Questions To Ask Prospective Umbrella Company Providers

The decision to work through an umbrella company is a big one, but one that offers numerous benefits to contractors. It is also a decision that leads to another decision: when you know you are going to work through an umbrella company, you have to choose which company that will be.

To ensure you are able to find a suitable company for you, we’ve put together a list of questions you can ask each provider, and what answers you should expect in return…

Are you a PAYE company?

Working for a non-PAYE umbrella company may seem like a good choice, but it can actually create myriad tax-related issues. A true umbrella company will play a more traditional, employer role in your working life, so if the company responds that they are not a PAYE firm, you’re going to want to look elsewhere.

What is the margin?

Before agreeing to work through an umbrella company, you need definitive figures rather than the figures the company may have used in their marketing campaigns. In particular, take note of the specific fees that you are liable to pay; if they are unwilling to provide this, or suggest they work on a percentage of invoice system, then extra caution may be required.

Do they have technology in place to manage timesheets?

Dealing with timesheets in an efficient manner is something you should expect of all umbrella companies, and there have been numerous technological advances over recent years to help with this area. If a company has not taken advantage of the digitalisation of payment-related areas, this is potentially concerning. You should expect an online accounting system to be implemented; this should allow you to look at your timesheet submissions and, where applicable, your expenses claims as and when you see fit. If an umbrella company does not provide this ability then, once again, caution is advised.

Are there any hidden fees?

You will expect to pay a fee when working through an umbrella company, but you also need to know about ‘hidden’ fees – for example, you may be asked to pay if you leave the company. It is usually best to ask for a complete breakdown of all the fees you may be expected to pay.

What is the payment schedule?

If you are entering into an agreement with an umbrella company, you need to know how this is going to align with your financial commitments on a monthly basis. It may also be worth asking for a guide to payments that are made across holiday periods; for example, how the Christmas and New Year bank holidays may impact the usual payment schedule.

How are payments made?

Ideally, you are looking for an umbrella company that utilises the Faster Payment system, which allows payments to be received within hours of being released.

How long has the company been established?

Background information on any company you are looking into is highly beneficial. A solid track record in your own chosen field is preferable, and you may also want to check information on the company’s financial solvency prior to entering into an agreement with them.

In conclusion

By establishing the answers to the questions above, you will be able to make an informed decision regarding the viability of any umbrella company you have under consideration.

 

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