Frequently Asked Questions
What is an umbrella company?
An umbrella company acts as the employer for contractors working on fix term contracts acting as the payment intermediary. The main function is to organise payments to the contractor, by collecting earnings from recruitment agencies or the end client and paying the contractor for the work undertaken. Tax and national insurance is calculated, deducted and payments are made to HMRC, allowing the contractor to be paid accurately and quickly.
Umbrella companies provide increased flexibility whilst still taking advantage of the benefits of being employed.
Why use an umbrella company?
Using an umbrella company is one of the fastest and simplest ways of getting paid. It is a quick and efficient way of allowing the contractor to concentrate on what’s important, instead of worrying about additional time consuming administration - whilst still enjoying being employed.
What is a limited company?
When you set up a limited company and become a director you will have statutory and financial obligations, such as submitting your annual accounts to Companies House, running the company responsibly and solvently, along with meeting HMRC tax deadlines. There are specific contractor accountants who can manage and handle these requirements, but it is still the responsibility of the director to meet the companies obligations.
Being a company director, there is flexibility on how income is taken out of the company. Typically, corporation tax is paid on profits, business costs can be claimed against tax bills, a basic salary is drawn and the remaining amount is taken as a dividend. Operating in this way can often be tax efficient, but with the limitations of IR35 and operating as an independent business carrying additional associated administrative tasks, can outweigh the benefits.
Umbrella vs Limited company
Choosing between an umbrella and limited company can be a tricky decision for contractors. Operating through an umbrella can be hassle free with low administrative requirements. Simply submit a time sheet and payment is received. Whereas owning a company can seem beneficial initially, but can change contractors minds when they realise the statutory and financial obligations of being a director.
Who we work with?
The Brolly Brokers work with and recommend trusted companies that we feel best match your needs. We compare the market and choose the best company for you.
The benefits you can expect are as follows:
Fast and simple set up within 24 hours
Understand your take home pay
Fully comprehensive employee insurances
Dedicated managers to be on hand during set up and throughout your employment
Perks, bonuses and incentives for referrals
FCSA and professional passport accreditations