Ltd vs Umbrella

[Hicks]

I am returning to work after an absence of a couple of years and the first offer I have is for a contract position.

I have traditionally been a permanent employee but the combination of the role, money and career break makes this a good opportunity to pursue.

The contract is a 2 month rolling one.

However, the role and requirement is new to me which I hope I can fulfill but, as with any contract, it may not work out and could be terminated early.

I am searching the board to pick up the relevant knowledge but thought I would ask a quick question in the meantime.

I was thinking of starting off using an umbrella solution and then switching to a Ltd structure after the first renewal.

Knowing what you know about contracting, if you were in my position, would you opt for an umbrella company or a Ltd structure bearing in mind the above.

TIA.

[thunderlizard]

An umbrella for 2 months then shift to Ltd? Not worth the admin of joining and leaving the umbrella. Go straight for Ltd: one of this site's "usual suspect" accountants will be able to help you through the whole process.

[oracleslave]

Agree with tl. The cost of setting up a limit are so small that even if the contract is terminated early as you admit is a possibility I would take that risk and go limited anyway. Also as has been mentioned get an experienced accountant to help you do the neccessary.

[NotAllThere]

I just check on googlefight. ltd wins 850'000'000 to 36'300'000

But I'd got ltd anyway. I did it 13 years ago before the wealth of information that is available on the www was available. And survived quite happily. Get a good accountant though.

[sidknows]

Go limited and dio not believ the hype from these umbrella companies who tell you its not worth the hassle -- be in control of the money that you earn

[NotAllThere]

..-- be in control of the money that you earn

Indeed. And on that note, don't just hand over things to your accountant and forget about it. Make an effort to understand your company's financial position from month to month. He's your accountant, not your FD!

[Hicks]

Thank you to all who replied.

I'll set the wheels in motion in setting up a Ltd.

Following on from that, am I correct in assuming that Ltd vs Umbrella also has a differential in terms of the amount of money which you could potentially pocket?

If so, approximately what would that be?

For example, Ltd = 95% vs Umbrella = 85%

[SueEllen]

Thank you to all who replied.

I'll set the wheels in motion in setting up a Ltd.

Following on from that, am I correct in assuming that Ltd vs Umbrella also has a differential in terms of the amount of money which you could potentially pocket?

If so, approximately what would that be?

For example, Ltd = 95% vs Umbrella = 85%

For a ltd it depends on what salary your accountant says you should pay yourself and your expenses plus whether you want to go into the higher tax bracket.

[LisaContractorUmbrella]

You take home will also depend on whether or not you will be inside or outside of IR35 which will make a big difference

[SueEllen]

Oh look what I found on this forum:

http://forums.contractoruk.com/accou...composite.html