Signing up with an umbrella company is a great idea for contractors who want to reduce the hassle and administration of self-employment. But how exactly does it work? Understandable, you won’t want to rush into anything without knowing what it involves.
Turning away from full-time employment for the first time and deciding to go out alone is a big step in itself. You are going to want to be confident in your manoeuvre to registering with the right umbrella company.
There are several calculated steps you can take to ensure that you have a smooth transition and guarantee you register with a suitable umbrella company that matches your specific needs.
Read on as we share how to register with an umbrella company.
Compare providers
There are tons of umbrella companies out there. The very first thing you are going to want to do is to pinpoint the best provider for you.
Rather than spending arduous amounts of time visiting or contacting each company individually, it’s recommended to visit an umbrella company comparison site instead. This way, you can quickly and efficiently compare all of your options side by side before making a final educated decision.
Each one is different so by using a trustworthy comparison site, you’ll be able to compare the specific traits that you’ll be looking for in a company and pinpoint the exact one to suit you.
An umbrella company comparison site will show not just the pricing structure, but other benefits you want to be aware of. This will include things such as insurance, pension schemes and medical cover.
On top of that, comparison sites will be able to highlight which companies are the most trusted. Anybody can set themselves up as an umbrella company, without any experience or qualifications, so it is essential to know who you are trusting to handle your money and time.
Get in touch
The next step would be to get in touch with the chosen umbrella company either online, over the telephone or via email.
Not only will speaking with them directly give you a good impression of how accommodating and responsive the company can be, you’ll be able to use them as a sounding board to answer your queries and any concerns you may have.
Most companies will be able to set you up with a new account for you within 24 hours so you can be straight to work in time at all. Almost all the leading umbrella companies also have online portals, so if you’re too busy to speak over the phone, then all of your communications can be managed via the web.
Read through the Ts & Cs
Before agreeing to anything in writing, make extra sure to read through all the company’s terms and conditions so you won’t be tripped up by any hidden clauses or surprise costs. Details such as a joining fee or leaving fee won’t be the same for each company, for example, so it is crucial to understand the specifics before you strike the deal.
It is smart to check whether any of the fees that are added on include VAT or if you can negotiate the cost to be lower. Some umbrella companies charge on a percentage basis, but will often be prepared to negotiate, particularly with contractors on higher rates.
The length of the contract itself is also something that can vary so you may need to be aware of how much work you are expected to complete within your agreement. This is especially true for short-term contractors who have chosen an umbrella company as they don’t want to risk the lengthy and time-consuming process of forming a limited company only to arrange for it to be dissolved.
In order to differentiate in a crowded market, some umbrella companies might also choose to provide their employees with additional perks that could sway your decision. This includes access to discounts and gym memberships.
One of the main positives of working with an umbrella company is their low-risk nature, so you wouldn’t want to be tripped up by an unsuitable deal all because you didn’t fully understand or read the finer details of the contract.
Registering with an umbrella company
Now for the exciting bit – signing the contract and getting started on work with the umbrella company.
Make sure only to sign the contract if you have done all of the above steps and are confident in the choice you have made.
Once everything is signed, you will also need to inform your agency or direct clients of the name of the umbrella company you are using, so that they can prepare their contract with the umbrella company’s name as a contractor.
What to do when you start
Your umbrella company will have a standard application form for you to advise them of your name, address and banking details for direct credit transfers to your account. It is also customary to send the umbrella company your P45 form from your last employer, which will enable them to obtain a tax code to operate your salary.
Going forward, whenever you agree on terms with a new client, you must provide all the relevant details to the umbrella company. This includes the hourly rate and start/end date of the project. Your umbrella will then take care of the administrative tasks for you.
You will need to provide them with timesheets of the number of hours of work you have completed for your clients. In return, they will provide you with a net salary that automatically deducts national insurance contributions and income tax.
