Umbrella Day Special: A Breakdown of Umbrella Company Solutions

Curious about how an umbrella company works? You’re in the right place! Welcome to our Umbrella Day Special, where we uncover the intricacies of umbrella company solutions—ideal for first-time contractors stepping into the independent workforce. Discover the available options, understand the setup process, and learn how payments are efficiently managed through these solutions.

Understanding the Setup Process

Umbrella companies provide a seamless framework for new contractors, enabling you to get started with minimal effort. Here’s how it all comes together:

No Need to Register a Company Name

One of the main advantages of using an umbrella company is that you don’t need to go through the hassle of registering a company name. The structure is pre-incorporated, allowing you to focus on your work rather than administrative formalities.

Bank Account Setup

Worried about setting up a business bank account? There’s no need! When contracting via an umbrella company, payments can be processed directly into your personal account, eliminating the requirement for a dedicated business account.

Payment Process

When invoice day arrives, Icon Accounting will invoice your agency or client on your behalf. Once payment is received in our business account, we handle all tax deductions, ensuring compliance. The net amount—along with a detailed payslip—is then transferred to your personal account. It’s that simple.

VAT Considerations

All our umbrella companies are VAT-registered, meaning you won’t have to worry about VAT registration or payments. Additionally, we manage all tax contributions, ensuring full compliance whether you’re under a Director or PAYE Umbrella Company.

PRSI Contributions

Director Umbrella Company & Personal Limited Company: Class S PRSI applies.

PAYE Umbrella Company: Class A PRSI applies.

Insurance Coverage

Public liability, employers' liability, and professional indemnity insurance are included under the umbrella company, providing you with peace of mind.

Employment Restrictions

While working under an umbrella company, you cannot hire others to complete work on your behalf. It is a sole set-up solution. If you require this flexibility, our Personal Limited Company (PLC) setup might be the better option.

Income Tax Returns

If you’re a director under an umbrella company, you’ll need to file an income tax return, which is included in our fully managed service. However, if you’re under a PAYE Umbrella Company, tax returns are not required.

Business Expenses

Tax relief may be claimed on certain business expenses under the umbrella company. However, large capital expenditures such as company cars are only permitted under a Personal Limited Company setup.

Company Options Available Under the Umbrella Company Setup

Now, let's explore the different umbrella company solutions available to contractors:

PAYE Umbrella Company

A PAYE Umbrella Company acts as a Limited Company on your behalf, bridging the gap between you and your contract client. This setup allows for:

• Swift registration and minimal administrative duties.
• Class A PRSI contributions, including Illness Benefit entitlements.
• Fully managed invoicing, payroll, and tax compliance.
• Expense claim flexibility in line with Revenue Guidelines.
• A hassle-free experience, ideal for short-term contracts.

Director Umbrella Company

A Director Umbrella Company operates similarly to the PAYE option but allows you to become a director, offering greater tax efficiency. Key advantages include:

• No requirement to establish a Personal Limited Company.
• Class S PRSI contributions for potential tax savings.
• Full administrative support from Icon Accounting.
• Suited for contractors with short to medium-term contracts or those planning to claim business-related expenses such as relocation or equipment.

Choosing the Right Solution for You

As we conclude our Umbrella Day Special, it’s clear that selecting the right umbrella company solution is a crucial step in your contracting journey. Whether you’re a first-time contractor seeking a simple setup or an experienced professional looking for maximum tax efficiency, there’s an option to suit your needs.

By partnering with Icon Accounting, you gain access to a dedicated team that will guide you through the complexities of accounting and compliance, allowing you to focus on what truly matters—thriving in your contract roles.

How to Get Started

Getting set up under an umbrella company solution is simple! Just complete our online starter form: https://www.iconaccounting.ie/sign-up