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Umbrella or Limited Company

UMBRELLA (VS LIMITED WHICH TRADING STRUCTURE SUITS YOU? EARNINGS POTENTIAL Higher take home pay compared to Agency PAYE, but significantly less tax efficient than a Limited Most tax efficient option for contractors - you get to keep more of your contracting income. Company. PAPERWORK / ADMIN Little admin to do, you simply submit timesheets and log your You are responsible for making sure your paperwork is in order and your accounts are submitted. expenses online. You can outsource this to an accountant. HOW DOES IT WORK? Client pays the Umbrella company and the Umbrella You are responsible for invoicing and managing the company bank account. The client pays your company How DOES IT WORK ? company pays you. If the Umbrella fails, you are unlikely to receive funds. direct. You can outsource bookkeeping to an accountant. HOW IS TAX CALCULATED? Tax and NI is calculated and You are free to choose the most deducted on a PAYE basis for tax efficient mix of salary and all Contracting income. dividends. UMBRELLA COMPANY LIMITED COMPANY Ideally suited for Contractors who: Ideally suited for Contractors who: EARN £15 PER HOUR OR LESS EARN MORE THAN £15 PER HOUR ARE ON SHORT-TERM PLAN TO BE CONTRACTING MORE CONTRACTS (LESS THAN 6 MONTHS) THAN 6 MONTHS DON'T WANT THE HASSLE OF ARE HAPPY TO DO THE ADMIN OR PAPERWORK OUTSOURCE IT TO AN ACCOUNTANT EXAMPLE INCOME ILLUSTRATION AT £300 PER DAY UMBRELLA COMPANY LIMITED COMPANY Contract Value Retained £41, 500 Contract Value Retained £57, 221 Contract Percentage Retained 60% Contract Percentage Retained * 83% 60% 83% EXAMPLE INCOME ILLUSTRATION AT £500 PER DAY UMBRELLA COMPANY LIMITED COMPANY Contract Value Retained £64, 500 Contract Value Retained £90, 701 Contract Percentage Retained 56% Contract Percentage Retained * 79% 56% 79% * Your personal income percentage will depend on a number of factors including the amount of expenses you incur. Created by Freestyle Accounting " Limited Company Contracting Made Easy! " www.freestyleaccounting.com freestyle accounting

Umbrella or Limited Company

shared by richard11 on Dec 11
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This infographic details, in a very simple format, the differences between contracting under an umbrella company or as a limited company. The graphic compares potential earnings, looks at the paperw...

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