What should I consider when deciding to use a payroll company?
If you are new to contracting or a seasoned interim professional, there will be a lot of questions and getting sound advice will be invaluable. With the implementation of IR35 in April 2021 you will need to agree with your client if your assignment sits inside or outside of IR35 legislation amongst other considerations on whether to use an umbrella company or not.
Are you a contractor that does not want to operate within a Limited Company?
Some contractors do not want to set up a Limited Company and abide by the regulations that this brings along with the paperwork and administrative overhead of running a Limited Company. Once a Limited company is set up you will need to ensure the rigid timescales are adhered to in terms of submitting company documentations and filing returns on time. Some contractors also do not want their financial information to be publicly accessible.
Will your assignments typically operate inside the IR35 legislation?
If you work for companies that employ more than 50 people and turnover more than £10 million per year it is likely that your assignment will sit inside of IR35. Where a company employs many contractors’ as part of their business model, they may take a blanket approach of ensuring all contracts sit within IR35. Using an umbrella/payroll company is the best way to satisfy your client that you are fully compliant.
Are you a contractor will take on multiple concurrent assignments?
Some contractors take on more than one assignment simultaneously, this can lead to complications if you are using more than one PAYE system and can have an impact on your tax code as you will be perceived to have several employers. A payroll/umbrella company will be your sole employer irrespective of how many contracts you are servicing at any one time.
Is this your first contract role?
An interim career is not for everybody, many people like the freedom of being their own boss and choosing who and where they work. If you have taken the step to move into a contracting career a managed payroll company is an ideal way to operate while you decide if this is the right path for you and gives you the time to assess your options in terms of how you structure your finances.
