Private Limited Company Vs Umbrella Company Director : Which Option To Choose ?
If you have ever had any confusion around these two topics and often asked yourself or others, “What is an Umbrella Company”, “how does it operates”, “which is a better option for me”, well then let us tell you that you are not alone and we will answer all these questions in the blog below.
Before assessing the benefits of both, let us understand them briefly:
An Umbrella company is a company that has already been set up. So it has a bank account, and necessary tax filings as per the Irish Law. There is no entry or exit fees. You will be made a director/shareholder of one of these companies. At any given moment, up to six different contractors may use it. You would not have to engage in any paperwork as Shelbourne Accountants takes care of it entirely. You can join and leave this company at your own ease, hence giving you the flexibility as a contractor. With regards to your earnings, we get in touch with your employer and transfer it in your own account, on a monthly/weekly basis as a salary at a certain fee*
A Private Limited Company, is a distinct legal entity. You continue to do business utilizing the Limited Company’s legal business structure as individual Contractors. Your classification will be as a Proprietary Director. Your employer is billed by the company, and you get payment in the business bank account. This money belongs to the company. The business then spends this cash on activities like paying salaries to yourself, making pension contributions and paying off other expenses.
As a company director you have to to create and submit yearly financial reports to the Companies Registration Office, file tax returns, and make sure the business is sustainable.
Once we receive all the necessary information from you, forming a limited company only takes a few days, however obtaining tax registrations from the Revenue Commissioners can frequently take up to six weeks. Before you obtain a VAT number, you cannot send invoices to your customers. Additionally, you must create a business bank account.
If in the future, you would not like to contract and shut down the company, then you would have to legally wind up the company as well.
While both options give you a limited liability, it is important to understand which suits your need the best by taking the following factors into consideration :
Shelbourne Accountants can assist you with both the services and provide some exclusive benefits such as the allocation of a personal account manager to handle your queries, an online app for all your financial documents and an exclusive health and benefits service for the contractors. This and much more when you decide to get onboard.
*The fees for Company Formation is €149 + VAT and we can further assist you with the Tax registrations, monthly bookkeeping, payroll, tax returns and much more. You can order the service online here at: https://www.shelbourneaccountants.ie/company-formation-page
*The fees for Umbrella Company Director is €125 + VAT per month (please note this is fully tax deductible). You can order the service online here at: https://www.shelbourneaccountants.ie/
