Guide for Setting up A Company


Setting up a company only takes a few simple steps and as a contractor it can often be harder finding freelance work that it is setting up a limited company.

You will firstly need to fill out a couple of forms which are both available from Companies House.  These forms are Form 10 which will identify the limited company as well as the directors and officers, and Form 12 which declares your intention to file the company. Once you have completed these forms you will need a Memorandum and Articles of Association

Once preparation of all these documents is complete then will then need to be filed with Companies House and the relevant fees paid. While these documents are being filed a contractor can still carry on working as a freelancer and can do so up until the company is registered and a certificate issued. You should receive your certificate after about 10 days and this will then enable you to open a business bank account that will be in the name of your newly registered company. You may need to register your company for VAT with the HMRC is you are going to provide services covered under VAT.

The main benefit of setting up a company is the credibility it adds to a contractor as it shows they are no longer freelance, but instead owning and running their own business and this added credibility is priceless.

The Benefits of Using an Umbrella Company


Becoming a contractor can come with a range of administration responsibilities that can cause you stress and suck up your free time. Contracting can be financially appealing but it can also be quite daunting knowing that you have to look for new contracts, negotiate with employers or agencies and manage your own finances and tax. Managing finance and tax issues can be a challenge for a good accountant let a alone a first time contractor.

By employing the services of an umbrella company you can ensure that your paperwork is greatly reduced and this will leave you precious time to concentrate on your contract, and more importantly enjoy your free time and work stress free. There are some major benefits to using a professional umbrella company which I will talk about below.

You will have a fixed monthly fee that will be arranged in advance with your chosen umbrella company services so you know exactly what your costs will be. There will also be no fees charged in periods when you are not working. If your umbrella company operates a good payment system you can also receive your money quicker. You should also be able to easily submit your timesheet and expense reports and most umbrella companies should have an online IT system that allows you to do this in a fast and easy manner. You should also be able to access your account online and view your historical details. Umbrella companies also offer a pension scheme and life assurance and can also provide private medical cover and travel insurance.

Operating under an umbrella company can free you from the hassles of setting up, and later shutting down a limited company. This is ideal if you want to trial a contracting career before making any long term commitments or if you are only going to be working as a contractor for a limited period of time. In some cases you may not want to take on the role of a company director and the option of outsourcing your administration tasks is an attractive one as it will leave you free to get on with your day-to-day work and not have your time consumed with tasks that do not create revenue, like chasing late invoices.

If you expect most of your contracts to be caught by IR35 then an umbrella company is a viable option.  In these cases going the limited company route is not financially justifiable as you will still have to pay full PAYE and NI contributions.

In summary, the main advantage of using an umbrella company services is that it gives and alternative route into contracting for those who do not wish to take the plunge and set up their own limited company.  Ensure you are aware of the business models available and also make sure you are clear in your mind what it is you want to get out of contracting. By doing this you will put yourself in the best position to enjoy an independent and rewarding career. 

How do you go about setting up a company


The question many ask is why set up a private limited company?  This question is asked mainly because setting up a company is likely to involve more administration and higher costs then if you remain as a sole trader.  The answer to this question concerns your personal financial liability.  If you are sole trader and your business fails, you are personally responsible for all of the business’ debts.  This means you are running the risk of personal bankruptcy if it is a large debt and you cannot afford to pay it.  By setting up a limited company you are protecting yourself against this.

Because a limited company is a separate legal entity it is therefore responsible for its own actions.  The finances of a private limited company are completely separate from those of the owner(s).  To a certain extent being a limited company might make you seem more credible to potential investors, partners and customers.

So how do you go about setting up a company?  Setting up a limited company will require you to register at Companies House.  By paying a small fee you can arrange for an accountant, solicitor or agent to do this on your behalf.  All you need to do is provide some basic information and a few signatures.  There are ready made limited company names that can be purchased if you wish to do so.  The alternative is to form a brand new limited company.  If you wish to do this you need to send a memorandum of association, articles of association and a completed IN01 form to Companies House.  A memorandum of association gives details of the company’s name, nature of business and registered office.  This document must be signed by the director(s) and in front of a witness.  The registered office of the company is the address where all correspondence from Companies House will be sent to.  The articles of association will set out the rules for running the business and also the regulations.  Companies House will not supply memorandum or articles and these can be purchased from a company-formation agent or a legal stationer.

