Before joining an umbrella company, there are plenty of things you should check. This article will provide you with 10 helpful tips to help you choose an umbrella company you can trust, and one that’ll provide you with an efficient payroll service.
Request a take home pay calculation
Umbrella companies provide take home pay calculations on demand, and it’s well worth requesting one. An umbrella company take home pay calculation will give you an accurate indication of your earning potential. Honest umbrella companies will ensure the calculation they give you is realistic. However, it’s been known for unethical umbrella companies to deliberately inflate their calculations – as a way of tricking contractors into registering with them over the competition. Make sure any calculations you receive:
- Are created with PAYE – HMRC’s tax system
- Use an accurate tax code
- Are based on the correct working days in a month
- Take holiday and time out of the office into account
- Include the umbrella company’s margin
- Don’t include an expenses allowance
Speak with them on the phone
Some umbrella companies allow you to register online and without the need to speak with someone directly. We have nothing against this kind of system, and in fact, it might be exactly what you’re looking for if you’re a seasoned professional who understands umbrella companies inside out. However, if you’re relatively new to umbrella’s, we recommend you contact them via phone and have a chat. Let the Sales Consultant run through the service for you, and ask any questions that may pop to mind. Ask for a recap email to be sent to you after the conversation, and make sure you grab the name of the person you spoke with in case you need to contact them again at a later date.
Do your research into umbrella companies
Before joining an umbrella company, it’s imperative you understand how they work, and how you will be paid. Our website is full of useful information that’ll help you with your umbrella company research. Check out the following resources:
- Umbrella Companies Explained
- Umbrella Company Example and Walkthrough
- Umbrella Company Payslip Example
See If there are any special offers at the moment
The only income that umbrella companies generate for themselves is the margin they deduct. This covers their administration, business costs, etc. Therefore, if you’re looking to retain the highest amount of your income possible, you’ll want to find the umbrella company with the lowest margin. Some umbrellas will run special promotions, such as low margins, weeks free etc. Keep an eye out and see what’s available. The marketplace is very competitive, so there are umbrella company deals available.
Prepare yourself for the registration process
Registering with an umbrella company doesn’t take too long. Realistically, you can be set up and ready to get paid in 10 to 15 minutes. Make sure you have time when you register – to avoid doing it in a rush. Umbrella companies require plenty of information to process your payroll legally, and they must ask you lots of questions. Registering is also an excellent chance for you to ask the umbrella some questions too.
Have a list of questions to ask
We’ve already mentioned questions in this article, but we believe it deserves its own heading. Having spoken with many professionals in the umbrella company sector, we were amazed to hear that many contractors use umbrellas without fully understanding how they work. If you have any questions or concerns at all, make sure they’re answered to your satisfaction before joining an umbrella company. Our umbrella company FAQs may be helpful.
Check they’re compliant with UK tax law
Compliance is crucial! Only use a compliant umbrella company for your payroll. Unfortunately, unscrupulous tax avoidance schemes target vulnerable workers in the UK and offer them inflated take-home pay. These schemes are almost certainly tax avoidance schemes, and using one could land you with a life-changing fine.
Our recommendation to our readers is only to use FCSA or Professional Passport accredited umbrella companies. Umbrellas with one of these accreditations have proven then operate compliantly and in accordance with HMRC’s rules and regulations. They’ve undergone strict audits and proven they act in the best interests of their employees.
Read up on the service and whether there are any added extras
Its common for umbrella companies to include extras as part of their service. These can include insurance, employee reward schemes, Same Day Faster Payments, discount schemes, salary sacrifice, and more. Before joining an umbrella company, carry out some research and see what extras are available. We’ve written a page that summarises the advantages and disadvantages of using an umbrella company, and we recommend you check it out.
Double check there are no hidden fees
Umbrella companies should be transparent and you should never face any hidden fees. However, its important you double check. Make sure the umbrella you choose if free to join and leave. The only income that umbrellas generate is their margin.
Visit our top 10 umbrella companies
The umbrellacompanies.org.uk website is written for contractors, freelancers and agency workers. We’ve made it our mission to provide reliable advice that’ll help our readers make better-informed decisions regarding their payroll. We recommend you check out our top 10 umbrella companies. They’re all compliant with HMRC’s rules and regulations, and some have special offers running at the moment!
