When contractors have to choose between umbrella company and limited company, there's more to do than merely picking the favorite side. One has to understand different aspects of business and then make the decision that favors him or her.

Before you pick one of the 2, you've got to make sure that you know what to consider. Many people only focus on expenses and charge to take the decision. This isn't the right approach. You have got to look at various other things to make the correct decision. Seriously, if you may ignore these, you will fail to pick the one that will be of benefit to you in the future. At the same time, making the incorrect choice will also mean facing decline in the business due to wrong business model chosen.

In the event of a limited company, you are able to save lots on taxes. You can keep yourself on lower revenue to make certain that the majority of the company money goes into the dividends. There are several alternative routes to reduce the tax that you pay thru limited company.

On the other hand, when you pick an umbrella company, you do not have to fret about taxes in any way. The taxes will be instantly paid prior to getting your payment amount in your bank. This makes things great deal easier. You do not have to stress about the largest concern in a contractor’s life i.e. Tax.

In a similar fashion, if your business is swept up by IR35, then going for an umbrella company will be a wiser choice. On the other hand, if your business isn't within IR35, then you can look at other different things including administration and responsibilities to make the right choice. Whichever side you pick in the final analysis, just be sure that you are making this decision after taking a look at all the different aspects.

Greg Dickson is head of selling for the Wealth Services, one the leading suppliers of umbrella company solutions for contractors and self employed staff. Wealth Services also provides contractor tax advice, offshore trusts advice, IR35 information, mortgages and wealth management.