Many people dream of working for themselves but are wary of taking that first step as there is so much to consider when going it alone. Luckily there is a way of becoming self-employed with a great deal of support, making it feel as though you are not alone at all. Umbrella companies are a great way of being an independent worker but without the distraction and time consuming process of dealing with the administrative side of being self-employed.
While working with an umbrella company, freelancers market their own services and will complete the timesheets as necessary for the client. However, instead of having to send them on to the client or produce an invoice, this information is passed to the umbrella company. They then invoice the client, collect the payment and pass this on to the freelancer. In addition, the freelancer does not have to worry about dealing with the tax man as this is carried out as part of PAYE; taxes and National Insurance are deducted by the umbrella company and paid to the relevant departments. Having to deal with the Inland Revenue can be very off-putting and many people prefer to work for others than have to go through self-assessment. This is one of the main areas where a worker can benefit from the use of an umbrella company.
The company can also collect expenses on behalf of the freelancer – these can be anything from travel to subsistence costs. Those who are unsure which expenses they are able to claim can find out more from their account manager at the umbrella company. Having a personal account manager can be a godsend to those who are just starting out on their own. Any questions can be answered quickly so that the freelancer can have peace of mind when going about their work.
Each of the umbrella companies is slightly different in the way that they operate. Some may not pay the freelancer until the client has paid them, while others will guarantee a monthly payment. Payments are usually processed quickly and if there are any questions they are normally cleared up quickly.
It is the administrative side of a business that can be the most binding for freelancers. Spending time each evening on timesheets, invoices or tax paperwork can be draining, and will have a negative effect over time. A few weeks of juggling work and admin can leave a person wondering why they bothered in the first place. Having someone else take care of this is the best option and will give new freelancers the opportunity to concentrate on the work they enjoy.
Some umbrella companies are able to offer other benefits to freelancers that are registered with them. These vary, but may include such essential items as pensions, life insurance, income protection insurance and mortgages. They are also able to advise if the freelancer should form a limited company at any stage.