Essential Things To know About Umbrella Company As A Contractor

A company that acts as the intermediary for contractors who want to work under a fixed-term contract is known as an Umbrella Company. The setup is specially made for contractors and has been an extremely popular solution that has aided the growth of the Contracting sector.

Generally, a Private Limited Company structure is required to operate as an Independent Professional and payments are processed to the company bank account in exchange for the services completed by the Contractor. 

The Umbrella Company is then responsible for deducting the required taxes from the payment and transferring the net pay to the contractor, alongside a payslip showing the tax deductions. 

Payment cycles for independent professionals are typically paid monthly, however, there are some clients and recruitment agencies that operate weekly billing and payment cycles.

Accountancy firms in Ireland like ICON Accounting specialize in proving Umbrella Solutions to Independent Professionals. These specialized contractor accountants are generally utilized by independent professionals and freelancers for a particular period when starting out as an Independent Professional Contractor. The natural progression is to then transfer to your own Private Limited Company to maximize pay retention should you decide to contract long-term. Alternatively, the umbrella solution offers a perfect temporary solution that is paid as you use with no set-up or leaving costs.

There are two separate Umbrella Company solutions giving Independent Professionals a choice in their preferred set-up as a proprietary director of the company or to retain their Class A PRSI contributions.

How Does an Umbrella Company Work?

It is the obligation of the Umbrella Company (generally claimed, worked, and oversaw by a firm of Accountants in Ireland for example ICON Accounting, who are likewise Tax Advisers) to oversee invoicing, payments, and taxes for employees as contractors. A contract is signed for the contractor’s service between the agency/client and the umbrella company.

The Umbrella Company guarantees that all your expense and tax commitments are actioned on your behalf by your service provider.

All relevant taxes and will be deducted by the umbrella company and provide the appropriate take-home pay as expected.

Timesheets and expenses are uploaded by the contractors to their respective accountants, or clients directly. If the hiring client doesn’t have an internal timesheet system, the umbrella company provider will further process the invoice to the client on the independent’s behalf.

Toward the beginning of each calendar year, a P60 will be given to all the contractors, this is a breakdown of their income and tax paid for the last year. 

Benefits of Umbrella Company Structure

If you are choosing ICON Accounting as your Umbrella Company you will be benefitted by following:

1. Dedicated point of contact for all queries
2. Assistance in claiming relevant business expenses
3. Yearly Tax-Free Voucher through the Small Benefit Exemption Scheme
4. In house team of experts for all Contracting queries
5. Access to our Wealth Management Partner
6. Access to iPerks, our Contractor Community Hub
7. The iConnect portal and Icon Accounting App to streamline timesheets, expenses, invoices, and payslips
8. Fully managed service, no additional or surprise fees
9. You do your job, we do the rest!

Disadvantages Umbrella V/S Limited Company Structure

1. Confined pension choices
2. No set-up or leaving costs in the Umbrella solution

Instructions to Get Started in 5 Steps

1. Contact Icon Accounting using the following details: +35318077106 or you can email us at info@iconaccounting.ie
2. Sign up to your solution of choice here
3. Complete the digital on-boarding process with IDPal verification
4. We will liaise with your hiring client or agency to send relevant company details for the contract for services to be prepared
5. The contract will be uploaded to your iConnect portal and you’re ready to go!

ICON Accounting is the top accounting firm in Ireland that you can trust. With consistent pricing since 2008, our team of in-house experts will not let you down.


Location: Ireland

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