Reply to: Open your own umbrella

[northernladuk]

What did your brolly say?

[northernladuk]

Harsh is fine, for me, it's a place to bounce back ideas and see if one can work through to get some more out of an Inside IR35 contract.

Thanks for your help folks, and being patient!

There are about three quarters of a million contractors trying to get more out of inside contracts. It's gonna take something very special and very clever to do it and no one has so far.

[coolestchip]

Harsh is fine, for me, it's a place to bounce back ideas and see if one can work through to get some more out of an Inside IR35 contract.

Thanks for your help folks, and being patient!

[northernladuk]

I understand where you are coming from, but as you said many agencies will not accept that without specific compliance requirements.

Setting up an umbrella requires a lot of in depth work, from contracts with consideration of employment / B2B / tax law, software requirements, pension arrangements, insurances (which agencies will want with bare minimums that are over the million mark, the bigger ones asking for at least £10m) to name but a few, seems excessive if you are only looking to do this as a consultancy. For it work you would have to be paid normally as a PAYE umbrella, charging yourself a margin for the payroll process which then has to cover the costs of the business, leaving very little company profit (unless your contractro numbers are high). Having started an umbrella from scratch, with experience in the industry, it was a hard slog to say the least. Also as a heads up a lot of the agency contracts will not allow for a director to be an employee / contractor through the umbrella either.

His model is fundamentally flawed so the umbrella question is now moot.

[northernladuk]

Hence my original question.

It’s times like these that you look at post history to see what happened in the past.

Yup. You nailed it. Your first question was the end of this thread. OP doesn't know it but it was.

[lucyclarityumbrella]

I understand where you are coming from, but as you said many agencies will not accept that without specific compliance requirements.

Setting up an umbrella requires a lot of in depth work, from contracts with consideration of employment / B2B / tax law, software requirements, pension arrangements, insurances (which agencies will want with bare minimums that are over the million mark, the bigger ones asking for at least £10m) to name but a few, seems excessive if you are only looking to do this as a consultancy. For it work you would have to be paid normally as a PAYE umbrella, charging yourself a margin for the payroll process which then has to cover the costs of the business, leaving very little company profit (unless your contractro numbers are high). Having started an umbrella from scratch, with experience in the industry, it was a hard slog to say the least. Also as a heads up a lot of the agency contracts will not allow for a director to be an employee / contractor through the umbrella either.

[northernladuk]

Open a startup in the technical consultancy field that I specialise in (like a Ltd. Company). Now, if this company pays me like an umbrella does (cutting all taxes, paying NIs etc.) and I can prove that to the agency, then ideally this company can sign the contract. What that does is gives revenue to this company, which can tomorrow be seen in a positive light when I'll be going for fund raise etc.
Going via a 3rd party umbrella unit, I cannot show revenue for the company.

But I guess the key there is to convince the agency to accept you - which I have very less confidence given my agency is a goliath and would not do so. So thanks everyone again. In-case I find a way through, or more ideas to make this happen, I'll report back here !

There is so much wrong with that I have no idea where to start. Sorry to be harsh but to say you don't have a clue what you are doing is giving you way more credit that you deserve. I dont' think I've ever seen anything like it

[fabios]

Thanks folks for all your replies.
Open a startup in the technical consultancy field that I specialise in (like a Ltd. Company). Now, if this company pays me like an umbrella does (cutting all taxes, paying NIs etc.) and I can prove that to the agency, then ideally this company can sign the contract. What that does is gives revenue to this company, which can tomorrow be seen in a positive light when I'll be going for fund raise etc.
Going via a 3rd party umbrella unit, I cannot show revenue for the company.

In my recent assignment I had to answer lot of questions checking if there is any relation between myself and the umbrella, e.g. whether it's not run by my Mrs or myself.

[coolestchip]

Thanks folks for all your replies.

I think i have my answer, which is a resounding NO!
Just to clarify, what I intended to do was this ->

Open a startup in the technical consultancy field that I specialise in (like a Ltd. Company). Now, if this company pays me like an umbrella does (cutting all taxes, paying NIs etc.) and I can prove that to the agency, then ideally this company can sign the contract. What that does is gives revenue to this company, which can tomorrow be seen in a positive light when I'll be going for fund raise etc.
Going via a 3rd party umbrella unit, I cannot show revenue for the company.

But I guess the key there is to convince the agency to accept you - which I have very less confidence given my agency is a goliath and would not do so. So thanks everyone again. In-case I find a way through, or more ideas to make this happen, I'll report back here !

