Which one among Umbrella and Limited suits you better?
Its awesome that you are in the path of your new career. You might be unclear about the options to choose right now which could benefit you the most. This article would help you make you a better decision in terms of whether to choose an Umbrella services or a Limited company services. Let me take you through the basics of the options you have right now.
Umbrella Company
As you might already know, Umbrella services helps you with end to end employment services. To get umbrella services, means you will be the full time employee of an umbrella company like Ganumbra, where you will be bound by the employment contract and everything which comes with it. Your timesheets, expense claims, invoices, salaries and taxes will be taken care by your umbrella company. You will be working for your client as a freelancer, contract job or a full time basis. But all your documents will be taken care by umbrella company on behalf of your work-employer. Umbrella company and your Work-employer will also have a mutual agreement and a contract which contains your type of work, pay scale and everything related to your work specifications. Your salary will be paid by your work-employer to your umbrella company. Umbrella company will pay you your salary after deducting the taxes leaving you free of hassles so that you can only concentrate on your work and perform better. You can read our detailed article on Umbrella company here.
Limited Company
Setting up a Limited company gives you much more freedom to be your own boss and be able to run your business more tax-efficiently. Umbrella companies are preferred for the beginners to get some basic exposure of contracting. But it is always good to go one step ahead after getting enough knowledge so that you can start planning your career and gain most of the employment benefits.
After all, if there is a smart way to save up most of your taxes, why would you wanna give it up?
Why should you go limited?
You could make a lot more money – We found that contractors who switched to limited took home 18% more every month on average.
You’ll be more tax efficient – As a limited company contractor you pay yourself a basic salary and the rest is paid in dividends, which are not subject to National Insurance contributions.
You can grow your venture – Limited companies can obtain a separate credit rating on which to borrow capital, and contractors who choose this setup can secure assignments with clients that require business-to-business contracts. For those with entrepreneurial ambitions, you also have the option to grow your venture into a small business by hiring a team of employees.
Firstly, let us break down the basics of a limited company.
Let’s consider you have your own business. It could be a start-up, entrepreneur, small – medium to large business. You will have a lot to deal with unlike an umbrella employee. Along with your work, you will also have director’s responsibilities to develop your business, managing your company accounts and taxes.
When you start your own limited company, you should be ready to take up additional responsibilities, which means that you will have less time to spend with your family and loved ones.
7 Important steps to decide:
The above steps can help you in some way to decide what is your current situation and how can you make a decision which one suits you better. If you think you can spend some time in your weekly hours, then calculate the UK taxes using the below link- where for your earning you will know how much you can save if you sign up for Limited company services.
Access the tax calculator here
Now, you know the difference. Think about the quality of life you will have if you are saving the above amount. Do you think it is worth for you and it will benefit you? If Yes! then Ganumbra is there to take you through the Limited company process; visit our website www.ganumbra.com
If you think the amount difference you are getting is relatively small and you wont benefit much out of it, then, we suggest you to go for Umbrella company services. Know more about Umbrella company services.
You can take help of a professional accountant or limited company services offered from most umbrella companies. It will ease your burden a bit but the most of responsibilities still lie with you. You will have to carefully weigh your options before deciding.
Ganumbra is a highly experienced and most trusted umbrella company that provides you with friendly and genuine guidance on your career. Ganumbra is always there for you no matter what path you choose. We will guide you at your each step. Visit www.ganumbra.com to speak to one of our experts.
We are in this together!
Happy Contracting 🙂