When you decide to set up as self-employed, one of the fist decisions you will need to make is whether you should trade through a limited company or an umbrella company.
There are advantages and disadvantages to both structures from a tax and admin perspective, but you’ll also have to market them slightly differently as well.
In the following paragraphs we’ll give you an overview of the different options and detail the approaches that you’ll need to take from a marketing perspective. Tax and admin is important, but the way you market your business has a bearing on how you generate work, so it is vital to choose the right option from both standpoints.
Our focus is on marketing, so if you would like a more complete view of the differences between both structures from an accountancy perspective, this comprehensive limited or umbrella guide will be useful.
Limited Company
A limited company is considered the most tax efficient way of trading and you’ll be the director. You’ll typically take home around 75% of your gross earnings and have to submit a set of company accounts and a self-assessment tax return.
Umbrella Company
Through an umbrella company you’ll have minimal paperwork and be paid via PAYE. This means that what money you are paid is yours to spend and you’ll typically take home around 65% of your gross earnings.
To find out more about which option is best for you, speak to an accountant.
Building a website
The majority of marketing is done online and at the core of online marketing is a website. The major difference between an umbrella company and a limited company when it comes to having a website is that under an umbrella company you won’t have a company name.
If you are trading through a limited company, you’ll just need to purchase a domain that is representative of your company name and it can be used for as long as you need.
On the other hand, if you trade through an umbrella company, you don’t have a company name, so your domain will most likely have to be personalised to you as an individual. Don’t create a domain around the umbrella company that you are currently using, as there will be a massive conflict of interest.
Some companies will only deal with limited
Something that you will always have to bear in mind is that larger organisations will often only deal with limited companies – mainly for security reasons. As a result, if you plan on trading through an umbrella company and having larger clients you will be extremely restricted.
You could have the best SEO strategy in the world and appear number one for countless terms, but if your legal structure doesn’t fit the bill, prospective clients will quickly return to the search results.
With this in mind, if you are trading as a limited company, make sure you highlight in the about section and the footer that you are limited.
No credit for umbrella
As an umbrella company contractor you won’t have a company bank account, which means that you won’t be able to take out a company credit card. This can largely impact your marketing strategy – particularly in early stages when money is tight.
Alternatively, if you choose to go down the limited route, you’ll be able to get a company credit card or overdraft (provided you have a good credit rating). As a result, if you need to spend some extra money on a PPC campaign to drum up some extra business, you have the flexibility of putting it on a credit card and paying it back later.
Obviously umbrella company contractors could use a personal credit card but due to them not having limited liability, their personal assets could be seized if they are unable to pay the debt.
You should now have a more comprehensive understanding of the marketing differences between limited and umbrella. Speak to an accountant to find out which option makes more sense for you financially and then start to think about the marketing implications of the decision.
