Umbrella Company for Contractors

Umbrella Company

Umbrella Company is a company which provides short contract assignments to temporary workers such as freelancers, independent contractors, consultants and enables them to accomplish these contracts for agencies and end clients. An umbrella company is responsible for all administration tasks such as –

1. Invoicing
2. Chasing
3. Collecting funds from your agency or end clients
4. Calculation of tax & national insurance contributions at source.

Being an employee of Umbrella Company, an individual enjoys the flexibility of being self-employed at one hand and avail benefits and security of permanent employees on the other hand.

Umbrella company provide various benefits to temporary employees (same as permanent employees) such as holiday pay, maternity pay, paternity pay, sick pay, holiday pay, workplace pensions etc. Joining an umbrella company is very beneficial for new contractors or freelancers and helps in removing all their company hassles related to admin, tax issues and responsibility of setting up their own limited company too.

How does an umbrella company work?

The work procedure of Umbrella Company is as follows –

1. In the first step, two contracts are signed, out of which one is between the employer (Umbrella Company) and the recruitment agency and other between contractor (you) and the umbrella company.
2. After finishing the tasks in the second step, contractor needs to complete the timesheet on weekly or monthly basis and submit the same to both – recruitment agency and the umbrella company
3. In the third step, Umbrella Company will send the invoice to the recruitment agency and Recruitment agency will invoice the end client.
4. When the payment against the invoice is received by the umbrella company, salary will be paid to the contractor.

Benefits of Umbrella Company

There are various benefits of Umbrella Company which are as follows –

1. No set up cost or exit fees
2. It saves your time as managing of timesheets, expenses and pay slips are the responsibility of Umbrella company
3. Contractors, freelancers get the same benefits – Perks, rewards & discounts as permanents employees.
4. Extensive support to contractors
5. Timely payments to contractors
6. After joining Umbrella Company, you will not only enjoy a self-employment status but also enjoys all the rights & benefits given to permanent employees.
7. It helps in removing the hassles faced by contractors in admin or tax related issues in case they set up their own company.