There are plenty of guides on how to choose an umbrella company. But in most cases, they’re needlessly complicated and drive you towards a specific provider. At Umbrella Broker, we do things differently. As an umbrella company comparison site, our main aim is to make things easy for you.
In this post, we’ll look specifically at how you can stay calm and in control when choosing an umbrella company – from start to finish.
1. Is it right for you?
One of the main reasons people become stressed when comparing umbrella companies is that they feel rushed into things. That’s why it’s always best to do your research before beginning the process.
First and foremost, is an umbrella company the right option for you? Broadly speaking, contractors that want to work for themselves have three options:
- Setting up a limited company – You can maximise income by becoming the sole director of your own company and topping up your salary with dividends
- Operating as a sole trader – You will work for yourself and complete a PAYE self-assessment tax return on your own behalf
- Working through an umbrella company – They will process invoices and tax on your behalf and provide statutory benefits in exchange for a monthly fee
Limited company
A limited company is often seen as the holy grail in terms of income. However, the government is slowly but surely cracking down on this route. IR35 forces most contractors operating as a limited company to process their income through PAYE rather than paying low-tax dividends. This route also has a hefty administrative burden in terms of setting up the company and managing accounts.
Sole trader
As a sole trader, your income will only be subject to PAYE income tax and employees’ national insurance. However, as with the limited company route, you won’t receive any statutory benefits like holiday pay, sick pay and maternity/paternity leave. There’s also a lot of admin to take on, with annual, quarterly or even monthly self-assessment tax returns.
Umbrella company
Finally, if you choose to work through an umbrella company, you will pay a monthly or weekly fee along with employer’s national insurance. These costs will slightly reduce your take-home pay. However, in return, you will receive full statutory benefits and have all invoicing and tax taken care of.
2. Figure out what you need
If you’ve decided, like many others, that having tax and invoicing taken care of is well worth the extra cost, the next step is to decide what you want from your umbrella. Having a clear idea of what you need will make it much easier when it comes to comparing and choosing your umbrella company.
Payment
How often do you want to pay your umbrella company – and be paid by them? While most operate on a monthly basis, some will invoice your clients and take payment weekly. It may simply be a case of choosing between the two with your umbrella company, but it’s best to decide beforehand.
Insurance
Do you already have insurance? Professional Indemnity, Public Liability and Employers’ Liability are all important insurance types for contractors. If you need an umbrella company that provides them, it’s best to keep that in mind while you’re choosing.
Extra support
Some umbrella companies will offer around-the-clock support by phone, while others will simply give you a contact form or poorly monitored email address. If you already have a lot of questions, it’s best to look for an umbrella company that offers plenty of support and guidance.
Online access
Many umbrella companies provide an online portal where employees can login to see payment updates or download payslips and invoices. Again, decide whether this is something you need before you start your search.
Perks
Would you benefit from a discount scheme or similar perks? Many umbrella companies will offer these as an added bonus for their employees. However, it’s important to be clear how much they really matter beforehand, rather than being enticed in when it really has no value for you.
3. Use a comparison site
Once you have a clear idea of your ideal umbrella company, it’s time to start searching. The best way to do so is through an umbrella company comparison site. A good comparison site will give you all the information you need to know, based on everything above, in one place. Here are some other great features…
Save results
Choosing an umbrella company isn’t something you should rush. With Umbrella Broker, we will email you a password, so you can save your results and come back whenever you have plenty of time. There’s no need to abandon your search when you’ve got things to do.
Edit your search
You can also edit your search to change the results. Let’s say you decide you want to opt out of a pension scheme, if only to see how it affects your income. Or maybe you want to do a comparison for two different hypothetical contracts. You can do both without having to start a new search.
Reviews
Most umbrella companies have reviews. They’re a great way to see if they do ‘what it says on the tin’. But you don’t want to have countless tabs open to find different companies and their reviews. Instead, we give you overall review ratings for each company in your search results.
Exclusive deals
On top of all that, with Umbrella Broker, you can get exclusive deals on umbrella company services. Best of all, you can do that directly through our site, rather than having to enter your details all over again.
