Contracting under an umbrella company is a great stepping stone into the industry and can provide some valuable insight into a contracting career. But for some contractors, going limited is a more attractive prospect
If you’re thinking about contracting or you’re currently working under an umbrella, we’ve put together some advice to help you decide whether contracting under your own limited company could be the best option for you.
How much control do you want?
If you want more control over your salary, the jobs you take on and your working hours, limited could be for you. This is because you’ll no longer be classed as an employee, and as the director of your own company, the decision making falls to you.
How long do you plan on contracting for?
If you’ve been contracting for some time and you’re planning to stay in the industry, your own company could better suit your long-term goals. Contracting under a limited company is a bigger commitment and allows you greater opportunities for tax planning.
There may also be the potential to take home more money from a limited company. You can use our online calculator to work out how much you could take home working under an umbrella compared to through your own company.
Do you mind the extra work?
As an umbrella employee, all of the administration is taken care of on your behalf. Becoming a director of your own company means that you will be responsible for the administration and paperwork.
Are you happy to take control of your finances?
A bonus for new contractors is the support they receive in the early days, especially in regards to finances. However, as a limited company director, this responsibility will largely fall to you.
However, a contractor accountant can provide support with your finances and take the pressure away when tax times rolls around.
Thinking about going limited?
If you’re thinking about going limited, our sister company ClearSky Accounting can help. For more information about switching or for any advice, call the team on 01925 645 265 or email bestadvice@clearskyaccounting.co.uk.
