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All About Umbrella Companies
Not many of us are familiar with what an umbrella company actually is. Many don’t know where they could even sign up for one. People still doubt whether or not it is beneficial to take the plunge or not.
So what Really is an Umbrella Company?
Umbrella companies are those companies that provide you with payroll services. This means you are in this a case acting like an individual contractor. Here the work isn’t done by you. Such services can include billing services, submission of expenses to the government bodies and paying National Insurance and PAY tax. The entire concept looks to be quite confusing but isn’t that so startling as you dig in deeper. For the umbrella company, if in case you are working with on behalf of a teaching agency then you are a contractor. As a temporary worker, you get some benefits. The biggest one is that it is possible to make a claim for expenses. To make the most of such an opportunity, become a part of umbrella companies. These companies cater to all the hard-core administrative work.
So how does the Work Flow?
Whenever you do sign up with an umbrella company and an agency, you will be assigned work for a week. Thereafter you have two choices:
1. You can fill out a timesheet and send it to the agency concerned. After this, the agency makes the effort to forward your timesheet to your respective umbrella company.
2. You could also fill out a timesheet and directly submit it to the concerned umbrella company.
After this your umbrella companygenerates your invoice and on your behalf will send it to your agency. After this, your agency makes payments to the umbrella company. Your umbrella company shall make calculations of your weekly pay, taxes and their fee. You as a contractor will also be required to share your expenditure on travel and supplies etc. The umbrella company thereafter will send a payslip and you will be able to get your hard earned money.
The whole concept seems to be much simpler now than what it looked like before. Many people don’t quite know why they will be asked to sign the dotted line with such umbrella companies which will bring us to our next question.
Why is One being Asked to Sign up with such Umbrella Companies?
After you have clearly understood the role and work that the umbrella company actively does, it is questionable why your agency doesn’t do this work themselves and instead chooses to get to outsourced. Well the answer is quite simple. Agencies don’t want to deal with such calculations. Expenses, NI, taxes and processing works requires the knowledge only accountants have Teaching agencies have their hands full already and this work would rather be outsourced than done in-house.
So should One Sign up with such a Company?
This question has great importance but unfortunately has an uncertain answer. Umbrella company topic can soon seem to get a bit more complicated when you can or cannot claim legally of all those expenses. Umbrella companies make a point to claim that teachers supply are able to make their homes into a permanent work area while others speak that teachers work only at school. The main argument comes to down to whether or not teachers can make a claim expense of travel. But it still leaves one stumped as to why these companies still manage to operate. Well this is mainly because legality of such a situation is for the best.
To sum it all up, it isn’t such a piece of cake after all. The question will remain for long whether you should or shouldn’t tie up with such an umbrella company. But if you do plan to join, you will be able to make claims for expenses. This way every week you will earn on the side and this will keep your bank balance afloat. But if indeed one fine day the government does take the initiative to crack the whip at such practises then teachers might have the government officials on their tail for evading tax. The whole concept might seem unnecessary for some agencies but it is always best to get the processing of bills and expenses done from someone else. The work is mucky and it isn’t like teaching agencies have enough free time on their hands. No wonder umbrella companies are flourishing these days and havemanaged to earn a name for them.