Umbrella Company Versus Limited Company: What’s Best For You?
John Jennings discusses the pros and cons of setting up your own LLC or engaging with an umbrella company when you’re an independent contractor.
(Monday, April 29th, 2013) United Kingdom - John Jennings tells of how: “As an independent contractor when it comes to your legal status, your operational ability and your taxation affairs the question often arises whether it is better to set up your own limited liability company or to become involved with an umbrella company. The umbrella company after all acts just as if it was an employer for independent contractors and freelancers and this takes away a lot of the ”hassle“ associated with conformity.”
Host John Jennings says: “Remember that when you engage an umbrella company the main buzzword here is simplicity. Once you have provided all the necessary information and they are in receipt of the details from the employer or initiator of the contract then all the tax concerns and accountancy details are handled for you. This is a significant advantage for many people who don’t want to take on the paperwork associated with the limited company.”
At this point John goes on to say: “While there are certain tax benefits associated with your own limited company you should never underestimate the commitment needed to run it. If you do not keep up with your tax responsibilities you can certainly expect your stress level to rise and remember that even though you can do your own finances and tax affairs online these days are you 100% confident that you know what you’re doing, especially when it comes to deductions, allowances and all of those grey areas?”
John Jennings then drives home the point that: “Ultimately you have to weigh up the pros and cons from your specific point of view. Of course the umbrella company will charge a fee for their services and you need to calculate just how much your time is worth and specifically how much your free time is worth to you. Wouldn’t it be better to put all these chores in the hands of an entity familiar with what it’s all about? When you do so you don’t have to fret about missing a date for a specific return, keeping up with the registration for your limited company, or worrying about what changes the government may bring in next time that could affect you adversely.”
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