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How to Set Up Umbrella Company

How to Set Up Umbrella Company

Hi

I work in IT and have no knowledge of doing taxes. I have been a contractor for sometime and always had to get an umbrella company to do my taxes. and they charge from £20 a week to a lot more......

with my case the wages was the same each week as the hourly rate, and the amount of hours worked never changed.....so it seems easy to me....so it got me thinking what do I need to know and learn to set up my own umbrella company....?

has anyone got any experience on how to set up an umbrella company and specially the tax and wage calculation side of it? I have heard some accountants sends their work to India....I am from India and can always hire an accountant to do some work for me in India....

I'd highly appreciate your help..... any info is welcome as so far I don't have any on setting up this business....

Kindest regards

(the reason I want to set this up is that I have been made redundant many a times and want something on the side to make extra cash...I am willing to put lot of time into it ).....

pp

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27th Mar 2012 16:40

I don't know if you are going to get a lot of help on this site.

... as its populated by accountants who make their living doing what you are asking them to tell you how to do for free!?

 Maybe a more successful approach would be to offer to joint venture with an accountant who would be interested in becoming involved in such a project?

If you do offer a JV, what can you bring to the table?

 

Steve

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By pritlee
Al Mighty
27th Mar 2012 17:01

Umbrella company

Thanks for the reply.....Well I was hoping someone would advise me and share their knowledge and wisdom with me....it's not lile I am going to become their competitor :)

Well what can I offer? I can get a website and telephone number and register a company and ring people and do the advertising so to speak....I am starting from scratch as well and will be charging a bit less then what other charge just to attract people..... can get an accountant in India to take some of the load off the accountant here (is it possible to outsource some accounting work to India?).....but as I don't know the work involved don't know what I can outsource and what I can do myself here.... the thing is once we get talking and I learn how to do some of the stuff I can do it myself so some more load off the accountant ......

Not sure what else to say as I do not know what kind of work is envolved.....

I hope some more accountants will come forward to help....

thanks once again Steve McQueen..

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By occca
27th Mar 2012 18:01

Stick to what you do best

I think you should stick to what you do best and let accountants do their job.  It's not as easy as just setting it up and doing a few calculations.

 

I agree with Steve, you are unlikely to get the help you require on here.  We all studied for many years to get to this point, so it's not something we can just tell you in a post.

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By pritlee
28th Mar 2012 08:54

thanks

I see

well no problem and thanks for replying to my message.....

in case some accountant decide he/she won't mind helping I'd appreciate it..... I promise I will not take over the accountant world and it's not like I want to do things that only the accountant can do it just I was after some help/guidance..... I am sure someone helped them when they were starting up..... (not having a go or anything by the way:)

have a nice day

 

pp

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28th Mar 2012 13:23

A lot more to it...

Accountax Consulting used to advise people how to set up umbrella companies correctly, I assume they still offer this advice. It won't be cheap but there is a considerable amount for you to understand before going into this area to ensure you don't get saddled with a significant personal liability or inflict the same on other people/companies.

Personally, I think you are massively underestimating what is involved and the knowledge you will need to enter into this area.

If you are looking at working with limited company contractors, I wouldn't as this creates a significant MSC risk for everyone in the contractual chain (unless you providing accountancy services only - in which case your question should be how to set up an accountancy practice, not umbrella). If you are looking at a PAYE umbrella route you may want to start of reading:

The MSC legislation and understanding why umbrellla's may/may not be caught and the consequences of this legislation (if you are not operating perfectly).Employment legislation, rights, benefits, case law etc. The individuals will be employees of your company and you will have to have up to date and accurate knowledge.Expenses legislation and case law so that you have a detailed knowledge of what expenses could genuinely be claimed by an employee.Agency legislation, your business cannot fall within this legislation otherwise you will be hit with a unthinkable liability.I would read the Reed Employment v HMRC case that was publised this year as that may be an eye opener for you.You will also need to understand how the change in pensions will affect an umbrella and the way it calulates pay.The calculation of the individuals pay and their pay slip has be perfect to ensure you do not get claims for unlawful deductions. holiday pay  or a NMW enquiry. You will have to have a crystal clear understanding of the Agency Workers Directive and how you will operate in light of this.Right to work in the UK and ID checks

These are just the most obvious things that spring to mind and you will need to have a solid grasp of these points before you realistically consider going into this business.

This is putting to one side many commercial points such as why would an agency contract with you when there are hundreds of umbrellas. Your new company will have no credit history, your knowledge in this area will be very limited compared to your competitors, some agencies want kickbacks which you cannot offer if you charge a discounted rate. Unfortunatly some umbrella's operate badly an cut a number of cornders meaning you will never be able to compete with them assuming you want to operate correctly. You will need insurance to cover the services provided which does not come cheap - the list goes on.

The only thing of substance you appear to be offering an accountant for a joint venture is sales - Instead of starting your own umbrella, I would consider simply going to an umbrella and offering your self-employed sales services on a commission only basis first so that you get a better understanding of the market and whats involved before jumping in at the deep end and wasting your time, money and energy on this.

Kye

 

 

 

 

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28th Mar 2012 15:30

Well said Kye...

You took the time to say what I didn't have the enegry to say :-)

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By riksti
28th Mar 2012 15:31

As a comparison

I think you might not understand how much you're asking. The equivalent in programming terms (as I don't know what sort of IT contractor you are) would be to ask 'I know nothing about programming. Can you please explain to me how to program in C++?'

I think you'd agree that it's practically impossible to explain that in an internet forum.

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By pritlee
30th Mar 2012 07:57

thanks

Hi Guys

 

thanks Kye for your info and advise......

I will not work with limited compaies as all the contractors I know who work as a limited company have their own accountant and pay them a set yarly/monthly fee to check their stuff...

I only want to work with PAYE contractors.... from your info I gather it'd be best to get an accountant on board...i have started looking for an account who may be interested in a business venture

thanks a lot guys

Kind regards

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