[cojak]

coolestchip give me a shout and I can talk you through it, you dont open up an umbrella company per-se, but we cna get you set up to work through us

Smooth, very smooth…

[lucyclarityumbrella]

Lucy - if you can see this, do advise. I'll be happy to take your services to open this up and manage it.

coolestchip give me a shout and I can talk you through it, you dont open up an umbrella company per-se, but we can get you set up to work through us

[WTFH]

I am seriously thinking you don't even know how a proper LTD works let alone an umbrella. You might but you certainly aren't convincing us.

Hence my original question.

It’s times like these that you look at post history to see what happened in the past.

[northernladuk]

Ok,

I agree that there would be some more fees involved and more hassle. I don't want the FCSA approval etc, as I'm not looking for umbrella to be successful as an umbrella company. For me, the benefit was that this new company gets to establish itself in the field of work - that's it. And if I have to pay slightly more for it, that's ok and that's a personal call.

I have no idea what that means? You want to start up an umbrella company to become a specialist in the field and have a side hussle but you don't want it to be successful as an umbrella company?? You do need FCSA approval as you aren't going to get any business otherwise. You certainly won't get any agents to use you. You seem to think this is easy and as I say if it was we'd all be doing it. Its hard enough starting IT consultancies are we are IT people let alone break in to employement and HR. What do you even know about the legals of employment? How can you start a company if you don't?

There is a slight difference between limited and doing like this. Under limited company, you don't normally pay yourself PAYE etc. under umbrella one would pay normally (like an employee etc.) Maybe I'm again sounding like a noob on this, but I still feel this is a good option.

You most certainly are sounding like a noob. Of course you can pay yourself PAYE under a ltd. You have to do it even if you are on an outside gig. Well don't have to but generally if you are running high div's low salary you do. What you can't do is get paid by an agent as they don't want to deal with a LTD for inside IR35 work. There is a risk to them if you don't pay your taxes so they will only go through a bone fide umbrella.

I am seriously thinking you don't even know how a proper LTD works let alone an umbrella. You might but you certainly aren't convincing us.

I think you might need to be more clear on what you are trying to achieve, or it's just me that can't see it in which case you might want to wait for someone a bit smarter than me.

Lucy - if you can see this, do advise. I'll be happy to take your services to open this up and manage it.

lucyclarityumbrella could you give this chump your company so they can open it up and manage it please

[coolestchip]

Ok,

I agree that there would be some more fees involved and more hassle. I don't want the FCSA approval etc, as I'm not looking for umbrella to be successful as an umbrella company. For me, the benefit was that this new company gets to establish itself in the field of work - that's it. And if I have to pay slightly more for it, that's ok and that's a personal call.

There is a slight difference between limited and doing like this. Under limited company, you don't normally pay yourself PAYE etc. under umbrella one would pay normally (like an employee etc.) Maybe I'm again sounding like a noob on this, but I still feel this is a good option.

Lucy - if you can see this, do advise. I'll be happy to take your services to open this up and manage it.

[northernladuk]

Hi Folks,

I did search this forum, and a lot of others, but really didn't find anything on this topic. Starting to feel that this is already a rubbish idea, or my situation is very different.

I wanted to explore if I could open an umbrella company by myself. I have looked at various Payroll softwares, and also at insurances - and total costs of these is within what an umbrella charges (for 1 person). So cost wise, this is ok (or so it seems).
What I really gain from it - is that the company can establish itself in the field of work that I do - maybe even to the extent saying that my client is that company's client. This gives the company some standing which can improve over the number of years.
My hope is that I could slowly become a consultancy firm which specialises in this area, and the umbrella part is just a side business (or a necessary thing when your clients want IR35 compliance).

Please can someone tell/ guide me if I'm making any sense at all, and if there is help around the internet to get this sorted and done.
How I would convince my recruitment agency to accept my own umbrella, and potentially HMRC too, I'm still to figure those two out.

No chance. I don't know how you get all the payroll software and insurances within the rate a large company pays. And there will be a lot more to it than that. What do you know about HR and all the legals around employment? Not a lot I reckon, so it's not just the cost of stuff you need to contend with.

If it were that easy every man and dog would be doing it. Lucy at Clarity is one of the most respected Umbrella types around and she's worked her bloody nuts off to Clarity off the ground so I am absolutely certain someone that has to come ask how to start cant do it.

How would you convince a recruitment agent to accept it? Pay about 20k to FCSA, shake a lot of hands and get pally with the top dogs for a year or two and once you are a full member then you can go approach the agencies. Expect them to ask for about 50% of your income as kick back for every person they put through you and you might get on. The fact there are only 5 or 6 on each PSL and they are the very big guys tells you this is never, ever going to happen.

Terrible idea.