What is an Umbrella Company?Posted Monday, December 17, 2018
‘what they are,why you use them’
Regularly I get asked the question ‘what actually is an Umbrella Company?’. I think I might be guilty of glossing over this question too quickly; I don’t do it on purpose – I just forget that not everyone else has been talking about Umbrella companies for as long as I have.
So, for this article I thought it might be helpful if I actually went in to a bit more detail about what an umbrella company actually is. Here we go….
An Umbrella Company…
‘as easy as ABC’
An Umbrella company is simply a company that is already set up, it already has the right tax registrations and it already has a bank account open. Umbrella companies are always managed by an accountancy firm (like ContractingPLUS).
You use the Umbrella company just like you would a regular umbrella – jump in under it when you need it, and when you don’t, jump back out again. There are no set up costs, there are no minimum requirements in terms of the length of the contract period, there are no leaving fees, and the set up time takes less than an hour. Umbrella companies really are the simplest option for those who want (or need) to start working as a contractor immediately. (Even on the same day!!)
How you get paid…easily
Most typically when contracting, a person submits timesheets to alert the client that payment is due. With an Umbrella company you submit your timesheets to your service provider,(ContractingPLUS contractors do this using smartphone Apps or via our online portal), from the timesheets, Contracting PLUS will send an invoice to your client (or recruitment agency). The very same day they pay us, we process your payment: we deduct the right taxes, we refund you any expenses you’ve incurred and then we transfer the balance directly into your bank account.
All the money that hits your account is yours. You don’t need to worry about any taxes because we will already have deducted those and paid them across to the Revenue Commissioners for you.
When you’re not working…
As I already mentioned, you only use Umbrella’s when you need them!, so if your contract ends and you’re not working then you step out from under the Umbrella. However if you are planning to get another contract, we suggest you stay in the Umbrella Company. There is very little administration involved in getting set up, but if you plan on continuing in contracting roles it saves you having to do the set-up again, especially if you plan on contracting again soon.
The compliance stuff…
You will be a Director of the Umbrella Company (you have to be classed as self-employed to be able to claim business expenses). Your Umbrella company will comply with registration requirements, it will have the correct insurance, be registered for tax, and your tax returns will be completed for you, Basically because ContractingPLUS manages the Umbrella Company we look after all the compliance and administration. We do it for 100’s of companies and 1,000’s of Contractors and we’re really, really good at it! So just have to concentrate on your contract, we’ll do the rest!
If you have any other questions about Umbrella Companies, click here to find out more.