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What is an umbrella company? The benefits for contractors and recruiters

Between a client/recruitment agency and a contractor, an umbrella company serves as the employer or payroll company. It is a legal entity in a foreign country that offers contractors payment, tax, and immigration services. Contractors are paid through them because they provide high returns, full compliance, and administration in the simplest way possible. They can work with residents and ex-pats because the benefits are the same. Once the client pays the umbrella company, they will calculate and withhold your taxes and social contributions to ensure that you comply and issue your net earnings.

Why do you require the assistance of an umbrella company?

The umbrella company saves you the time and effort of dealing with taxes and contributions in a foreign country. It gives you peace of mind that we monitor the contract with your client, which benefits both parties because the client has a locally established entity to reduce the risk of working with a new ex-pat contractor. You will be entitled to all local benefits and entitlements as a company employee. The company can also sponsor work permits or visas for non-EU contractors who wish to work in the EU.

You may be wondering why working with an umbrella company is even necessary! Working through an umbrella company does have advantages. Here are some of the primary benefits of working with an umbrella company:

  • Responsible for all client payments, tax withholding, and social contributions.
  • You will receive a payslip each month to a local or foreign account.
  • Process earnings fast, providing adequate money flow.
  • Assists in the establishment of the contract with the client.
  • Use of all legal loopholes and provisions available to the contractor.
  • Any disagreements with your client are resolved through mediation.
  • Contractor administration is deficient due to the high level of automation.
  • Provides advice on totalization and double taxation treaties.

Umbrella companies and recruitment agencies

Let’s glance at the advantages that recruitment agencies can reap by partnering with an umbrella company.

The umbrella company becomes the sole employer for all of the agency’s contractors, which is the most appealing benefit. This relationship shifts all payment responsibility to the umbrella company, freeing up resources. Collaboration also increases the attractiveness of your recruitment agency to potential contractors. One way to accomplish this is through continuous employment status, a legal status that broadens a contractor’s options for statutory benefits such as sick pay, holiday pay, maternity pay, paternity pay, and more. Contractors can also demonstrate ongoing employment status, making qualifying for loans and mortgages easier.

This status – and its benefits – provides a financial safety net that independent contractors find more challenging to obtain. Umbrella companies that operate in specific industries may also offer appealing advantages to contractors working in particular sectors.

Working with an umbrella company as a recruitment agency allows your contractors to use their tax code more efficiently. Instead of one paycheck for each contracting company they work with, they receive one consolidated pay cheque each period and one at the end of the year.

There is also the reduced administrative burden that partnering with an umbrella company represents from the perspective of a recruitment agency. You may even work without the big in-house team, lowering operating costs and allocating internal resources more effectively toward achieving your larger business goals.

There are three ways to structure a compliant employee:

  • Self-employment
  • Employment/EOR
  • Limited Company

Not everyone is eligible for all three solutions. Each has benefits and drawbacks. The only way to determine the best method in a given situation is to understand your requirements, the wishes of your clients, and what is in the contractor’s best interests.

We demonstrate this by conducting an in-depth fact find, and we believe that Access Financial is unique in using this methodology as the industry’s leading Umbrella Company and problem solver, as these few facts confirm:

  • Nineteen years of profitable operations, providing a full range of legal, compliant solutions –  Employed/EOR, Self-employed and Limited company in 60+ countries.
  • Nearly a hundred employees dedicated to serving clients.
  • The CEO has 45 years of business experience and is a Chartered Accountant.
  • Offices in Switzerland (head office), Germany, the United Kingdom, China, India, Malaysia, the United Arab Emirates, Luxembourg, and Cyprus.
  • We have thirty subsidiary companies to sponsor work visas and an in-house Immigration department.
  • We have an in-house R&D department staffed by qualified accountants with FCCA FCA FIAI CPA, ADIT, and MBA degrees.
  • We hold federal and cantonal labour-leasing licences in Switzerland and a German AuG licence.
  • Internal immigration and self-software development departments.

To learn more about how we at Access Financial can solve your business problems, contact us at:

Email: [email protected]

Tel: CH: +41 22 365 4620  |  UK: +44 20 7017 3110  |  CY: +357 25 820 640