Umbrella Company Guide - Choosing an Umbrella Company
It may seem like there are thousands of umbrella companies out there: ContractorUmbrella, Giant Strongbox, Parasol IT, Liberty Bishop, Oxygen 360, Parasol Group, Orange Genie, Atlantic umbrella, Crystal umbrella, Danbro, Plan IT, Tarpon, Alternet, Bedouin, Paymatters, Churchill Knight. . . to name just a few.
The best advice we can give before choosing a company is, and it may seem obvious but you’d be surprised at the number of contractors who don’t, is. . . do your research. All companies are going to say they are the best and have outstanding service, what else could they possibly say? Some may even be recommended by recruitment agencies - it’s worth mentioning that some agencies do receive referral commissions for recommending certain companies which may affect why and who they recommend. Choosing an umbrella company is an important decision so why not try Googling them or search for posts on forum websites, you could also ask other contractors and colleagues. Our advice is, have a good hunt around, there are good companies out there.
Find below SJD's Top 7 tips on choosing an umbrella company:
1. Steer clear of umbrella companies that have: entry fees, exit fees or minimum term commitments with penalties for leaving early.
2. Avoid companies that link their fees to your rate; these can be expensive as your fees increase in line with rate increases. Umbrella companies like this often have complex fee structures that are in some way linked to contract values - why should you pay more just because you earn more? It's not like the umbrella company has to do anymore work. Clearly advertised, fixed fee structures are best.
3. Don't touch umbrella companies that tell you it is ok to claim expenses without receipts – in the event of an investigation by HM Revenue and Customs they would be disallowed and you would be liable for all the tax owing.
4. Look for an established umbrella company - this may seem obvious but a number of umbrella companies have sprung up recently and if they fold or go into administration, they will take your money with them, leaving you out of pocket.
5. It is often difficult to tell an ethical or honest umbrella company just from their website or brief telephone conversation. Generally speaking, if they are promising expense claims with 'No Receipts' and larger than what seems reasonable or possible take home pay, they are best avoided. All umbrella companies operate under the same HM Revenue and Customs regulations.
6. Are they compliant? Have they been reviewed or audited externally? This is becoming increasingly common. Of course an umbrella company will advise you they are compliant, they are hardly likely to tell you otherwise. Ask what their marketing claims are based on and remember it is you who the Revenue will investigate and not your umbrella company.
7. Finally the personal touch, yes fully automated and online only umbrella companies are cheaper, but you will most definitely need to speak to a human being at some point, especially if you are new to contracting. Do a test call and ask a few questions - will you have a dedicated account manager? Do they have service level agreements? Or will you be pushed from pillar to post speaking to 20 different people having to explain who and what you want 20 different times.
We hope you have found these tips useful.
If you have any questions about umbrella companies, contracting or using an umbrella companies please call 01206 713680, e-mail info@contractorumbrella.com or visit www.contractorumbrella.com.
Alternatively, if you have any questions about contracting through your own limited company or would like any further advice please call our New Client Services Team on 0500 152500 / 01442 275789 or e-mail rachel@sjdaccountancy.com
Click on the links below to read our other umbrella guides:
How does it work using an Umbrella Company?
SJD Accountancy provides Umbrella Company Services to contractors and freelancers through it's sister company ContractorUmbrella.
ContractorUmbrella Ltd
ContractorUmbrella is part of the SJD Accountancy group and was formed in 2002 to provide employment services to UK based contractors who do not wish to operate through their own Limited company.
They are also the first umbrella company to be fully compliant with all Managed Service Company (MSC) and debt transfer legislation, as reviewed by KPMG. This is important as many other umbrella companies claim to be HMRC compliant - but can they prove it? ContractorUmbrella can, read KPMG's review.
ContractorUmbrella is an alliance partner of Contractor UK, Contractor Money, FreelanceUK and is an associate member of the Professional Contractors Group.
They offer:
- Low weekly/monthly fixed fees
- NO entry or exit fees
- Money backed service guarantees
- No voice mail or automated call handling - all calls are answered by real people and within three rings.
Unlike other Employment Service Companies and Umbrella Companies they will not take a percentage of your income, their weekly or monthly fees remain the same regardless of your earnings. For the duration of each contract you will be guaranteed a payment from them regardless of whether they have received funds from your agency/client - this is a unique service within our industry.
If you choose to use ContractorUmbrella, but then wish to convert to a Limited Company at any time ContractorUmbrella will arrange this for you quickly and easily.
If you have any questions about ContractorUmbrella or using an umbrella companies please call 01206 713680, e-mail info@contractorumbrella.com or visit www.contractorumbrella.com .
SJD Accountancy
SJD Accountancy is the UK's largest specialist provider of fixed fee, limited company accountancy services to contractors and freelancers. SJD have been acting for contractors across the UK since 1992, have more than 11,000 clients; are the only National specialist firm of accountants with offices in all major cities; are the most recommended accountancy firm on the internet and have more qualified staff than any other specialist firm with qualifications from the following major Tax and Accountancy bodies - ATII, ATT, ACCA, CA, ACA, FCCA, ACMA.
SJD have also won every relevant award possible, including: the Accountancy Age Award for Excellence, Contractor uk 'Best Contractor Accountant', Sunday Times 'Best company to work for'; are deemed PCG Accredited Accountants and are recommended by the Sunday Times.
If you have any questions about contracting through your own limited company or would like any further advice please call our New Client Services Team on 0500 152500 / 01442 275789 or e-mail rachel@sjdaccountancy.com
Appoint SJD Accountancy and never worry about your tax or accountancy affairs again!
