Advantages Of Engaging Services Of An Umbrella Company

By Author: Salvatore Andrea
Total Articles: 6261

In a business organization with increasing sales you have to outsource work. However, similar to any other job, people engaged in performing outsourced activities will have to be paid. Hence, this is exactly where the importance of an umbrella company lies. According to the definition it is a company, which acts as an employer to agency contractors who work for a limited period. These companies are generally recruited through an agency. It was only after the British government introduced the “IR35” legislation these companies began to flourish across United Kingdom. The function is to process the time sheets they receive and then send invoices to the concerned client for payment.

The client in this case is the company for whom the contractor works. Business houses often use contractors as there are multiple benefits associated with this process. It allows them to use services of temporary staff without having to share the burden of legal requirements associated with permanent employee. The process is simple as the agency performs the recruitment process and the contractor or the employee completes the work and prepares time sheet. Once the process is over it is time to look into taxation issues.

However, before paying taxes one will have to arrive at the correct profitability figure. Hence, one will have to look into accounting related issues. This is tough, as one will have to have a through idea regarding the taxation laws of any particular country. Hence, it always makes sense to seek professional help. There are many accounting firms who specialize in outsourced accounting and employing their services is the correct way to proceed. Since most of them have online presence, one is at liberty to log into the website and have a peek into everything on offer. Since it is a crucial job one must consider outsourcing the contract to the experienced and reputed names.

These firms play a crucial role in bringing normalcy back to the chaos that is usually prevalent in an office. Then there are firms who are ready to look into book keeping issues. Though not considered an integral part of accounting it is important as it sets up the base to arrive at the correct profitability figure. On most instances umbrella companies use the same payee calculation to arrive at the exact figure. Some of the most common allowable expense is mileage, travel expenses, hotel accommodation, travel expenses and professional subscription. Food or subsistence is rarely allowed to be claimed.