16 September 2020
If you are here reading this article, there is a good chance you already know about the benefits of umbrella employment. It is an excellent platform for contractors that are just starting out, providing employment security with lots of admin and insurance support to get you started.
So why would you want to think about switching to limited company trading? If you have established yourself as a contractor, are happy with how the lifestyle is treating you and have a steadily increasing hourly (or daily) rate, then you may benefit from operating through your own limited company.
Let’s explore how you might benefit from switching over to a limited company trading:
- Full control over your finances will allow you to minimize tax and retain more of your earnings
- Flexible pension savings options
- Claiming expenses and VAT
- Enjoy full employment benefits as an employee of your company
- Increased employability and the possibility to take on more work/expand your business
- Build and develop your brand, with training paid by your company
These are just some of the main benefits, depending on your particular circumstances. You may be able to find more after talking to an accountant.
Ending your umbrella employment
Once you’ve decided that incorporating a limited company is indeed the way you want to take your contracting business, here are some tips on how to end your employment with the umbrella company:
- We recommend switching just after your contract expires to avoid any complications in case you have a tie-in period
- Look up the notice period in your contract
- Make arrangements with your umbrella to settle all your hours and any outstanding payments
- Request a P45 leaver from your umbrella as you will need this for the payroll in your limited company
If you are with SmartWork, make sure that you speak to your Business Manager to guide you through the process.
Setting up your limited company
The first step of switching over is finding an accountant that will help you with the running of your limited company as well as submitting accounts, reminding you of deadlines etc.
If you are a SmartWork contractor, you are in luck, because our sister company MyAccountant are specialists in contractor accounting with FCSA accreditation and two decades of experience. That means your assigned Personal Accountant can help with everything, all in-house.
Incorporating a limited company is relatively quick, can be done in 24 hours and is typically offered free by most accountants.
The accountancy fee you will pay will depend on the services required, some of which dictated by your contract. Make sure that you only pay for what you need, and look out for those hidden fees. Amongst other tips mentioned in this article, make sure that they actually take the weight of running a company off your shoulders.
If you don’t want to worry about any of the above, contact your business manager or MyAccountant directly on 0800 917 9100 or at firstname.lastname@example.org
Once you are all set up, you will find that operating via your limited company requires a little more work and attention, but with the right accountant at your side, there is nothing to worry about. In time you will find that the benefits will far outweigh the little extra effort it requires compared to umbrella employment.
We hope you’ll find this article helpful in answering some of your questions. If you’d like to get in touch with SmartWork, please feel free to call them on 0800 434 6446 or send an e-mail to email@example.com.