Tax Umbrella Companies - Is it Worth You Using One?

If you are thinking of casting off from the shores of being permanently employed and heading into the potentially stormy, but nonetheless lucrative, waters of contracting or freelancing, then you need to consider how you will set up your new business so as to minimize your long term tax liabilities, while maximizing your income and making it simple for your clients to deal with you. Your choices are to set-up a limited company or to operate under what is called an tax umbrella company. Setting up a limited company, in which you are the director and only shareholder, is the most tax efficient way of working, and means that you can claim back a wider range of expenses, such as equipment and software costs. The downside to setting up a limited company is the extra work involved. There is a lot more paperwork to fill in, and you will need to hire a lawyer and an account to look after your affairs, which can make the process quite costly.

So, if you want to focus solely on your work, and to bring in as much income as possible, then using a tax umbrella company is the better option. What they do is take care of your invoicing, payments and tax contributions. They do this in the same way as your previous employers did. They literally follow exactly the same processes. Technically, you are employed by them, but that is only for tax purposes, and not in a practical sense. Obviously, they have no control over you, and cannot tell you what to do or how many hours to work. The tax umbrella company will pay you weekly, fortnightly or monthly (whichever you agree on when signing a contract with them), and the funds will show up in your chosen bank account, minus your tax contributions and the umbrella company's fees. The umbrella company should only take a set fee (again agreed on before you sign a contract), and not a percentage of your earnings.

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In the day and age of online banking and internet shopping it's no wonder that consumers are becoming more and more comfortable with giving away their bank details. This attitude has inadvertently lead to the rise of fraud as hackers and scammers come into contact with growing numbers of people who use the web for business and leisure. Credit card fraud isn't inevitable however and consumers and banks alike can work together to prevent this from happening.

The first port of call for anyone looking to prevent credit card fraud is to never use a site you don't trust. The rise in fraud has a direct link to 'phishing'; a type of scam whereby fraudsters create opportunities for card holders to unwittingly enter their details and personal information. If you are not purchasing something the use of card details is generally not required so be suspicious if this is the case. Protect your card details and don't give them out to people who companies you do not know or have never met.

Shopping online is an activity enjoyed by millions of people across the globe and web users shouldn't be put off by the threat of credit card fraud but should be vigilant. If you get a bad feeling from an online store or something happens to raise your suspicion simply move your business on elsewhere. Icons that signify 'secure online banking' can easily be replicated by fraudsters so it's advisable to shop from reputable brands or online equivalents of recognised and respected high street names.

Finally, card holders shouldn't leave the security of their details entirely up to the banks. Today's providers work hard to stay up to date with the latest anti-virus technologies and banking software is one of the fastest growing sectors, simply in a bid to keep up with hackers and fraudsters alike. That said, 90% of credit card fraud is linked to weaknesses in individual's home computers that lack basic virus protection. Installing an anti-virus software package or Firewall will arm your home PC against attack and invasion, thus allowing you to shop safely online.

Are you a credit card holder? Do your bit to prevent credit card fraud by protecting your home computer, only giving out your details when necessary and keeping your wits about you when shopping online.