Most contractors in the UK usually settle to launch limited companies in order to effectively handle their businesses. Still, there are some specific scenarios in which umbrella company contractors can be very beneficial. Essentially, the advantages of this business model are designed for those contractors who don’t wish to set up limited companies yet. It can also work well for those who aren’t able to set up their own limited companies. In either case, this option is excellent when it comes to realising your contracting career’s objectives and expectations in a stress-free manner. Well then, let us review the pertinence of this contracting business model to such individuals.

You can avoid managing your own tax, payroll NI contributions obligations

This is an extremely important issue for new contractors, even those who manage to retain the services of a competent accountant. By operating under an umbrella company, you can be free from handling the usual overheads of launching and maintaining a contracting business. Also, this business arrangement lets you try out your contracting ambitions, prior to ultimately making long term commitments. While, at the same time, been a feasible business plan if you intend to work as contractor for a fixed period of time.

You can be able to outsource your administration obligations

Being under umbrella company contractors can be ideal if you don’t wish to be actively involved in the administration of your business. You will always be able to outsource all your contracting administration duties. This will naturally free up your time to focus on the essential day to day duties as a contractor. This way, you can as well efficiently circumvent duties that are complex to budget for or those which cannot generate revenue. One of the most notable of the latter includes following up on late invoices.

Lets you avoid the IR35 trap

Should you anticipate a big number of your contracts will be subject to the infamous IR35 legislation, umbrella company contractors can be your out. If you decide to work for a PAYE umbrella, you can foot the right PAYE AND NI contributions. This is not the case with a limited company where you will have to foot these obligations on top of everything else.