Advice on Choosing an Umbrella Company

(3 minutes to read)

There are many Umbrella Companies on the market and they are not all created equal. With such a large number to choose from, it’s important you do your research and make a well-informed choice to make sure your contracting experience is as straightforward as possible.

When choosing an Umbrella Company, it’s vital to consider the following:

Compliance. This is the big one! Umbrella companies are employers and all must calculate your pay in the same way. If they’re promising 80% or more take-home pay, they’re probably taking liberties with your payment calculations. Although it’s tempting in the short-term, using a non-compliant scheme puts you at risk of HMRC investigation in the future.

HMRC never approve an Umbrella company, so “HMRC approved” on a website is nothing more than marketing. Always look for badges of compliance on an Umbrella’s website – and remember, “if it looks too good to be true – it probably is!” Check out our guide to tax avoidance schemes for more information.

Transparency. Any Umbrella company worth their salt will provide you with a bespoke pay illustration before you commit, with all costs clearly laid out. When you are paid, they should give you a full breakdown of your payment calculation (with employer-side deductions) as well as your own payslip. Watch out – if an Umbrella doesn’t do this, it’s possible they will have hidden costs or extra deductions.

It’s also worth inquiring about additional costs. An Umbrella might advertise a rock-bottom margin, but rack up hidden costs – fees for same-day payments, providing a reference or even issuing your P45 at the end of the contract!

Reputation. How long has the Umbrella been established? Have they won awards? How many contractors choose to work through them? What do other freelancers say about their experience with the Umbrella? Although small or newly-established Umbrellas can give a good experience, but it’s a risk – picking a big name in the market is a guarantee that you are in safe hands.

Service. The best Umbrella companies have a dedicated support team, always available by phone and quick to respond by emails. After all, if you have a query with your pay, it’s no use signing up to an Umbrella who you can’t reach by phone or who take two days to respond to your emails! Some Umbrellas even give you a dedicated staff member who will be your first point of contact for anything you might need.

Look out for independent awards and commendations on the Umbrella’s website. It’s also worth speaking to other contractors to find out their experiences – many will have both good and bad experiences with Umbrellas and their feedback can be invaluable.

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Efficiency. Although working through an Umbrella is more straightforward than operating a Limited Company, you will still need to submit timesheets and possibly expenses. A good Umbrella portal is worth its weight in gold – after all, submitting timesheets and getting paid shouldn’t be difficult.

Some Umbrellas still pay by BACS transfer, which is cheaper (for the Umbrella!) but can leave you waiting two or three days for a payment to clear into your bank account, so look for a provider who offer same-day payments as standard.

Additional perks. Established Umbrellas will have partnerships to help you get a little bit extra back during your employment by them. Look for rewards schemes, childcare vouchers, preferential foreign exchange rates and more.

Our award-winning sister company, Contractor Umbrella, are one of the longest-running and most respected names in the industry. If you’d like to know more, visit their website or give them a call on 01206 761 326.

If you think a Limited Company might be a more suitable option, have a look at our Limited vs. Umbrella guide, give one of our specialist contractor accountants a call on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.

Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, ContractorUmbrella, it means we can offer one low cost, fixed fee package at £95 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of ContractorUmbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, ContractorUmbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
  • Free Business Banking – We have decided to waive our commission so our clients can use CashPlus free of charge for the first year, saving you £69.
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

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