Most of the time a PAYE Umbrella Company is the right solution for a contractor looking to spend few months contracting. Similarly, the contractors within IR35 should also opt for Umbrella Company instead of forming a limited company of their own. Umbrella Companies may not prove out to be the most tax-efficient solution, but it benefits the contractors in many other areas.
But if you are not sure about the company you are choosing, you may not get the value from it. To ensure that you are getting the best umbrella for contracting, you can follow these tips.
- Ensure that Umbrella Company is the best possible solution for you: When choosing between Umbrella Company and limited company, ensure that you know the best solution according to your contracting needs.
- Check Umbrella Company’s background: If your research tells you that Umbrella Company is the right solution for you, you need to run some background checks before you select a firm. Check its trading history and see if the company moves your money offshore at any stage. If this is the case, you may be getting into trouble with such Umbrella Companies.
- Learn about fees and hidden charges: Before you go ahead with an umbrella company, check its fee structure. Some companies may not be clear about their fee structure and include some hidden fee. Learn exact fee that the company will be charging. Ask them about any possible processing expenses, tax expenses, and anything else that comes to your mind.
- Check the nature of contract: When you sign up with an umbrella, ensure that it is giving you a full contract of employment. Company should also provide all the employment right that are available to employees in the UK.
- Learn how to claim expenses: Ask the company about the process for claiming expenses. Sometimes, umbrella companies will make exaggerated claims as to tax. Such firms will usually claim unreceipted expenses. Firms will portray it as dispensation, although it has nothing to do with contractors.
- How and when it pays you: Ask the company about payment details. Ask about the payment schedule and when you will be paid. The company should pay you in reasonable time after you submit your timesheets with the company.
- Check the services and see if they include tax paperwork: You may have to submit tax return, P60 along with P11D form is the company does not have dispensation. Make sure that the company includes entire fee in initial charge and does not charge anything extra.
- Learn about exit policy: When you are joining an umbrella company, learn about its exit policy. It should not charge anything when you leave the company. Check the terms and conditions at the time of joining the company and read the termination clause. You should also ensure that the company is balancing accounts with you when you leave, paying any surplus from holiday pay funds.
- Check help and support: Check whether the company provides sufficient help and support for contractors. Companies with excellent support will flourish relationships with clients ensuring that they are comfortable with the company. Ensure that the company provides efficient and quick support when required.