Umbrella Services For Contractor Payroll Solutions
Since IR35 legislation was brought in to effect in 2000, many contractors have benefited from handling their payroll through an umbrella services provider.
As many of the most lucrative contracts involve terms and conditions which effectively make the contractor a temporary employee of the client, a large number of contractors come under its remit. Unfortunately unlike regular employees, contractors have to take responsibility for their paperwork and tax returns.
When it comes to the IR35 legislation, the most effective way of doing this is through an umbrella company – in short, outsourcing your payroll to another company, who’ll handle all the paperwork, administration and invoicing for a small fee.
Such companies often offer a variety of umbrella services to contractors beyond handling their salary. As well as providing a solution for keeping their PAYE contributions compliant with HMRC regulations, umbrella companies often have extensive policies for HMRC compliant expenses. Some of the best also offer professional insurance packages to safeguard their clients from liability for mistakes made by employers, the HMRC, the company or even the contractor themselves – umbrella companies will process your records but they can’t help you keep them after all.
The more flexible umbrella companies also offer a competitive, tailored fee structure. As not every contractor is the same, and neither is every contract, having the option of a variable weekly or fixed monthly management fee can be a big help. Often the more experienced and established providers will also offer ‘immediate’ processing of all income received; rather than waiting for a set payroll date, they’ll begin work on clearing money into your account as soon as possible.
Perhaps one of the best umbrella services though is their provision for workers rights for contractors. As self-employed individuals, many contractors miss out on the employee rights that are standard in most businesses. An umbrella company can offer full statutory employment rights to client contractors, including maternity/paternity and sick pay.
Of course there is always the option of handling your accounts through the limited company structure. However, this will leave you fully culpable for any timekeeping, salary, invoice or expense mistakes that go through to HMRC and could result in heavy fees for inaccurate or late returns. It will also mean you miss out on the many benefits offered by umbrella services.
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