Being successful in business means focusing on what you are good at. A company that provides house painting services, for example, does best when it can concentrate on hiring and training good painters and providing excellent service to customers. Unfortunately, however, the very act of setting yourself up in business means that there are also financial matters that need to be dealt with. This is where many businesses run into difficulty.
Because dealing with payroll and employment taxes is a special skill set, many businesses choose to work with an umbrella company. An umbrella company is a special kind of company that can take over the responsibility for financial functions such as administering your payroll so that you can concentrate on serving existing customers and recruiting new ones.
Benefits of using an umbrella company
An umbrella company can provide small businesses and even individual contractors with a variety of services. Umbrella companies can take charge of administrative matters such as billing your clients for services and collecting monies. The umbrella company will calc all appropriate taxes and then deal with the balance as you specify, supplying it to you if you are an individual contractor or paying any employees you have. These payments will also have all appropriate taxes taken out. Umbrella companies can, in fact, become a complete accounting solution, greatly simplifying the running of your business.
Many American businesses must hire a full-time accountant in order to be sure that all regulations are being met with regard to tax contribution calculations. Businesses must not only take care to correctly withhold federal income tax from employees, but they must also pay attention to Social Security withholding and comply with other payroll regulations that vary from state to state. Handing those tasks to an umbrella company can be a huge benefit. Using an umbrella company is usually a far less expensive option than having an onsite accountant and the business owners will not have to concern themselves with complicated and often difficult to understand financial matters.
An umbrella company offers a complete accounting solution, which means that they will also make sure that all of your expenses are properly deducted. Their experience and expertise often means that contractors find themselves with less to pay in taxes, which of course increases the amount of pay they take home each week or month.
Who is suited to use an umbrella company?
Umbrella companies are useful in several situations. Independent contractors such as freelance writers or marketing consultants can sometimes spend more time billing clients and trying to collect funds than they spend actually doing their work – and all of that is unpaid time. By shifting these burdens onto a company with a proven track record of success, a freelancer or other contractor can spend much more time working.
Anyone who runs a small business with employees can also benefit from using an umbrella company to handle the complexities of payroll. Such businesses may not be able to afford an accountant; an umbrella company can be a more economical solution as well as one that solves the issue of some business owners being uncomfortable dealing intensively with computers.
One of the most important benefits an umbrella company offers to contractors and small business owners is peace of mind. The umbrella company assumes legal responsibility for correctly administering payroll and other functions so that you do not need to worry about contravening applicable state and federal regulations.