For the typical contractor, striking a good work-life balance can be tricky. After all, not only do you have to manage the contract at hand, but you also have to win work, negotiate with the client, deal with finances, file tax returns, and run a business. That can make finding time to take a break and switch off increasingly difficult.
However, every contractor knows that taking time off and enjoying downtime is key to being productive and refreshed at work.
To help, in this guide, Umbrella Search has put together our guide on how using an umbrella company can help to boost your work-life balance, to help you enjoy more of your valuable downtime.
Taking care of finances
One of the many benefits of using an umbrella company is that they take care of finances and taxes for you.
Whereas a limited company contractor must spend time invoicing the client and dealing with cash flow management, an umbrella company will take on this task for the contractor. The contractor simply informs the umbrella company of hours worked and the umbrella company will take care of the rest.
Not only do they take care of invoicing and getting paid, but the umbrella company will also then deal with taxes.
A limited company contractor has to file a self-assessment tax return, as well as a company corporation tax return and annual company accounts. These can be complex and mean that most contractors end up using the services of an accountant, which comes in at an extra cost of around £2000+ per year.
Or, if the contractor decides to become an employee of their limited company, they must run a company payroll and ensure correct levels of tax and National Insurance are paid to HMRC. These can all be tricky and time-consuming tasks.
An umbrella company takes this all off the contractor's plate, however.
The umbrella company puts the contractor on their own payroll. This means that they receive the money from the end-client, process it on the payroll, ensuring all correct funds are paid to HMRC for tax and National Insurance, before paying the contractor what they are owed.
This means that all of your finances and taxes are taken care of without any input required from the contractor, freeing up lots of your precious time to focus on other things.
Paperwork and admin
As well as dealing with finances and taxes, the umbrella company will also take paperwork and admin off the contractor's hands.
Naturally, contracting brings with it a level of administration, such as invoicing, expense claims, negoatiating the contract with the client amongst other things.
What's more, a limited company contractor must also deal with all the paperwork and admin that comes with running a company, such as filing an annual confirmation statement.
The good news for umbrella company contractors is that the umbrella company will take on all these administrative tasks on your behalf, again freeing up more of your well-earned time off.
Providing security
Many contractors enjoy the freedom and flexibility that contracting brings, however many would also enjoy a greater level of security which isn't afforded with this type of work.
That's where an umbrella company comes in.
An umbrella company ensures that you are paid a regular salary each month, so you always know your cash flow is in check.
This means you will receive holiday pay with a minimum of 28 days per year, sick pay if you are too ill to work, and maternity/paternity leave.
Knowing that your cashflow is predictable and you will be paid in instances where you can't work means less stress for contractors, allowing you to fully switch off during those moments of downtime.
Insurance sorted
Another task that every contractor must deal with is sorting out insurance. After all, certain types of insurance are a legal requirement in order to carry out the contract at hand.
For example, every contractor must have professional indemnity insurance and employer's liability insurance by law, and most will be expected by the client to have public liability insurance if they have to work with the public or on-site.
Some contractors will also be expected to have other types of insurance, depending on their sector and line of work.
A limited company contractor must sort out and secure all these types of insurance and check any other coverage they may need to carry out the contract at hand.
The great news for contractors using an umbrella company, however, is that they will ensure this is all sorted for the contractor. They will provide the contractor with the insurance needed to be legally compliant, meaning one less thing for you to worry about.
Easier transitions between contracts
The nature of contracting means that contractors can often take on several contracts within a year.
Every time you take on a new contract, a new contract must be drawn up, negotiations occur with the client, payments must be set up and there's a lot of paperwork to deal with.
Using an umbrella company means they take care of this on the contractor's behalf. This means that if you are a contractor that works on several contracts throughout the year, you will free up a lot more of your time.
Considering an umbrella company to promote a between work-life balance going into 2025?
As we approach 2025, if you think the new year is a great time to prioritise a better work-life balance, then using an umbrella company could be a great way to go.
An umbrella company takes care of all of the complex and time-consuming tasks that come as part of contracting, giving you more time to focus on downtime and your well-being.
To take the first steps towards finding an umbrella company, just get in touch with the Umbrella Search team today and see how we can help match you with the perfect provider.
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