How does an Umbrella
Company work?
An umbrella company acts as the employer for contractors and freelancers working on fixed term contracts. The umbrella company will provide the services of the contractor to the agency/end client.
The contractor will supply their timesheets and expense claims. The umbrella will use the information to collect the contractors earnings from the agency/end client. The umbrella company will then pay the Tax and NI contributions and make any other deductions such as pension contributions and student loan repayments. This means the contractor is paid PAYE just like a full time employee.
As an employee of an umbrella, contractors have certain employee rights such as full statutory benefits including holiday pay and sick pay. Professional indemnity, public and employer’s liability insurance are all included within the umbrella company’s services.
Why work through an Umbrella Company?
One of the main reasons contractors choose to use an umbrella company is the freedom. Umbrella companies will not tell contractors which assignments to accept. Contractors have the freedom to pick and choose their contracts, and work on multiple assignments for different end clients and still get paid under one employment.
For contractors it also makes good business and financial sense to outsource the tasks that aren’t a strategic priority. Umbrella companies take on the administration burden, providing contractors with the additional freedom to enjoy their free time.
Additionally many contracts could be caught inside IR35. For these contractors it makes sense to work under an umbrella company.
Why choose
Red Opus?
Unparalleled Service
We understand contracting can be stressful. We aim to provide an unbeatable level service and make life easy.
Simple, Compliant Payroll
Submit your timesheets and we take care of everything else for you. We will liaise with your agency/end client and ensure you’re paid correctly.
Employment benefits and insurances
You will have one employer regardless of the number of assignments/agencies you work with.
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