Freelancers can always sign up as self-employed, and pay an accountant to do taxes every year. Or they can create limited liability corporations, to shield themselves from legal liabilities, and to save up on taxes (because corporations have more allowed deductibles). But then there is big paperwork involved, and the costs might offset the potential benefits.



One solution would be to sign up for an umbrella company. The main benefit of signing up under an umbrella service is that the administrative work is taken care of. One way to look at ti is that umbrella services can be considered as the shock absorbers of any company-contractor relationship, because they handle all the paper work and free their clients from the legalese that could get them into trouble.

The advantages are perhaps best determined through cost-benefit analysis. These days, companies are trying to minimize costs, and one way of doing this is by contracting out services to competent firms and individuals, rather than doing everything in-house. The good thing about doing this is that companies only pay for the services that contractors render, and they don't pay for any dead weight loss (meaning employees who are paid by the hour, but don't put in much output).