Once you’ve made your decision to go down the umbrella company route over limited company, you need to make sure you choose the right one for you as you will effectively be an ‘employee’ of that company. With so many umbrella companies to choose from, we’ve put together a brief guide on how you can differentiate between the trustworthy companies and the ones who are just out for your money.
Your earnings should be the same
All umbrella companies are governed by Inland Revenue, which means that your earning with one company cannot be any higher than they would be with another company. The only difference is the fees the company charges. If a company promises more earnings, you should question the methods they would use in order for this to be possible. If it seems too good to be true, it probably is.
Choose a fixed fee structure
Umbrella companies that charge you more based on what you earn are most likely not reputable. Average fees are normally between £15-£25 a week. Fixed rates mean you know exactly how much you will be earning and won’t be hit with unexpected fees. Similarly, steer clear of companies that have fees galore, such as entry and exit fees.
You should receive your payments through PAYE
Your umbrella company should be deducting income tax and National Insurance contributions from your earnings. Any other payment structure is illegal, regardless of what they might tell you.
Avoid any companies that don’t follow correct procedures
If the company tells you that you can claim expenses without receipts, they are untrustworthy and this will come back to bite you in the event of an investigation by HM Revenue & Customs. You would be the one liable for all the tax owing, not them. Always choose a reputable company that follows the correct procedures.
Go for the personal touch
Automated systems can be efficient, but it is always worth speaking to an actual human being. If a company has a dedicated account manager who can handle all your queries, even better. It will save you a lot of time in the long run.
Do your research
The most important step in choosing an umbrella company is making sure you do your research. All companies will say whatever they need to in order to get you on board, which is why research is key. Search on forums and find out about other people’s experiences. Personal recommendations are also important; speak to your contractor friends and colleagues. Also, go for more established names over new umbrella companies as they will most likely have been externally reviewed at some point, while newer companies have a greater chance of going bust.
If you would like to find out more information on umbrella companies vs limited companies, or are looking for work with an umbrella company, Cyberteam have an Umbrella PSL that we encourage all contractors to go through, contact us by emailing email@example.com or call us at our offices in London (+44 (0)207 849 3082) or Leeds (+44 (0)113 398 4070).