What exactly is the role of a management company for an IT consultant?

As a contractor, you may have heard of a management company, but if you have never used one, you could be unsure of what they do and their role and how their services can benefit contractors and freelancers. If you’ve been approached by a business like ours offering to manage some business functions on your behalf in return for a fee, it was probably a management or umbrella company.

Essentially, a management company allows you to work freelance easily without the constraints that come with setting up a business. There’s no administrative paperwork such as accounting or invoicing for you to worry about. A management company can take on all these tasks leaving you more time to work on IT consultancy contracts. So is there a catch to working with a management company? We believe the benefits of our service outweigh any disadvantages, so we have put together this article to cover exactly what the role of a management company is and how it can help contractors like you.

What exactly is a management company?

Before we get into the details of a management company’s functions and roles, let’s consider first what a management company does more broadly. A management company acts as a third-party employer for a freelancer or contractor. As an independent worker, you are free to choose the projects you work on and the hours you work, but the management company will take over specific admin functions on your behalf in return for an agreed fee.

A management company allows independent IT consultants like yourself to work easily without the restrictions that come with running a business. When you choose to work with a management company, you will not have to create your own company, additionally, it removes the requirement for time-consuming admin work leaving the contractor more time to work on their projects whilst the management company ensures that any work carried out remains IR35 and tax compliant on your behalf, just like an employer would.

What functions can a management company take on for a contractor?

A management company like Hightekers takes on the role of an employer for various independent IT professionals, design engineers, software developers, consultants and more. They provide all the support and services you would expect from any good employer, for example:

ADMINISTRATIVE SUPPORT

A management company can take on all aspects of administrative support. Depending on the contractor’s needs, this could include invoicing, chasing payments, answering invoice queries, legal paperwork, fee collection, expense management and managing the PAYE function. For contractors that do not want to spend their time on admin and accounting, working through a management company may be an ideal solution that allows them more time to do what they do best, keep their independence and choose assignments they want to work on. Whilst enjoying all the benefits of being employed.

CONTRACT MANAGEMENT

It’s not just the behind-the-scenes administrative tasks a management company can take care of for IT contractors. As experts in software engineering, IT support and other technical services, a management company can also handle contract negotiations and issue estimates or quotations on your behalf. Working with a management company that knows the IT industry as well as us means that contractors benefit from the managing companies’ industry knowledge and expertise which means you are more likely to get the best possible deal for your skills and experience. On top of this, professionals that choose Hightekers as their management company can also gain access to key accounts through our professional network, which they may not be eligible for as self-employed contractors or freelancers.

BESPOKE SUPPORT

Another benefit of using a management company is the tailored support every contractor can access. Whether an IT professional needs assistance with contract negotiations, compliance paperwork or if they have a training and development need, the team of experts at Hightekers (or alternative management agency) can help answer your queries and offer guidance and support.

Joining a management company is an alternative to setting up and working through your own limited company, but still allows you to be an independent worker. When you become their employee, the management company acts as an intermediary between you as a contractor and the end client. It takes care of all aspects of the working relationship.

Benefits of working with a management company

The overarching benefit of working with an umbrella or management company is that it allows IT contractors to focus on their projects without being weighed down with administrative tasks. Like working for any other employer, all you need to do is work and get paid at the end of each month for your efforts. The management company will handle all aspects of PAYE to take care of national insurance and tax obligations on your behalf.

As a third-party employee, you will also qualify for any benefits the management company offers or are statutory for your region. This may include holiday pay, sick pay, and pension scheme enrolment.

Working as a third-party employee through a management company removes much of the stress that goes with being freelance, such as ensuring your business is IR35 compliant and paid in line with UK HMRC and tax laws. In addition, working through a management company means you’ll have minimal paperwork and no year-end tax return to worry about.

Hightekers can also provide continuity of employment that can help employees seeking loans or mortgages when required and give them access to a range of benefits not usually accessible to self-employed contractors working through their own limited company.

How to choose a management company?

Not all management companies are created equal, so careful consideration should be given before signing up to work under one. Choosing one that specifically works with clients in your industry will also benefit you as a contractor rather than a generic umbrella company that works with multiple trades.

For example, at Hightekers, we work with a talent pool of IT specialists, acting like a community. Our specialist knowledge of this industry allows them to find the best projects, and co-opting each other to make sure they can reach top jobs within their field.

When choosing a management or umbrella company, make sure you do your due diligence to ensure they can handle all the functions you require, are fully tax compliant and that you are happy with the level of service they provide to you as a contractor.

Choosing Hightekers as your management company will open the door to a world of opportunities. Click here to find out more.