Umbrella companies in a financial downturn
Umbrella companies can help business owners by managing their paperwork and accounts, and are very important during financial downturns. Although they make times economically tough, financial downturns can give entrepreneurs the chance to start up a new business where there may be a perceived gap in the market – some businesses thrive in poor economic times, especially those which offer consumers something unique at a good price. Umbrella companies are important during financial downturns as they allow business owners to concentrate their time on the business, leaving the paperwork to someone else and giving peace of mind that it will be done properly. They are also useful in helping business owners and contractors to maximise their earnings, which is important during hard financial times.
How umbrella companies can help you or your business in a recession
There are many ways in which umbrella companies can help business owners and their operations during a recession. It can be difficult for a new business, or indeed any business, to do well in a recession. However if the business concept is good and customers like it, recessions can actually provide an opportunity for new businesses to thrive. Companies are more likely to be successful if the business owner has plenty of time to work on and develop the business, but what many business owners fall down on is paperwork. This particularly applies if it is their first business or they are generally inexperienced. Umbrella companies can help by dealing with their accounts and employment matters according to sound principles, staying on the right side of legislation such as ir35. They can also help to maximise the profit of the business by allowing the owner to claim a number of expenses that may ultimately reduce their tax bill at the end of the financial year. Businesses that make more profit are more likely to enjoy long term success.
Comparing contracting with permanent employment during a recession
Many people think that permanent employment offers more stability than contracting. However, during a recession with so many businesses failing, even permanent employment doesn’t guarantee job security. During past recessions, a significant number of permanent employees have left permanent employment and begun contracting. Contractors can secure fixed term contracts to bring some job security, but also have the flexibility to find new contracts with better pay and conditions when the economy improves. Self-employed contracting also offers various tax benefits, with workers able to pay less national insurance contributions and reduce their tax bill using their business expenses such as travel, materials and clothing. Some workers may find that being a self-employed contractor suits them better, as they are able to improve their earning potential. On the other hand, permanent workers may prefer the security of being employed, and not having to worry about dealing with matters such as tax and national insurance, as the bulk of these are dealt with by their employer. However, many contractors use umbrella companies to help take care of these matters for them.