Advice on sourcing an agency - limited company - umbrella - contractor
Advice on sourcing an agency - limited company - umbrella - contractor
(OP)
I have been offered a short-term contract with a company (environmental engineering) I have worked for in the past.
My employer has advised me to find a suitable agency to act as the middle man.
So far I have found an industry specialised agency that does not deduct PAYE tax Student Loan etc. and therefore I'd need to
1. Pay an "umbrella" ltd co a small weekly fee to take care of deductions.
2. Set up my own limited company and increase earnings if done properly?
Having not dealt with agencies before I had assumed they normally take care of these deductions.
On Monday I will enquire with another specialised agency that can apparently take care of deductions.
I am keen to learn and if there is financial benefit I don't mind doing some leg-work. On the other hand short-term means 1-3 months, after which I could be looking for permanent employment.
What would you do and why?
Thanks





RE: Advice on sourcing an agency - limited company - umbrella - contractor
I am in Florida, USA
On my last gig (also short time) I chose "LBO" (Legal Benefits Only) contract direct with the company (their suggestion).
LBO means that I set my rate and they deduct and pay:
- Federal Income Tax
- Social Security Tax
- Medicare Tax
That's all
RE: Advice on sourcing an agency - limited company - umbrella - contractor
RE: Advice on sourcing an agency - limited company - umbrella - contractor
Salary deductions as follows:
Income Tax
Student Loan
National Insurance
RE: Advice on sourcing an agency - limited company - umbrella - contractor
If you are capable of consulting and that is your long term plan, just set up your own company. Why pay someone just to make deduction and take a % of your money?. I would rather pay (much less) to an accountant.
Not sure of exact laws in the UK (I am sure in weekdays, members from UK will chime in). It could not be too hard or expensive. You will need professional insurance though.
If this is just a one off gig, and you would rather work for someone than this may not be worth the head ache or risk.
RE: Advice on sourcing an agency - limited company - umbrella - contractor
If you know that it's going to be a short term thing then go for the umbrella company route, however i would also suggest that you look at the professional contractors group website for the various start-up guidance documents.
http://www.pcgroup.org.uk/cms/index.php
and in particular the "guide to freelancing" which may be able to answer the questions you've asked and probably some more that you haven't thought of!
Also have a look in the library section of the website for information about Managed Service Companies (agencies) and what you should be looking for.
I would only go for your own limited company if you think that contracting is for you in the long term as there is an overhead of start-up costs, accounting, VAT (depending what your anticipated turnover is although the flat-rate scheme is fairly straight forward) etc.
One word of warning though, you say this company is one you've worked for in the past - is this your last employer i.e. have you just left them? In which case if you are now proposing doing contract work for them you need to be very careful that you don't fall under the IR35 legislation. If it's the case that they are several employers ago you still need to be careful but it's not such a big issue as long as you follow some sensible precautions in the contract stage. Again the PCG website has some guidance on this.
Hope things go well for you, HM
No more things should be presumed to exist than are absolutely necessary - William of Occam
RE: Advice on sourcing an agency - limited company - umbrella - contractor
regards, HM
No more things should be presumed to exist than are absolutely necessary - William of Occam
RE: Advice on sourcing an agency - limited company - umbrella - contractor
There have been some on the U.S. side that complained bitterly about not having direct deduction. I would complain more bitterly about not having direct control of my money.
RE: Advice on sourcing an agency - limited company - umbrella - contractor
RE: Advice on sourcing an agency - limited company - umbrella - contractor
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