It’s great to see that contracting is becoming a way of life for hundreds and thousands of UK professionals. You could almost say it’s booming!
The profession’s upswing in popularity has caused the number of umbrella companies to soar in recent years, meaning contractors have a wide range of employment providers to choose from. Yes, yet more decisions!
As a contractor, we know that selecting the right company is crucial, as making the wrong decision could leave you out of pocket or even at risk of sanctions from HMRC. But what should you look out for when researching umbrella companies? Here are our top tips:
Look for reputation & experience
They say that reputation is everything, and this is especially true with umbrella companies. When looking for an umbrella, it’s important to look out for a trustworthy provider with a good track record of supporting contractors.
You should also check contractor forums for recommendations and speak to your more experienced peers to see if they have any thoughts on where you should turn.
Check if they’re a genuine employer
Compliant umbrella companies provide contractors with what’s called an overarching contract of employment. This gives you access to all the rights and benefits associated with permanent workers, including sick pay, holiday pay and maternity & paternity pay.
If you join a company that doesn’t offer a genuine contract of employment, you could find that you’ll miss out on what you’re entitled to. It’s therefore essential to check whether the umbrella would act as a genuine employer and provide you with everything you deserve.
What’s their margin?
When it comes to pay, an umbrella company’s margin is the only thing that separates it from the competition. Income tax and National Insurance amounts are set by the government so have no effect on your pay.
As with most things, it’s always a good idea to dig deeper and find out exactly what you’ll get for your money. While a cheap and cheerful headline figure may look tempting at first, chances are you’ll end up getting a much lower standard of service.
In addition, you should also research if an umbrella provider charges a joining or leaving fee, or expects you to remain on their books for a minimum length of time.
Check their payment & expenses policy
It’s also a good idea to thoroughly research an umbrella company’s payment processing system. Most compliant providers will run several payrolls each day, ensuring you get your money as quickly as possible. The last thing you need after a hard day’s work is to waste time chasing payments.
What’s more, you should also be aware of the umbrella’s expenses system. Compliant providers will always advise you to keep hold of your receipts for auditing purposes and will only accept legitimate claims. While other firms may let you put through claims that are not valid, and spin it as a way for you to keep more of your money, this practice could land you in trouble if HMRC comes calling.
The types of business costs and expenses that can be claimed and reimbursed are dependent on the type of assignment you’re working on and whether it’s subject to supervision, direction or control (SDC). Take a look at our handy guide on claiming business costs and expenses.
Are they user-friendly?
Contracting is a demanding profession, so the last thing you need is an umbrella company that makes you jump through a million hoops just to get paid. Choose a provider that offers a user-friendly online portal to submit your timesheets and expense claims. This will ensure these essential tasks can be completed around your schedule.
Remember that a contractor’s WorkStyle is never just 9-5, so it’s advisable to check the umbrella company’s opening hours. This will ensure you’ll be able to contact them at a time to suit you and not the other way around.
Are they on a preferred supplier list?
Some recruitment companies operate a preferred supplier list (PSL), consisting of a number of different providers that the agency trusts to look after its contractors. When researching umbrella companies, it’s a good idea to check if your recruiter operates a PSL and choose a provider from there.
As one of the largest and well-respected companies in the industry, Parasol is the name you can trust. We’ve helped over 90,000 professionals make the leap from permanent employment and embrace their new contracting careers.
Over the years, we’ve built up an in-depth knowledge of a contractor’s life and WorkStyle, meaning we’ll always be on hand when you need us. What’s more, we’re committed to be with you all the way through your exciting new career.
As a first time contractor, we understand that there are a number of different decisions to make. That’s why our helpful team of experts will guide you through your options and suggest a solution that suits your personal circumstances.
With us, you can be sure that all your income tax and National Insurance obligations will be taken care of, while we’ll also provide you with the same rights and benefits given to permanent employees. Our clever online portal makes submitting timesheets and expenses a breeze, and we run several payrolls a day to make sure you get your money as soon as possible.
We hope we’ve been able to shed some light on what you should look out for when researching umbrella companies. If you still need more help, or would like to sign up, please call 0800 458 0818 or email firstname.lastname@example.org.