A limited company is very different from an umbrella company. When a limited company is set up, the person in charge is the company director, whereas, a person joining an umbrella company, will become an employee of the scheme. There are almost two million companies in the UK which are currently trading, and among the directors’ responsibilities are the submission of accounts to Companies House and the filling in of a tax return for HMRC. Running your business as a limited company can prove to be tax efficient.
Disadvantages of running a limited company
The main disadvantages are the amount of admin and paperwork required, particularly in the filing of accounts. Responsibility will also fall on the director for the day to day running of the business, including the often arduous tasks of invoicing, keeping financial records and liaising with the accountant, to make sure the accounts are returned in time.
Under an umbrella company structure, the contractor would not act as a director or have to assume the responsibilities connected with a limited company. Instead, the umbrella company provider takes care of accountancy and tax matters and deals with the day to day admin. The contractor will complete a timesheet and forward it on to the company, who will then invoice the agent.
Cheltenham accountants can assist with financial matters in relation to the setting up of businesses. There is a range of services that accountants Cheltenham provides and they will guide you through every step of the process. According to the Yorkshire Post England and Wales are two relatively easy places to set up a limited company.
Advantages of an umbrella company
The contractor undertakes most of the duties which saves time and effort, and there is no requirement to be involved in VAT returns or payroll matters and accounts. However, some disadvantages are that the contractor will not be running the company. It’s important to weigh up the advantages and disadvantages. If having control of the company is an essential aspect, then the one person director route should be followed. If you are undecided, then it’s better to go with the umbrella company for the interim. It is simple to leave an umbrella company, but harder in terms of admin and expense to move from your own company to an umbrella structure.