Choosing the right umbrella company is an important decision that every contractor needs to make.
There are plenty of umbrella companies out there, and although it's great to have choice, this can make it difficult to know which one will be best for your contracting career.
To help make the decision easier, Umbrella Search has put together this guide outlining 5 key questions every contractor should ask before making a decision.
Question 1: What are the fees, and how are they charged?
One of the key questions contractors will need to ask before settling on an umbrella company is what the fees are and how they will be charged.
After all, the fees you will be charged will directly impact your take-home pay, meaning it's an essential factor to consider.
The great news for contractors is that umbrella company fees are competitive, coming in from around £15 per week.
The next thing that contractors must ask before choosing an umbrella company is how they charge their fees.
There are typically two ways that umbrella fees are charged:
• Fixed Fees: A fixed fee is deducted from your weekly or monthly income, regardless of your earnings. With fixed fees, you always know what you will be paying, which makes budgeting easier.
• Percentage Fees: A percentage fee varies depending on your income. A percentage-based fee might seem more manageable if you have a varying income, but it will mean that you will end up paying higher fees if you earn more, which can be a drawback to this option.
Find out more about umbrella company fees in our guide
Question 2: have they got a good reputation?
Another key question contractors must ask when choosing an umbrella company is around the company's reputation.
After all, by securing an umbrella company with a solid reputation and good reviews you will ensure that you're working with a company you can trust to have your best interests at heart.
Some things you can look at when choosing an umbrella company are:
- Accreditations: Is the umbrella company recognised by the Freelancer and Contractor Services Association (FCSA)? Such bodies recognise umbrella companies that have undergone strict checks and meet stringent standards, meaning you can rest assured that they meet a high standard.
- Years trading: although the length of years running doesn't necessarily correlate with quality, if an umbrella company has been trading for a number of years, they should have a lot of experience and knowledge and it can indicate that they're doing something right.
- Reviews and testimonials: contractors should also check out reviews and testimonials from other contractors that have used the umbrella company. Positive or negative, this will give you a good idea of what you can expect if you choose to work with the provider.
Question 3: What benefits are on offer?
A key question that contractors must ask is what benefits and perks the umbrella company offers.
Every contractor has different needs and requirements, so you will need to make sure that the umbrella company you choose can offer you the benefits you need.
Every umbrella company offers a set of services as standard, but what is on offer in terms of benefits and perks? For example, some contractors may require same day payments, others may want the ability to buy more holiday leave. Some will need certain types of insurance cover, others will want help with things like childcare tax credits.
Ultimately, choosing an umbrella company that has the benefits and perks you need on offer will make your life as a contractor much easier going forward so make sure you ask the question before making your decision.
Question 4 How will you be paid?
One of themany benefits of using an umbrella company is that they sort out everything from invoicing the client to paying your salary. This makes your life much easier, but does mean that you will need to check how often you will be paid, so you know what to expect.
Before progressing with an umbrella company, it's important to check how often they run their payroll as this will impact how often you will get paid.
Some umbrella companies will run it twice a month, so if you are content with monthly or fortnightly payments, this will work well. However, if you prefer weekly or even daily payments, you must ensure this can be provided.
Question 5: can you claim expenses?
Many contractors will incur business expenses such as travel, training, or specific equipment needed to carry out the work at hand. HMRC state that contractors are allowed to claim these legitimate expenses back which will be offset against their tax bill.
That's why it's important to ask the umbrella company how the process of claiming back expenses works. After all, these are tax deductible, so it's key that you know how the process works to save as much as possible.
You should ask the umbrella company for a list of allowable expenses, how reimbursement works, and how often expenses are reimbursed.
Find out more about umbrella company expenses in our handy guide.
Looking for the perfect umbrella company? Umbrella Search can help
Before choosing an umbrella company, every contractor should ask these 5 key questions to ensure there will be no surprises and to find the perfect umbrella company for your needs.
At Umbrella Search, we know that finding the right umbrella company can take a lot of time and energy. After all, there are plenty of umbrella companies out there, so finding the right one can be a big task. That's why we're here to help make the process a whole lot easier for contractors.
At Umbrella Search, we will find out what is important for you in terms of needs and requirements in order to find the perfect umbrella company for you.
To see how we can help, and to start the journey towards finding the best umbrella company for you, simply get in touch with the Umbrella Search team today.
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