Contractor Umbrella Company
If you are a contractor and don't want to get caught in the hassles of running a limited company, then umbrella solutions provider is for you. It is because; you can use it as an efficient trading vehicle. However, the problem is, there are more than 100 firms in the United Kingdom offering contractor umbrella services, and there are even more abroad. Then what is the way to decide which umbrella company will suit you perfectly? Well, there are some parameters based on which you can choose the best Umbrella company. Here they are:
You should intelligently make a comparison by making use of various online sources like websites. Consequently, you will hit upon various reviews and supplier lists. You may also get good candidates by browsing some portal websites and the adverts contained therein. After that, you can prepare a shortlist of some top Contractor Umbrella Company and start your research. Forums and blogs are also good resources to get useful feedback from other customers. Again, if you know some knowledgeable person, you can also use his/her recommendation.
Do a thorough research regarding the history of the firm, its experience in business, and its location. The best way for you to ensure whether the company is financially sound or not is to obtain a credit reference. You should note that not all overseas providers might be umbrella companies.
Always check the price for what you are getting otherwise you will waste your hard earned money. After you join, you should expect to get a formal contract of permanent employment and that too on a full- time basis. You should keep yourself informed about the various expenses that you can claim and make sure to keep the corresponding receipts. Lastly, customer care is of prime importance, and therefore you should ensure that you are getting the services of a trustworthy account manager at a reasonable price. You always have the freedom to switch over to another service if you find the earlier one lacking in some facility.
Some contractors prefer not to use umbrella companies on an ongoing basis to avoid the fees that are charged for their services. There are also some umbrella companies that will view a contractor as an employee paying them in this format which can cause the monies to be affected by tax and NI contributions up front.
What about company formation? The alternative is to carry out a company formation. By being a limited company, the contractor can invoice the company direct. As a legal entity, a limited company is more tax efficient, and a contractor can pay themselves using dividends rather than using the PAYE system. This reduces the amount of tax to be paid and can increase the money taken home. A contractor also benefits from limited liability which is not available when self -employed.