The Benefits of Choosing an Umbrella Company for Payroll Management

In the past several years, remote work has experienced exponential progress and it’s safe to say that it has become almost equally as common as on-site work. This shift in the business landscape has encouraged people to turn to either contracting or freelancing.

That’s because both of these alternatives are generally pretty flexible because employees do not have strict schedules anymore. Although it’s great to be a contractor or freelancer, the reality is that, oftentimes, it can be extremely challenging to navigate this world and everything that comes with it (such as invoices, taxes, etc.).

But that’s when umbrella companies come into play. They make things drastically simpler in terms of the abovementioned things. If you would like to uncover all the positive sides of joining forces with an umbrella company, then keep reading to find out more!

Streamlined Tax And National Insurance Payments

In case you didn’t know, these companies are intended to manage your National Insurance payments (NIC), along with tax payments by utilizing the Pay As You Earn tool. So how does it work? According to the resourceful team at DASA Umbrella, an umbrella company is going to calculate and deduct a certain amount of cash (reserved for tax and NIC) from your salary before you receive it. In other words, they are going to handle the taxes on your behalf.

Furthermore, they are going to deal with all the deductions, like student loan repayments, pension contributions, and others. Contractors get their net pay which takes into consideration every deduction, making sure that it’s paid on time and that it adheres to all the rules and regulations.

If you’re the contractor, the umbrella company is going to give you all the necessary paperwork, like payslips, so you can properly keep track of every penny you’ve earned and tax contributions.

Smooth Contracting

It is widely known that these sorts of companies enable contractors to receive their pay in the fastest and most effective way. That’s because they provide a completely hands-off method and help with tasks such as payroll processing, administration, invoicing, and many others.

Aside from submitting your timesheet (weekly and/or monthly), you do not need to worry about dealing with a bunch of different paperwork. Furthermore, they are also an amazing way to get more familiar with contracting, especially if you’re not too sure whether contract work in the long run is suitable for you or not.

The point is that with them, you do not have any financial obligation or tie-in period, which means that basically, you can employ their services whenever you feel like it. They are generally a great solution if you occasionally work on shorter contracts.

You Do Not Need To Stress Over IR35

When you’re part of an umbrella company, you do not need to worry about whether you are outside or inside IR35. How come? Well, that’s because IR35 doesn’t impact these companies in any way.

Besides that, you won’t need to think about whether you will pay the right amount of money for taxes and National Insurance Contributions. Once you become part of their “community”, no one is ever going to ask you any questions in regard to taxes, and any of the previously mentioned stuff.

This is a massive advantage for any person who is constantly concerned about their IR35 status because things are significantly simplified for contractors.

Pension Enrollment & Salary Sacrifice

Umbrella companies are obligated to enroll you into a pension after a couple of weeks, however, if you already put a certain pension scheme in place, or you simply are not interested in incorporating an umbrella company in it, then you can always opt out.

By no means you are obligated to proceed with them as far as this goes. Generally speaking, workplace pensions are an amazing way to save up a substantial amount of money for retirement, and they come with numerous spectacular benefits.

When it comes to salary sacrifice, it is one of the best ways to increase your pension pot. It enables you to assign a specific amount of pre-tax income for your pension.

They Are An Ideal Solution For First-Time Contractors!

If you’ve never been a contractor before, then an umbrella company is a fantastic way to dive into the world of self-employment. As previously concluded, you can use them whenever your heart desires without any long-term commitment.

The world of contracting may seemingly look simple, but it’s actually far from that because there are many aspects of it that are a bit confusing. However, if you put your trust in the hands of an umbrella company, things will be drastically simplified in every sense.