Before registering with an umbrella company, it’s important you understand the advantages and disadvantages of using one for your payroll. Like most things in life, it’s important to compare the pros and cons before making an important decision. In this article, we share our new video explaining the advantages of using an umbrella company for your payroll. We’ve also included the transcript in case you would prefer to read a quick answer to the commonly asked question.
Transcript: What are the advantages of using an umbrella company?
If you’re in a hurry and would rather read the content of the video, the transcript is below:
There are plenty of advantages to using an umbrella company for your payroll. Firstly, umbrella companies are generally regarded as the easiest solution to get paid compliantly when working on temporary assignments inside IR35. Once you complete the registration process, all you need to do is complete your work for your client, and you should be paid on time and issued a supporting payslip. You may be required to submit timesheets if your agency is not self-billing.
By joining an umbrella, you can access employee benefits, including Statutory Sick Pay, Maternity, and Paternity Pay. This is because you officially become an employee of the umbrella for payroll purposes. Most umbrella companies include comprehensive insurance coverage as well. The most common insurance cover that umbrella companies include is Employers Liability, Public Liability and Professional Indemnity insurance.
Umbrella companies are relatively inexpensive. The only income they generate is from the pre-arranged margin, which is usually in the region of £15 to £30 per week. The margin only applies when the umbrella processes your payroll, meaning there are no joining or leaving fees and no unexpected costs along the way.
Registering with an umbrella is relatively straightforward. You must complete the initial registration process and provide plenty of personal information, including name, address, contact information, NI number, and more. This is a legal requirement. You will also need to provide your Right to Work if you are not a UK national. The umbrella will present you with a contract to read and sign if you are happy. You may also be required to complete a short government form if you do not have a P45 document. The registration process can be completed in little over 10 minutes, and once you successfully join, there is minimal administrative responsibilities throughout your time with the umbrella.
One of the significant benefits of using an umbrella company is Continuity of Employment. You can use the same umbrella for multiple assignments with various different end-clients. As a result, you will always have the same employer, which can help you obtain external finance such as a mortgage or bank loan.
The umbrella company marketplace is saturated with over 500 to choose from. Initially, this may sound daunting, but it’s a good thing. Umbrella companies are starting to offer little extras to try and win new business, which can work to your advantage. For example, it’s common for some umbrella companies to provide employees with access to an award scheme where they can save money when eating out or shopping online.
Before choosing an umbrella company, always make sure they are compliant. We recommend that you only seek the services of an umbrella company with an FCSA or Professional Passport accreditation because these businesses have undergone strict audits to ensure they operate compliantly and in the best interests of their employees.
We have also released a video explaining the disadvantages of using an umbrella company. It’s worth checking out!
Check out our new YouTube Channel
Please visit the Umbrella Companies YouTube Channel for more videos answering the most commonly asked questions about umbrella companies.
Top 10 umbrella companies
To help you with your search for your next umbrella company, we have put together a list of our top 10 – and they are all accredited by the FCSA or Professional Passport. Please check them out now – some have special offers at the moment!
