“Best umbrella company” is a term you’re likely familiar with. What you should be asking is “which umbrella company is the best for me?” Having your specific needs met in a friendly, supportive manner is what separates the good umbrella companies from the best.
There are recommended umbrella companies that have become an authoritative name in the industry over the years. If you’re a person who tends to gravitate towards brand longevity, this might be your main criteria for choosing your best umbrella companies and we do recommend looking for a company with a good brand reputation.
Top 7 tips for choosing an umbrella company
1. Steer clear of umbrella companies that have entry fees, exit fees or minimum term commitments with penalties for leaving early. This is especially helpful if you have not used umbrella companies before; changing your mind could become a financially costly decision if you are subject to these fees.
2. Avoid companies that link their fees to your daily or hourly rate; these can be expensive as your fees increase in line with rate increases. Umbrella companies like this often have complex fee structures that are in some way linked to contract value.
3. Compliant umbrella companies will never tell you it’s acceptable to claim expenses without valid receipts or proof of purchase. In the event of an investigation by HMRC, the expense claim would be disallowed, and you would be liable for all the tax owing on these expense claims.
4. Look for an established umbrella company – this may seem obvious, but several umbrella companies have sprung up recently and if they fold or go into administration, you will be left out of pocket with no recourse.
5. It is often difficult to tell an ethical or honest umbrella company just from their website or a brief telephone conversation. Generally speaking, if they are promising expense claims with ‘no receipts’ and larger than what seems reasonable (or possible) take-home pay, they are best avoided. All umbrella companies operate under the same HMRC regulations.
6. Are they compliant? Have they been reviewed or audited externally? This is becoming increasingly common. Of course, an umbrella company will advise you they are compliant, they are hardly likely to tell you otherwise. Ask what their marketing claims are based on and remember it is you who HMRC will investigate – not your umbrella company.
7. Finally, the personal touch. Yes, fully automated and online-only umbrella companies are cheaper, but you will most definitely need to speak to a human being at some point especially if you are new to contracting. Do a test call and ask a few questions – will you have a dedicated account manager? Do they have service level agreements? Or will you be pushed from pillar to post speaking to 20 different people having to explain who and what you want 20 different times?
Planning to work under an umbrella company?
If you would like to know more about Parasol or working under an umbrella company, visit Parasol’s site or contact a member of their team.