As an umbrella company contractor, you’ve already proven that you have the mettle to execute bold transitions: you’ve walked away from the comfort zone of permanent salaried employment to venture in to the more exciting but less predictable world of freelance contracting. Can you make another similar transition?
A good number of umbrella company contractors do have such a further step in mind – the move to setting up their own Ltd Company. But how might you go about it?
The first practical move you’ll need to make is to let your umbrella company know that you’re going to leave (just as you did when you left your “permie” post). You may be required to give a fixed period of notice, although many umbrella companies don’t insist on this.
The company should then pay you any outstanding expenses plus any further salary due and prepare a final calculation for you. As before, you’ll receive a P45. This is when you need to bring in your friendly contractor accountant (if you haven’t got one, now would be a good time to find one). He or she will help you get the paperwork straight to set up your own Ltd Company, with you at the helm as both director and employee.
As for optimal timing, it’s probably best to jump ship when you’re between contract renewals. It’s still possible to make the transition in the middle of an existing contract, however: you just have to ensure that the contract is modified to take account of the new relationship between the client and your new Ltd Company (your accountant should help here). So, are you ready to take the plunge?
