Being a contractor can be rewarding both financially and in terms of overall job satisfaction. Many chose this route, rather than being a conventional permanent employee, because they

• enjoy working for different organisations
• like meeting a wide range of people
• continuously develop their skills set

In turn this makes them a more sellable commodity and able to command a higher daily or hourly rate.

You'll benefit enormously if you can develop two key relationships, from the outset. One of the most important partners you'll need whilst forging your contracting career is your recruitment agent. Much maligned and often criticised the poor old agent actually does plenty behind the scenes, and works very hard for the contractors on their books. You don't have to become bosom buddies but you do need that mutual respect. You need to be confident your agent will secure you suitable work at maximum rate, with little or no break between contracts. Your agent meanwhile has to have confidence in your ability to be able to fulfil the contract, whilst at the same time interacting with the end-client in a professional and business like manner.

The second important partnership you'll profit from is having a good team of people sorting out your back-office. Someone to do all your paperwork, fill out forms, talk to the authorities (HMRC) and ensure you're paid as quickly as the process will allow. Also, in order to work legitimately you must be employed by a limited company that is registered for PAYE with HM Revenue and Customs.

You could setup your own limited company and run things yourself. It sounds grand and you can call yourself a director, but do you really want to fill in forms and complete statutory returns after a full days work? Most people would prefer not to - given a choice.

This is where an Umbrella company comes in. It gives you that choice. It's like an off-the-shelf solution which comes ready to use and has everything you need all under one roof. Plug ‘n Play, Chip ‘n Pin, Wash ‘n Go.

And it all works - without you having to understand spreadsheets, payroll, contractual issues and an awful lot more.

Unfortunately, the government believes freelance contractors have, previously, been guilty of not paying their fair share of tax & NI. So they have introduced a mass of complex legislation over the past few years affecting this industry and limiting the ways in which you can work as a freelance contractor. The days of ‘cash in hand' have long gone.

In order to work legitimately you must be employed by a limited company that is registered for PAYE with HM Revenue and Customs.

Register for free with an 'employment management company', also known as an Umbrella company

or

Set up and run a limited company and accept the additional work that comes with doing it yourself.

Working through a legitimate Umbrella company is the safest & easiest way to be a freelance contractor. If an assignment is caught by IR35 legislation an Umbrella company will always be the best way. Good Umbrella companies will give you the following:

Employment Protection. An Umbrella company provides employment to you in much the same way as any other business that employs staff. You have a Contract of Employment under the Employment Rights Act 1996 which grants you full employment rights & statutory protection.

Overarching Contract. Your contract of employment is drawn up on the basis that you become a permanent employee in the expectation that you will be working for the Umbrella company on a number of contracts/assignments. Your permanent workplace will normally be your home which you will use as a base to complete your paperwork, search for new contracts, and travel to the various temporary workplaces that you need to attend to fulfil your contract. You are able to claim business travel (mileage, subsistence & accommodation) from home to your temporary workplace(s).

Insurance. As an employee you are normally covered by the Umbrella company's group insurance cover (employers' liability, public liability & professional liability).

Paperwork. The real advantage of working for an Umbrella company is they provide a simple means of employment for those who don't want the hassle and burdens of running their own limited company. Your Umbrella company looks after all the day-to-day administration: contracts, assignments, invoicing, credit control, expenses, payroll and deal with all statutory matters from company law to PAYE; from employment law to IR35; and, from national minimum wage to the working time directive.

Peace of Mind. Umbrella companies offer a proven, compliant and comprehensive service which will be supported by a team of taxation, HR, legal, accounting, administrative and customer support staff.

Working for an Umbrella company means you can focus on your assignment. All you need do is:

1. Get your timesheet signed off by the client and

2. Collect and keep receipts for any business expenses you have incurred

The Umbrella company does the rest.

Umbrella Supermarket members can save £££s, check out our special offers and save on your processing fees.

• You become an employee of an Umbrella company
• The Umbrella company provides you with full employment rights through an overarching contract of employment
• You are covered by the Umbrella company's insurance policies for Employer and Public Liability Insurance & Professional Indemnity Insurance
• You'll be expected to remain an employee of the Umbrella company and work on successive assignments with them
• The Umbrella company take full responsibility for, PAYE, National Insurance payments, VAT, and all corporate and statutory reporting
• The contracts (or assignments) for your services are entered into by the Umbrella company and they take responsibility for all contractual matters
• Between contracts your Umbrella company should support you in getting new contracts.

• Registration normally takes a few minutes and can be done over the phone or online (if your chosen Umbrella company has that facility)
• The Umbrella company contact your agency/client and enter into a contract on your behalf for your services
• The Umbrella company send you a contract, and details of your assignment
• You sign and return any forms, and give the Umbrella company your P45
• The Umbrella company will give you a call to make sure you understand everything that's going on.

• Put the details of your Timesheet and Expenses on your portal or send them to your Umbrella company
• Send in receipts if required
• The Umbrella company will invoice your Agency/Client
• The Umbrella company will receive money from your Agency/Client
• The Umbrella company will process your salary and send you the money
• Your payslip will be sent to you
• Your net salary will be transferred into your personal bank account
• At the end of the tax year, normally around May, the Umbrella company will provide you with a P60 confirming your pay & tax over the past year.