Umbrella VS Limited Company – Which is best for you?

At Ovations Umbrella, we understand that it may be difficult to decide between an Umbrella Company and setting up your own Limited Company as a new contractor. Thankfully, we are here to help! We’ve created this handy guide to lay out the key differences between both options and help you make that major decision. 

Umbrella Company

An Umbrella Company takes care of all your Income Tax and National Insurance responsibilities and is an excellent choice especially if you’re planning to only contract for a short period. Good Umbrella Companies such as Ovations, provide the same rights which are given to permanent employees such as:

• maternity and paternity pay
• holiday pay
• sick pay

Choosing an Umbrella company will also ease the stresses of IR35 as Umbrella Contractors are not affected by those rules. With Ovations Umbrella and other creditable Umbrella companies, you will also be able to claim back all business costs and expenses as well as receiving no joining or leaving fees, 24/7 support, and an advanced online portal to avoid paperwork hassle.

Limited Company 

A Limited Company is a private company in which you’ll become the companies director. Having a limited company will mean that you will have statutory and financial obligations, such as:

• meeting HMRC tax deadlines
• conducting IR35 reviews regularly
• opening a separate business bank account
•  submitting accounts annually to Companies house
• having slightly more paperwork for you to take care of each month!

Having your Limited Company results in full control over your business finances and could be a better option if you are thinking of contacting long term. Also as a Limited company director, you can claim on a bigger selection of expenses than you would be working through an umbrella company which is one of the main benefits of having a Limited Company.

 Conclusion 

 Using an Umbrella Company means you will have very few admin duties and legal responsibilities which is beneficial if you don’t like the hassle of being a director of a Limited company, which has a lot of admin and legal responsibilities. Although for some, having a high degree of control over your admin and finances may be a better option. Also, with a Limited Company, you would need to pay for Business insurance but when using Umbrella Companies, the Business insurance should already be included in your fee.

An Umbrella Company is the ideal option for anyone who is not sure about their next steps. Going Limited can be daunting at first and is a lot of responsibility therefore having an Umbrella Company as an option is ideal. Did you know you can use an Umbrella Company and have a Limited Company at the same time, however, If you start using an Umbrella Company, your Limited Company will be temporarily inactive.

Both options are great to run your business. Whichever choice you make we at Ovations Umbrella wish you great success! Still, feel like you need more help? If you’re thinking about going down the Umbrella Company route but need further information, feel free to contact us through our contact page or call us now at 01582-344-044