When deciding on a tax preparation company for your seafaring business needs, there are two popular choices available, Umbrella and Limited. As their names imply, one offers a much wider spectrum of features and benefits, while the other offers a much more limited selection. Deciding which type is right for you is important and it is usually determined by your needs and the needs of any employee that you may have.
Let’s take a look at some of the pros and cons of a Seafarer Tax Umbrella Company and Limited Company to help you decide which one is right for your business.
The Pros And Cons Of A Seafarer Tax Umbrella Company Vs Limited Company
Service Provider Costs – With a limited company, you pay a monthly fee to your accountant to manage your company’s tax affairs, whereas with an umbrella company, you can pay a weekly or monthly fee.
Tax Efficiency – A limited company is the most tax efficient way to contract. Director salaries are typically lower and there is no National Insurance paid on dividends. With an umbrella company, your entire salary is taxed via PAYE, making it much less tax efficient. However, as a Seafarer you may be able to claim back all of your income tax if you qualify for the Seafarers Earnings deduction (SED) tax relief.
Ease of Use – Limited companies are much easier to use as they typically offer a monthly admin to help compile accounts. With an umbrella company there is less admin required and subsequently less for the contractor to do as well.
Legal Duties – Limited company directors have a number of statutory and financial duties, whereas with an umbrella company, there are no legal duties.
Set Up – With a limited company, it takes a few hours to set up your company, whereas registration for taxes (VAT, Corporation Tax) can take a few weeks. Working with an umbrella company is much more straightforward, setup is instant.
Your Status – With a limited company you are stated as a director of the company, however, if you chose to go with the umbrella company you will be an employee.
Duration – A limited company is a much better route for long-term contracts, while an umbrella company is perfect for new seafarers, and those who are working on short contracts.
Tax Planning- A limited company makes tax planning easy. It’s much more flexible than an umbrella company and you can time your dividends to save money.
Control – A limited company gives you more control over your business than an umbrella company.
Contact Binks Overseas
To learn more about International Payroll Services, contact Binks Overseas today and speak with a payroll specialist who can answer any questions you might have about your company’s payroll needs.
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