A private limited company must have at least one director and they can also be a shareholder.  If a person has been disqualified from acting as a limited company director, are an undischarged bankrupt or are less than 16 years old they cannot assume this role.  Directors of limited companies are responsible for notifying Companies House of any changes to the structure and management of the company.  Company directors are also employees of the company and must pay income tax and Class 1 National Insurance contributions.

Umbrella Company : Benefits


Enjoying a more relaxed approach to your work could be an attractive prospect for a lot of people, and will enable you to enjoy more free time, which you could either spend boosting the amount of work you take on or relaxing with your friends and family. When money is the issue, you cannot afford to be living in a fantasy world. You need to know what your bottom line is in order to exceed expectations, and the umbrella companies are the ones who can give these projections to you.

Finding an umbrella company to help in this area is easy and there are many companies available online. It is very simple to set up as a contractor through an umbrella company. All that required is for a contractor to choose and join an umbrella company that they feel would be right for them.

Using an umbrella company provides significant benefits to the independent contractor and the agency. The contractor no longer has to worry about setting up and managing a company. He gets all of the same benefits as a regular employee while maintaining his flexibility as a contract worker. Further, he is allotted benefits priced to the entire umbrella workforce, rather than to a one-person company. This ultimately provides the contractor with access to benefits he might not otherwise be able to afford.

The major appeal of umbrella companies to contractors is not only the amount of time they save by handling PAYE, NICs, VAT returns, payroll issues and company accounts. They also shield all contractors who work for them from the effects of IR35 legislation. They have the technical expertise and knowledge to deliver a more precise idea of what your most tax efficient way to receive your earnings.

IR35 legislation is a bit of a grey area and there are no hard and fast rules. The most important thing to remember is that IR35 is your responsibility and this view is held by HMRC. This is why it is advisable to invest in an IR35 expert so that you can be prepared for any higher rates of taxation you may be facing.

Payroll Service of an Umbrella Company


When it comes to picking the very best option as a contractor, first you have to work on your own requirements. If your clients like working with contractors who have total control of their administration, you want to start a limited company. On the other hand, if the clients are only attempting to find wonderful management, you can simply join an umbrella company. An umbrella company provides payroll services that are extraordinary. 

Wages have to be paid on time every time to maintain your employees' trust and productivity. For many small to medium sized businesses administering payroll can be a lengthy, time consuming chore, using up energy and resources that could be better spent on the company's core activities. The increasing complexity of taxation and employment legislation in the UK accompanied by ever-increasing penalties for non-compliance only adds to the pressure of doing the payroll.  Using an umbrella payroll service can increase the tax efficiency of your earnings, enabling you to get tax relief on some expenses, reducing your costs in the long run. This is a benefit you would not find if you were taken onto an agency payroll.

Expense claims and happy employees are two of the biggest things that you need in any business for a healthy bottom line, and by making sure that every last deduction is factored in, and that employee payments are fair and accurate, a well experienced team of accountants ensure both. An umbrella company with wonderful payroll processing will give you a better service as they understand the importance of maintaining a well-running, functional payroll system which is desirable by any business owner. At Cloud9Umbrella, we have a dedicated team of payroll specialists who can help eliminate the burden of administering your own payroll system by providing a comprehensive payroll service that covers all the essentials. We do not believe in one-size-fits-all packages; our team of UK based accountants and payroll experts can offer customised solutions geared specifically to your company. 

Our customised payroll service will include weekly or monthly payment schemes, handling PAYE, National Insurance contributions, statutory sick pay, statutory maternity pay, and credits for student loans and working families. Our payroll specialists have plenty of experience in dealing with all aspects of the UK's pay-as-you-earn system and can ensure PAYE compliance, deal with PAYE investigations and even liaise with HMRC to clear up any issues that may crop up. Our pool of Accountants can ensure that any harm from possible future investigations regarding payroll irregularities are minimised.

