It’s a great idea to try comparing suppliers when renewing your home insurance or trying to find a new mobile phone contract. However, it also comes in handy when trying to find the best umbrella company schemes available to you. Over the past decade, contracting as an employee of an umbrella company has become increasingly popular.
There are a number of benefits associated with contracting via an umbrella company. The lack of legal, financial and administrative duties being the main reasons why so many contractors are choosing this particular business structure. Contractors working through outsourced payroll companies, like the umbrella specialists we’re exploring here, are also charged Employer’s National Insurance Contributions (NICs). This is yet another financial obligation that is fulfilled on your behalf when using an umbrella company.
For new and established contractors alike, setting up as an employee of an umbrella company is easy and provides direct access to a plethora of advantages. Working for the best umbrella company for your circumstances is the key to making this business structure work for you. In this blog post, we look at the factors every contractor should consider when comparing umbrella companies.
Selected umbrella companies charge a fixed weekly or monthly fee for their service, whilst others charge a margin of your invoice value. Make sure you understand the fee structure of any umbrella company before joining. You want to ensure that you can keep as much of your hard-earned money as possible.
Compare the fees charged by umbrella companies – IT Contracting has already done this here – and be clear on what you’ll receive in exchange. Beware of the hidden costs before signing up too. Some will charge additional fees for joining, leaving or undertaking additional administration, such as completing the extra paperwork required to manage expenses. Many umbrella companies offer same day or faster payments as standard as part of their service.
Obtaining the right insurance cover is crucial for contractors. There are a number of insurances to consider, including professional indemnity, personal accident, public liability and employers’ liability. Understanding which insurances your umbrella company provides for your monthly or weekly fee is a must. You may have to pay more for adequate or specialist cover related to your skills or trade.
Everyone wants to source a service supplier with an excellent track record, and with the internet you can now dig even deeper into the history of your shortlisted umbrella companies. Find out how popular the umbrella company is with other contractors and read reviews penned by happy (and unhappy) customers. Don’t be afraid to get recommendations from other contractors or recruitment agencies. A PAYE umbrella company’s track record in terms of compliance should also be noted.
It’s all too easy to fall for clever marketing tactics when searching for the right umbrella company for you. Don’t be swayed by terms like ‘HMRC approved’ or ‘IR35 compliant’.
Ready to switch?
If you’ve found the perfect umbrella company and are eager to switch or join, Contractor Calculator has some great words of advice for you:
“You can wait until you have a firm offer from an agent before joining an umbrella schemes. Joining one is quick and easy. After choosing an umbrella scheme to use the whole concept is based on simplicity, so there really is very little for you to do. The process is very simple and most umbrellas will be able to set you up as a client within 24 hours.”
Want further advice on working via a PAYE umbrella company? Contact our team direct to discuss your options.