Contracting has become a flourishing sector in the recent past, and even more so after the enactment of IR35 law in 2000, thousands of umbrella company or firms have emerged. These firms have been crucial in serving the rising numbers of freelancers as well as contractors.
As a contractor, you’ll need to find a well-managed and fairly-priced umbrella scheme. But to find such a company solution, you’ll have to do proper homework through legal paperwork. This post outlines vital things to consider before hopping onto just any umbrella company schemes. Proceed below to learn more.
Today, faster payments are what most contractors prefer as they are same-day transactions at zero extra costs.
- After submitting your timesheet to your umbrella firm, how long does it take for your guaranteed payment to arrive in your bank account?
- Does the company provide quicker payment transfers, CHAPS, or BACS?
Determine whether your umbrella company charges contractors a fixed weekly or monthly fee or charges on the percentage of the gross invoice value. Additionally, determine if you will be charged on your time off or statutory sick pay. Ensure that your total weekly or monthly fee is quoted, rather than opting for the fee following a higher tax relief.
Dispensation of Expenses
In case your umbrella firm offers a ‘special’ allocation of expenses or other similar types of financial obligations, be careful as this is a red flag. Contractors are only allowed to claim money for expenses which are wholly incurred during their work’s course. To have a better understanding of expense dispensation, research more online on expenses incurred.
Do They Offer Insurance Cover?
Good umbrella companies typically offer employers public liability cover as well as Professional Indemnity (PI) cover. These are essential covers necessary for contractors to have as most clients often ask for them before signing any work agreements.
Furthermore, in cases of Professional Indemnity insurance policy, ensure that your specialized skills & contractor services are covered since less conventional occupations may be left out of a blanket policy.
Company History and Compliance
Determine the number of contractors the umbrella firm hosts as well as how long it has been operational. Furthermore, find out whether it has been scrutinized for tax compliance including national minimum wage, tax return and deductions, liability insurance and other tax rules or company claims for the tax year. Also, determine whether there are any arrangements it has instituted to comply with the Agency Workers Regulations.
Don’t Fall for Clever Marketing Strategies
Do not just pick on any umbrella firm just because they use slogans like ‘HMRC approved.’ Remember, HMRC is not tasked with any approvals. It only means that they have given the umbrella firm the ‘dispensation’ to simplify how expenses are accounted for. Other impressive labels to watch out for are IR35 compliance.
Watch out for extra or hidden charges when choosing an umbrella firm. These costs may be those imposed to you for joining or exiting the firm. If you use a calculator contractor, you’ll surely never miss on the plenty of umbrella firms that don’t charge any extra fees for joining or leaving.
Your contracting company would likely have a few selected umbrella firms as its preferred suppliers. However, you shouldn’t just join them and sign up immediately. Follow all the tips given in this post, because it is not guaranteed that your preferred umbrella firms are the best choice as service companies.
These are the eight vital tips to help you find and compare the best umbrella firms freelancers can choose to work with. Go through them insightfully and join the right one.
Remember, after finding and signing up with any umbrella firm, you have the freedom to choose a different one, if you are not happy with the current one.