Umbrella Company Why Who How

If you have decided to earn a living as a contractor, rather than as a permanent employee, one of your first tasks is to choose an umbrella company. It's an important decision and worth spending some time comparing what services are on offer.

Do I Have To?

No, you do not have to use an umbrella company. But you cannot go down the self-employed route and you can't be a sole-trader.

What you have to do is find a way to trade through a limited company. There are three options and you can decide which one suits you the best.

• Set up and manage your own limited company. This requires quite a lot of your time on record keeping, form-filling and handling HMRC.
• Work through your recruitment agency. Some recruitment agencies offer this service to their contractors. This is not a popular option and the worst in terms of earnings.
• Using an umbrella company is today's preferred option for contractors. It's an all-in-one service and handles everything from start to finish.

All The Same

Some elements of an umbrella company are the exactly the same whichever one you choose. There are three key features common across all the umbrella companies. These are:

• Limited company status
• Invoicing and credit control
• Calculating tax and NI

When you're deciding which umbrella company to choose from, you'll be considering everything else over and above these aspects.

All Different

The difference between umbrella companies come down to matters like the ease of handling your account, how quickly the umbrella company processes your paperwork and the quality of customer service.

Is it important you receive your money quickly?

Some umbrella companies have one weekly pay run, others will do it every day.

Do you want easy access and 24/7 online facilities?

Some umbrella companies ask you to send in a copy of your timesheet and will manually raise an invoice to send on to your recruitment agency. Others allow you to do submit your timesheet through an online facility.

Problem solving

You need to decide whether you are happy to submit any queries and questions by email, or the type who prefers the option of being able to speak to them on the phone?

Worry Not

Of course price plays a part in your decision making process, too. But that should not be the single deciding factor. There are some qualities in an umbrella company that are more important than saving a few pounds each week.

Consider the importance of a regular & reliable service. What price peace of mind?