As a new I.T contractor, should I set up my own company OR join an 'umbrella' company ?

Question

Are you an I.T. contractor? Can you explain whether you think setting up your own company or working under an 'umbrella' company is best?
What is the name/website of a good 'umbrella' company that you personally have used and what are it's advantages?

Are you an accountant? What thoughts do you have on this matter ?

[for information only, examples of umbrella companies are atlantic-umbrella.com, psccs.com, bbuffalo.com etc.)

Thanks in advance !

Answer 1

frankly I would go self-employed then you can claim plenty of costs for running your business from home. It also depends if you are working in one place for a long time or whether your work takes you to various different locations. If you are working as a normal employee might work, i.e. at one location for several weeks at a time, you oculd find that your claim to be treated as self-employed would not be accepted. I'd find a good accountant to help you with this.

Answer 2

Hello,

Having worked in the past as an IT contractor there are two destinctly different ways to working.

No.1 (the limited company approach) forming a LTD company which you can do by purchasing a limited company pack & using a solicitor & registering your company with companies house.

This allowes you to not only create your own company but it means you have to create a business plan, do your own book keeping (not accounts, you can employ an accountant to do your annual accounts & tax returns), keep detailled records of work done for clients or contracts worked on. The BIG benefit is that you can gain a better income & charge a higher hourly rate, as you have to cover all your costs, including income tax, persion provision and so forth.

No.2 (The unbrella approach) If you register with an IT agency or an unbrella IT company, they will pay you a lower hourly rate. Why? because they will be doing the admin for you so they will work out your tax, holiday or sickness pay. In essence you are employed by the agency, thus you are an employee and so NOT technically your own boss. Any agency or unbrella will take a cut of your hourly rate or over all fee's.

**Working for yourself under a LTD company structure although more complex, I found it to be much more rewarding.

IR

Answer 3

Be your own Boss.Then you only have to appease yourself.