01582 390 100 or Contact Us

Umbrella vs limited company

Setting up your business through an umbrella company or as a limited company could significantly increase your earnings and tax savings.

Benefit from our personal and expert accounting service

We specialise in increasing your take home pay by setting up your company and ensuring it is run as tax-efficient as possible.

> Enquire now

It is important to understand the limitations of each type of company to ensure you make the right choice for your business.

Umbrella company

If your contract is up to three months long and you want to avoid completing your own paperwork, finding an umbrella company may be the most suitable option for you as:

  • All tax is deducted at source so you have no further liabilities at the end of the year
  • Setup is hassle free as the umbrella company looks after your financial affairs
  • This is a great option if you are unsure about committing to contracting long term
  • It works best for those on short term contracts or low earners (ie, less than £25k)
  • This is a good option for those affected by IR35

There are some disadvantages to running your business through an umbrella company. These include being limited by the range of expenses you can claim and having your entire income subject to PAYE and National Insurance.

> Enquire about our umbrella solution

Limited company benefits

Setting up your business as a limited company helps you maximise your take home pay by taking advantage of tax savings and giving you the option of claiming business related expenses. The liability of company directors is “limited” as the company is a separate entity from the director, which means personal assets are protected against company debts.

This type of company is ideal for high earners and those on long term contracts as:

  • You will have independence and complete control of your financial affairs
  • It can offer significant tax savings to maximise your earnings
  • You will benefit from flat rate income
  • You can claim a range of business related expenses

As director of a limited company, you are responsible for completing tax returns and making payments for liabilities. However, running a limited company can be simple and straightforward with the assistance of an experienced firm like Cobia Accounting to support you.

Set up your limited company

Cobia Accounting specializes in setting up hassle free limited companies and providing accounting and taxation services for freelancers, contractors, self-employed individuals, startups and small businesses for a fixed monthly rate. This includes access to a dedicated, UK-based accountant, online accounting software and our online portal.

If you would like to go ahead and set up your limited company now, please complete our company setup form.