Top Tips for Comparing Umbrella Companies

What to look out for when comparing Umbrella Companies

Because of their growing popularity, hundreds of umbrella companies have popped up in recent times.

Although it’s great to have choice, this can also make it difficult and often confusing for contractors to find the best umbrella company for them. After all, no two umbrella companies are the same.

To find the perfect match for your contracting needs, there are certain factors to take into consideration.

In this guide, Umbrella Supermarket outline our top tips for comparing umbrella companies in 2021, so you can find the best fit for you.

Use an umbrella calculator

The best way to compare umbrella companies is by using our umbrella company calculator.

By simply entering a few key details, such as your day rate and preferences, our award-winning calculator will generate a list of the umbrella companies best suited to you.

Now, you will be able to compare umbrella companies based on the following:

Fees

In return for their services, every umbrella company will charge fees.

However, fees vary from one company to the other and therefore it is always necessary to compare the company’s fees to ensure you get a fair deal.

When comparing umbrella fees it is important to look at how the company charges their fees. Companies can charge fees as either:

  • Fixed fees: this is a set fee which is taken from the contractor’s pay either monthly or weekly.
  • Percentage fees: this is where the umbrella company takes a percentage of a contractor’s pay. This is dependent on how much they earn, so as their earnings increase, so do the fees.

Many contractors understandably prefer the fixed fee option. After all, paying a percentage fee means paying more for the same level of services if you begin to earn more.

Another thing to look out for when comparing umbrella company fees are smaller, one-off fees companies can sometimes charge. These include things like joining fees, exit fees and fees for processing expenses. Although they are often small one-time fees, they still need to be accounted for.

Insurance

Another key factor to account for when comparing umbrella companies is the level of insurance they offer.

As your employer, an umbrella company is required to provide employers’ liability insurance to protect the contractor financially if they fall ill or are injured at work. However, some contractors may require further levels of cover depending on the contract at hand.

It’s always useful to find out whether the company offers public liability insurance and professional indemnity insurance. These are typically a requirement laid out in the contract, however as they are not a legal requirement, it’s always useful to check whether the company offers them as part of their services. Otherwise you may have to bear the cost yourself.

Some contractors require other types of insurance depending on their industry and role, so it’s always best to check whether the company can cater to your needs.

Payment terms

Payment terms are a significant factor to take into consideration when choosing an umbrella company, and there are many important questions surrounding the issue.

Every contractor wants to know exactly when they will get paid and umbrella companies provide different payment options from daily, weekly, fortnightly to monthly. Clearly, different contractors will have different preferences, so it’s important to find a company that caters to your needs.

Another factor to take into consideration is how easy it is to get paid.

Every contractor knows the importance of getting paid on time which is why it is important to avoid companies that force you to jump through loopholes to submit timesheets. Additionally, it is important to look out for any indications of payments being delayed, such as requirements for timesheets to be signed off.

Finally, always look out for any red flags.

Steer clear from umbrella companies who claim to offer you a more ‘tax efficient’ way of working. This this is not possible due to the fact that every umbrella contractor pays tax through the PAYE system.

Some companies will offer to split the contractor’s salary into 2 or more payments, with just one payment going through the PAYE system, pay via a capital advance agreement or make payments through an offshore structure in order for you to pay less tax.

This will in fact do the contractor more harm in the long run as you are liable for your own tax responsibilities.

Reputation

The final factor to look at when comparing umbrella companies is their reputation.

No contractor wants to work with a company with a poor reputation, which is why spending time researching companies and looking at reviews is key.

Though a simple online search you can find out important credentials such as how long the company has been operating, the number of contractors they have worked with, what reviews they have received, if they have any history of working with contractors in your sector and if they have any other accreditations that can boost trust.

Find the best umbrella company for your needs with the help of Umbrella Supermarket

Now you know exactly what to look out for when comparing umbrella companies, why not try out our handy umbrella calculator to find the perfect company for you? Using Umbrella Supermarket’s award winning comparison tool, we will generate a list of the best companies catered to your specific needs in just 2 minuets.

If you’re ready to see what our umbrella calculator can do for you in 2021, simply start by entering a few key details and we will do the rest. Thousands of contractors are moving to umbrella companies, are you?

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