Newbie: 2 month contract. Should I set up Limited company or use Umbrella?

[Limitless]

Hi

I'm new to this so I am seeking the best honest advice. I have just been given a:
- 2 month contract on £207.32 a day and I have the option of setting up my own Limited company and using a company called "Income Made Smart" or using an Umbrella service called "Parasol".
Has anyone had any experience using any of these 2 services. All I know is, after all deductions my net salary is very low in all cases! I want to get my net salary as high as possible.

Both companys have given me their advice. It seems my options are:
1. Set up my own Limited company & use "Income Made Smart" (a representative for Income made smart said all I have to pay is £100+VAT accounting charges per month. However, a "Parasol" represenative told me that this is not true, and there are a whole list of addititional costs that were not mentioned I would need to pay? Do you agree with this & is the trade off worth it for 2 months?

2. Use "Parasol" - who can "act as my Limited company". But there are additional costs such as accounting (£195 per month), incorporation fee and shutting down the Limited company function (£495 to shut it down!) etc?

3. Use "Parasol" - who can act as my Umbrella company. The net pay is not great though?

Many thanks

[Wanderer]

I'm new to this so I am seeking the best honest advice. I have just been given a:
- 2 month contract on £207.32 a day and I have the option of setting up my own Limited company and using a company called "Income Made Smart" or using an Umbrella service called "Parasol".

Hello and welcome!

If you can get a contract on a higher rate (say 300/day) for a longer time (say 6 months) then think about becoming a company director. There is quite a lot to understand though. As a starter, read the "First Timer's Guide" linked to on the right. Also understand about IR35, how it will affect you and where you can get professional advice about your status. Also read my list of Noobie Contractor Mistakes and try not to make them.

In your current situation, take option 3, go with a reputable umbrella company and accept that the net pay isn't going to be high. It is not worth forming a LTD company if you are only on ~200/day because the admin and accountancy costs are quite high relative to your company income and it's not going to be worth it. DON'T go with any of these tax avoidance schemes unless you want to get HMRC after you in a couple of years time for tax owed plus fines.

Good luck with it, do some research and watch what you are signing!

[LisaContractorUmbrella]

WWS - it is definitely not worth your while to set up a Limited Company for a 2 month contract - you would be better off with an umbrella company for your first contract and then see how you go from there.

[GazCol]

Is it likely that 2 month conract will be renewed?

[quackhandle]

qh

[LisaContractorUmbrella]

qh

[Andy Hallett]

WWS - it is definitely not worth your while to set up a Limited Company for a 2 month contract - you would be better off with an umbrella company for your first contract and then see how you go from there.

This