Independent contractors must take all measures that can help them focus more on their work and just leave the admin and financial aspects of the business to the experts. An umbrella organization will take care of the admin side of the contractors such as taxes and payments.
Take a look at these benefits that contractors can experience from an umbrella organization:
- Say goodbye to IR35
The IR35 is also known as the off-payroll working rule and it determines whether a contractor is either self-employed or employed mainly for tax purposes. If a contractor has a contract inside IR35, then they will be obligated to pay taxes which can cause a dent in their finances.
But, if the contractor is employed under an umbrella organization; they won’t have to worry about the taxes since they are considered as employees of the company.
- No admin tasks
All admin-related tasks and taxes will be handled by the umbrella organization. This gives the contractor more time for work or for other personal matters. They can even get more workload since they have more free time.
- Get the benefits of a regular employee
Contractors working under an umbrella organization are eligible for regular worker benefits such as sick pay, holiday or redundancy pay and as well as maternity or paternity leave/pay. They are also covered with insurance for the workplace.
- All financial matters are properly managed
The umbrella organization will make sure that all taxes and National Insurance are deducted from the pay and will be updated. These details will be sent over to the HMRC by the Umbrella company.
- Contractors can file back their expenses
Contractors are eligible to claim or get back their work-related expenses. All they need to do is to log all their expenses so that the umbrella organization will take care of them.
Are You Fit To Work Under An Umbrella Organization?
There are no set requirements for contractors to comply with when they want to work under an umbrella organization. However, these are the factors worth considering:
- New contractors who want to limit the hassles of setting up their own limited company
- Contractors who are not able or do not want to be the head of a limited company
- Contractors who earn less than 15 pounds hourly
- Contractors who will only be working for a short period of time
- Contractors who are working with an agency or if their end-client requires an umbrella organization
Signing Up With The Right Umbrella Organization
There are two options for contractors who are working with a limited company and are thinking of making the big switch; they can either close their business or just make it dormant for now if they think that they still want to work with a limited company in the future.
The next and most important step is to sign up with the best umbrella organization and just let the company handle the remaining important matters.
