Category: Accounting

If you want to continue to work as a self employed or freelance contractor, it is a good idea, if you have not done so already, liaising with a contractor umbrella company to make use of the payroll services offered by these companies. Not only will you get CIS payroll benefits (if you are in construction), but you will have a higher level of stability this way, which is especially valuable at the moment. Even in hard times it is still desirable to be self employed, provided that there is enough work available.

One reason for this is that self employed traders are often required to pay less in national insurance contributions to HM Revenue & Customs. Another is that by being self employed you can to offset your work-related expenditure against the income tax that you owe on your earnings. On top of that, of course, you have the final say over what contracts you take on, or decline to take on, which can be important, especially to freelancers with more than one profession: if times are good in a contractor’s main profession, he or she might reject contracts in his or her secondary profession until there is a lull in trade in the first. In other words, self employment is a fine way to attach new strings to your bow.

Freelancers and sole traders from a whole range of different industries make use of the services offered by contractor umbrella companies. Whether you work in logistics, construction, teaching, Information Technology Services, or even social care, making use of payroll services can increase your earning potential and save you money at the same time. In addition, it can simplify the complicated procedure of ensuring that you are CIS compliant, according to the rules and regulations of HM Revenue & Customs.

A contractor umbrella company can provide experienced freelance contractors to its clients at short notice, enabling these clients to temporarily boost their staff numbers in order to complete projects, without all of the associated hassles that they get with fixed term employees, such as sick pay, NI, maternity or paternity leave, and so on. In the construction industry, however, all payments made to sub contractors must be made in compliance with the Construction Industry Scheme regulations (cis payroll). Umbrella companies can provide payroll services to sole traders, pending a successful registration process, verifying, among other things, the sub contractor’s eligibility to work in the UK. They will have a system in place to process payments between themselves, their clients, and their sub contractors.

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If you are a sub contractor, working under a contractor umbrella, you should consider making use of payroll services, because they can enable you to retain your status as a self employed contractor, while helping you to ensure that you stay compliant to HM Revenue & Customs cis payroll rules and regulations.

As a sole trader, it can be important to you to retain your status as self employed. Reasons for this might be that you are obligated to pay less money in National Insurance contributions, and the ability to reduce the costs of your livelihood by offsetting expenditures against your tax liability when it comes to completing and filing your Self Assessment Tax return. And of course, you are free to accept or turn down contracts as you choose. Not that you will definitely be in a position to turn down work; nobody is denying that, especially now in uncertain economic times, this can be a precarious position to be in. This is where contractor umbrella companies come in.

Whether you work in the public or the commercial sector, or both, it is worth registering with an umbrella. You will need to get some paperwork out of the way first, as follows: you will definitely need to request application forms, fill them in and send them. It is probable that this can be done electronically – i.e. you will be able to download an editable PDF of the form, fill it in on the computer, and email it back with no paper involved – but in order to obtain the form in the first place you will have to register your email address with the umbrella. They will need to make sure of your eligibility to work in the UK before you can start sub contracting for them.

The process for your payments is as follows: you will need to log your hours as well as your hourly rates on a timesheet – again, in most cases this is nowadays done on an online interface on the contractor umbrella’s website – on a weekly, or monthly, basis. Then they will send an invoice to the client, who will be asked to approve it before paying the invoice. Then, upon receipt of payment, the appropriate amount of money will be paid to your bank account. With these payroll services you can fully expect to be paid on time every time: as a self employed contractor this may be something you are not used to! You will stay self employed and enjoy the associated freedoms and savings. Also, your payroll process will be compliant with HM Revenue & Customs cis payroll regulations.

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