Umbrella to Limited
When embarking on a contracting career, one of the first decisions you’ll have to make is whether to join an umbrella company or set up your own business. We understand it can be difficult to decide, so hopefully this will help clear things up for you!
Do I get more take home pay with a Limited Company?
What are the advantages of a Limited Company?
One of the big advantages of being limited is that you’re able to pay yourself via a combination of wages and dividends (Intouch can help you do this). As these payments carry different taxation levels you will retain more of what you earn, while the taxman will still get all that he is entitled to. You will have more control, based on when you draw money from the company, over when taxes are due. You will have more flexibility in the way you plan your finances or invest money that remains in the company account. You also have advantageous options when it comes to appointing other directors, should you choose to.
When should I switch to Limited?
As soon as you decide you want the extra benefits and flexibility of being Limited. There is no need to wait for the end of a contract or the end of your accounting year if you already have a company. The best time is when you decide flexibility, permanence and more take home pay outweigh the simplicity of using an Umbrella.
Get in touch today to find out how much better off you could be as a Limited Company contractor, and what Intouch Accounting can do to help you achieve your contracting goals.
What do I need to do to become Limited?
Does IR35 affect me?
Is there lots of paperwork and admin?
You will have more paperwork and admin than when you were contracting under an Umbrella company, but should you enlist the services of a contractor accountant, many have online software that only requires 15-20 minutes of your time per month to maintain. So whilst there are extra responsibilities when it comes to paperwork and admin, there are the tools to help you manage this quickly and effectively.
Take a look at our video which demonstrates how Intouch’s bespoke online accounting portal works; from uploading your monthly invoices to showing you how much you can pay yourself in dividends in real-time. Alternatively if you’d like to request a free portal demo to see if it’s for you, get in touch today.
Aren't fees more expensive than Umbrella fees?
Many contractor accountancies include everything you’ll need to contract successfully within their monthly fee. Whereas your Umbrella may be charging you per week for a service which will effectively be stripped back to just a payroll service, contractor accountancies can offer so much more to ensure you have the capabilities to make the most from contracting.
Take a look at how much we charge here for our award-winning all-inclusive monthly contractor accounting service.
What happens if you decide to go back to permanent employment?
What contact will you need to have with the client?
Whilst your Umbrella company would have contacted your client directly for contractual, invoicing and payment purposes, once you have gone Limited this is now your responsibility. Whilst this may seem daunting at first, the increase in control over your finances and communication with the end client will benefit your professional career and enable you to run your company exactly as you wish.