Accounting, tax and consulting for the employment sector

Limited Company vs Umbrella Company

For some contractors, the idea of setting up their own company can seem a little intimidating. Owning a company does bring more responsibility but with the support of a good and affordable accountant, the benefits can greatly outweigh any perceived disadvantages. The following table seeks to summarise the considerations you should make in deciding whether to use your own Limited Company or an Umbrella Company:

Limited Company Umbrella Company
Significant tax advantages, particularly for higher earners Allows more flexibility
You are a long term contractor You are contracting in the shorter term
Ability to offset business expenses Ability to offset business expenses
An accountant is required No accountant is required
Accounting fees are a business expense Umbrella fees are a business expense
As a director of your company, you have more control You become the employee of the umbrella company
You may need to consider IR35 IR35 becomes irrelevant
Small cost to set up your company No set up costs or joining fees
You need to keep a file of your receipts Receipts need to be sent to the umbrella company
Reduced accounting fees if your company is not trading Fees are only payable when you are working

At PacificB2E, we provide both services so unlike others, you can be assured that we will not try to steer you down one path. Our advice will be impartial and will be based on your individual circumstances. And don't be put off by the thought of accounting fees as the costs are similar to umbrella fees. Ultimately, we want to ensure that as much of your hard earned money ends up in your pocket as possible.

Contact us for more information.