Umbrella companies: how they work, their pros and cons

5 mins

August 29, 2022

By Panama Harris

Key learnings
  • Wage portage is a status that lies between salaried work and independent contracting.
  • It’s a three-party contractual agreement between the salaried worker (contractor), the umbrella company and the client company.
  • The employee is associated to the umbrella company by a work contract and enjoys the same social advantages as a normal salaried worker in a company (unemployment insurance, health insurance, retirement, paid vacation, etc.).
  • They’re free to choose their clients and set their own rates.
  • The umbrella company handles the administrative and financial tasks for their employee’s work activity (invoicing, accounting, follow-up with clients). In exchange they levy a management fee on the employee’s revenue.
  • It’s an attractive option for freelancers who are just starting out in their business project

ABOUT THE AUTHOR
Panama is a Copywriter at Qonto with over 15 years' previous experience working as a freelancer around the world. Her mission is to take the mystery out of entrepreneurship and make it more accessible.
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