Reply to: Another Umbrella vs Limited thread..!

[SueEllen]

Paid holidays?????? Are you sure this is a contract, and not temporary employment (where they also pay your tax & NI)

Have to agree.

If there is any mention of paid holidays then it's not a contract for services and it'stemporary employment. This means that you should be on someone's payroll either the agency's or the company that is employing you.

[newcontractor08]

Yeah, I thought that was weird, but from the job ad:

"This role is to work for --- via their Managed Service Provider, ---. As such, the successful candidate's contract will be with --- and not ---, i.e. ---will view the candidate as a contractor and he/she will not be eligible for any benefits afforded to permanent --- employees. The higher salary reflects contract status, which is to cover lost daily wages as a consequence of time lost due to holidays, bank holidays and time off through illness. 14 days holiday allowance has been written into the contract due to it's long duration. Any further holiday will result in a loss of wages for the duration of the holiday." (I don't know why I feel the need to blank out the company name )

The manager explained that he gives contractors 14 days holiday because otherwise they are loathe to take holidays at all, and he believes they end up actually performing worse through having not taken a break/coming in when ill/whatever. Does this make sense? But I agree it does seem quite close to employment, so IR35 could well be an issue.

I'm thinking I'll just go with Parasol for now then a bit down the line once I've got a better understanding of how things work, I can reconsider... Does this sound reasonable?

Cheers for the help

[Archangel]

the only benefits I'd receive are 14 days holiday + bank holidays

Paid holidays?????? Are you sure this is a contract, and not temporary employment (where they also pay your tax & NI)

[NotAllThere]

yeah yeah, and in the old days you had to type in all the zeroes and ones by hand, and when you ran out of ones you didn't complain, you just made do with all zeroes.

Zeroes? We dreamed of having zeroes. No, we 'ad to move the electrons between the plate and the filaments by hand... etc. ad nauseum.

[newcontractor08]

Thanks very much everyone. Some fantastic advice, I'd have thought everyone was sick of answering this question so it's much appreciated!

Were I confident that I was going to be in a contract role for the foreseeable future, I would certainly go with the Ltd option after having read your input. However, it was suggested to me that there was a good chance of the role becoming permanent - the contract status being portrayed as kind of a formality - almost a prohibitory (is that the word?) period. It's a big company and this is their standard practice with new web developers so I'm not worried that anything dodgy is going on! I'm kind of indifferent, although were I offered it as a permanent role I'd likely take that and the benefits that come with it vs. contract status. Don't have the choice at the second though, just pleased to have got the job

So, bearing in mind that there's a good chance of it becoming a permanent role within the year if I want it to, umbrella co. does seem an easier way to go, although you pointing out the use of the world "could" pisses me off a bit!

A couple more Q's if I may:

1) How easy/difficult is it to change from umbrella co. to limited at any point in the contract, if I do get a taste for the contract lifestyle? Any advice on doing so?

2) I can't be too sure about the IR35 thing, you're right - the only benefits I'd receive are 14 days holiday + bank holidays - I was told by another contractor there that I'd need to get a solicitor involved to make sure the contract was drafted outside of IR35. Say it were to fall inside IR35, am I right to assume that with a "low" (yeah, it seems high to me, lol) value contract, the "take home" amount will be pretty similar with doing it Ltd inside IR35 vs umbrella company?

So much to think about! If a permanent role were on offer, I'd probably just go for that at this point, but hey it's all fun and games and either way I'll be better off than I am now

Cheers

[lambrini_socialist]

If you want to start your own business, go with the Ltd. If you just need a payroll, go with Parasol.

J

nice. that, to me, is the key difference. i wouldn't be starting a company if it was nothing more than a tax vehicle while i continue to live, work and think like an employee.

[Jubber]

£35,000 p/a

At that rate I would be looking to go permie and all the benefits that would go with it.

If you want to start your own business, go with the Ltd. If you just need a payroll, go with Parasol.

J

[original PM]

The one thing to remember is that when you go Ltd you need to ensure you have the relevant insurances in place

They are normally included in the Brollies monthly fee but they will almost definetly not be included in the accountants fees.

You should need
Employers Liability,
Public Liability
Profesional Indemnity

No idea what the cost of these per year is - I am sure someone on here could enlighten us.

You could obviously wing it and not get any insurances - but then that would not make you overly profesional would it??

[lambrini_socialist]

What is it with contractors today?

yeah yeah, and in the old days you had to type in all the zeroes and ones by hand, and when you ran out of ones you didn't complain, you just made do with all zeroes.

[NotAllThere]

What is it with contractors today? What's scary about ltd. When I started contracting there wasn't the www fund of information (all we had was Freelance Informer), and umbrella companies were not widely used - it was ltd. or agency employee.

Perhaps if all brollies were shut down, and ltd. was the only way, there'd be less competition!

[Torran]

yup with your expenses youll be lucky to hit 60% mate. 71% is pie in the sky.

[Alan @ BroomeAffinity]

Umbrella = Convenience (normally)
Own Ltd = More money (normally)

If you can handle a bit of inconvenience, I'd go for your own ltd every time. Yes, there's mroe work involved but at least you can arrange your affairs to favour yourself rather than an anonymous umbrella who are just another company to grab a margin from your income.

[malvolio]

Which is the most cogent summary of why you go Ltd that I've seen for a while.

[lambrini_socialist]

he emailed me over a quote, stating that "You could take home at least £2,066 each month using our service. This is at least 71% of your gross income.
Cheers

hmph. note the word could. i could go home today to find my wife and Sarah Beeny having a naked pillow fight on the bed, but it's unlikely. i've NEVER got better than 70% with Parasol, and that's only when i've claimed plenty of travel + lunch + software expenses. typically i'm getting about 58 - 60%, which is one of the reasons i'm switching to my own Ltd. TBH i wish i'd done this in the first place, but switching from perm to contracting was scary so i went with the "safe" option to start with.

IR35 or not, what it boils down to for me is you can either pay money to Parasol, who in turn will pay accountants to arrange things in Parasol's best interest, or you can spend that money paying your own accountant to act in your best interest.

[williamdavis]

I see what you're saying newcontractor08, working through your own ltd co is a bit more of a pain, especially to begin with. However, I'm guessing on a daily rate like yours of around £140 you'd be taking home approx 80% plus in a combo of salary and dividends.

Check out some of the take home calculators on the net.

For me the extra money comes in handy.

With regards to IR35 get your contract checked out (the PCG have a good check list on their site). Don't assume just because you think like a permie you are actually a permie. What company benefits will your client be providing: holiday pay, sick pay, final salary pension, fully expensed car/mobile phone, laptop etc? I but nothing!

Take home and claim everything you are entitled to, why leave money on the table or even worse pay the revenue more than is absolutely necessary.