Ryan Galiotto

Posts Tagged ‘tax umbrella company’

If you are about to leave your employer to become a freelancer or contractor, then you need to decide how you will handle your future tax liabilities. You need to get something arranged as soon as possible, to avoid being hit with a big, unexpected, tax bill later on. The solution should be one that allows you pay the least amount in taxes, but which also makes it easy for your customers to deal with you. One option available to you is to set-up a limited company. You will be the director and only shareholder, so it is not as complicated as it may sound. Taking this approach minimizes the amount of taxes that you have to pay, and allows you to claim back the widest possible range of expenses. If you have the time and money available to do this, then it is certainly something to consider doing. Setting up a limited company is expensive and time consuming though. You will have to hire a lawyer and accountant to start with, and there are various on-going fees to pay, and paperwork to deal with. The easier option is to let a tax umbrella company take care of all the technicalities for you, and then you can focus on what you do best – making money. If you use the services of a tax umbrella company, you enter into a contract with them and effectively become a PAYE employee again. However, you get the benefits of being an employee, without the hassles. Of course, the umbrella company cannot tell you what to do, but for you they will look after your invoicing, payments and tax contributions. The tax umbrella company system is fairly simple to use, and you can have everything set-up within a few days. Once you are in their system, you will get paid from them every couple of weeks or every month, with the amount being whatever your clients have paid for your services, minus your taxes and the fee that you have to pay the umbrella company. You should only have to pay the umbrella company a set monthly fee, and not a percentage of your earnings.

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