The Differences between Director Umbrella Company and PAYE Umbrella Company for Contractors

The Differences between Director Umbrella Company and PAYE Umbrella Company for Contractors

When people become self-employed as a contractor, they normally get confused between the structure of a Director Umbrella Company as opposed to a PAYE Umbrella Company. In this article, we will cover the characteristics of the two structures, and the difference between them.

These two types of structures have a significant difference in the contractor’s role in the company structure. In the structure of the Director Umbrella Company, the contractor is the director of the shelf company. If a contractor becomes the director of an umbrella company, he/she must satisfy his obligations to take responsibility for the company. However, it is not possible to know all the information about these shelf companies since they have no actual control over the company. Therefore, a Director Umbrella Company is not a good structure to use when contracting.
In the PAYE Umbrella structure, the contractor is acting as a PAYE employee and the Umbrella Company is acting as an employer. While being an employee, there is no obligation on the contractor to complete corporate governance duties and therefore cannot run into any issues. Furthermore, PAYE Umbrella Company is also acting as an intermediary agent between the contractors and the recruitment company. This PAYE Umbrella Company is normally directed by an accounting firm, and its responsibility is to cover all accounting tasks including payroll, taxes, PRSI, and USC. Joining a PAYE umbrella company is the most suitable option to kick start your contracting career while paying the least effort and cost. If you have been using a Director Umbrella and have any questions or concerns, please contact us. We would be happy to help or give guidance.

Accounting Pro is Ireland’s premier contractor accounting service. We are here to help the busy contractor and company, with all your accounting and payroll needs. We are both an umbrella company and umbrella corporation and we can create your limited company. We are experts in contractor pensions, contractor health insurance, illness and sick benefit for the self employed and contractor expenses. To learn more about what we do please review and contact us by email: or phone us 01 592 1199. For the UK see Accounting-Pro UK. “How to maximise your net pay when contracting in Ireland” is an article written by Accounting-Pro Ireland for the benefit of everyone. Feel free to share it but please give attribution on a CC BY-SA license.

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