Why join an Umbrella Company?


When you reach the end of an accounting period you need to "close the books." At a minimum, you will close your books annually because you have to file an income tax return every year. You may want financial statements monthly, bi-monthly, or quarterly. Even though there are many accounting software programs out there, without a skilled and qualified bookkeeper or accountant to interpret the information, small business owners are only seeing part of or a smaller financial prospect for their businesses. Without seeing the big picture they can’t make informed decisions to improve the financial health of their company. Information that isn’t interpreted accurately is not only incomplete but dangerous.

Accountancy is one area that should be handled by professionals. Any advice and support that an expert can offer is something that is hard to put value on. You can minimize your efforts and maximize your profits by hiring a reliable, fairly priced and established umbrella company. It is important for small businesses to have professional accountants who have expertise in keeping careful tabs on their proceeds and outflow. This will give you even more confidence. An umbrella company service is ideal for many contractors in today’s busy market place as umbrella services makes sure that you are meeting all the right tax obligations and will arrange for tax contributions to be taken out of your pay and handed straight over to HMRC. When choosing an umbrella company, it is essential to be well informed about the processes.
                                                                                        
Contracting can offer significant financial advantages, for many it is the chief benefit. There are both positive and negative reasons for selecting either the limited or the contractor umbrella companies to work under. However, once you start contracting and have experienced the flexibility, freedom and pay rates on offer, you'll never want to go back to normal employment again. There are a few things you should consider if you are looking for a contractor umbrella company. Below are the questions which you can ask once you've found the best umbrella company for you.

1) What weekly/monthly fees does the scheme charge?
2) How often does the company make payments?
3) How long has the scheme been operating?
4) Are there any joining/leaving fees?
5) Are there any other 'hidden costs'?
6) Does the scheme have an automated online service?
7) Are there any service guarantees?
8) Does the scheme offer any additional benefits?

An Umbrella Company can give you the assistance and support that you need to solve difficult issues of self-employment and allow you to focus on what you do best as a contractor.

Contractor Umbrella Company

  
Contractors find using an umbrella company simple. Once the contractor has signed up, which can often be done online or over the telephone, and negotiated their contract with the agency or client, they hand over responsibility to the company's management team. The umbrella company will get the contract paperwork signed by both parties, so the contractor can start work secure in the knowledge a contract is in place. Then each week, or month, the contractor completes a timesheet for the client to authorize before forwarding it to the company online, by fax or post.

The company will invoice the agency or client for the correct amount, chasing for payment if necessary. Once the company has been paid, it will pay the contractor a salary after deduction of the company's fees, income tax and National Insurance Contributions, which the umbrella pays direct to HMRC. Because the contractor can claim travel and subsistence expenses, they pay less tax and take home more of their gross fees.

In addition to this, there are several benefits which you will get from a Contractor Umbrella Company. Personalized attention is the major benefit that a good umbrella service delivers to their clients. Instead of getting access to an overworked and bombarded account manager prone to mistakes, successful umbrella companies work to ensure that each account manager can handle a case as if it is his only one. Experienced accountants who have years of field practice under their belts knows how to help a business reach its full potential with regards to efficiency and the claiming of expenses.

Thus, contractor umbrella companies are a popular trading solution for many contractors, particularly those caught inside IR35.When choosing an umbrella company to use for your freelance business there are a number of things to keep in mind. Many companies use flashy advertising gimmicks which can be misleading and they may even make false promises, so it's important to get as much information about the company as you can.

Contractors are often introduced to umbrella companies offered through their agency. Be aware that these companies may be partners of the agency who will receive referral commissions for recommending certain companies. More often than not they will not be the most efficient company for you so it's important to research the broad spectrum of umbrella companies out there. 

Ask the umbrella company for client testimonials and references. Word of mouth is always a powerful statement about a company, so ask colleagues and friends for referrals. More than likely, they will have plenty to tell you about both good and bad umbrella companies, so use their experiences to your advantage.