So you are considering using an umbrella company? Lots of contractors do, in fact, and many see it as a great way to go about their business. By using an umbrella company you can focus on your work and let them worry about time consuming activities, such as paper work and tax calculations.
But before you go ahead and enlist the services of an umbrella company, there are a few questions you may want to ask. This is completely normal – after all, the company you choose will be responsible for your finances and pay!
The following are some of the most popular questions umbrella companies are asked by contractors.
Can you accurately estimate how much I would earn when working through an umbrella company?
To see how much you would earn as an umbrella company ’employee’, you can use a contractor salary calculator. This handy technology will work out how much you will take home after tax and National Insurance Contributions. By using this, contractors know exactly what to expect in their first paycheck.
Each company is different so it is important you search around for the one that suits you best.
Do you offer on-going tax planning advice?
All top umbrella companies will have a team of tax experts at their disposal. As a result of this, high quality advice is always available to contractors who choose to work through an umbrella company.
As your company will be largely responsible for your tax deductions, it is in their best interests to ensure you are kept up to date and informed about your tax options. On top of this, your umbrella company will handle most of your tax related paperwork, so you won’t have to spend all your time worrying about this.
Is it quick and easy to submit expense claims?
Umbrella companies often offer contractors a range of expenses. These are usually for accommodation, travel and food costs that have been incurred as a direct result of your current contract. Each group is different and so too are their expense policies.
A company’s system for claiming expenses will be linked to their individual policy. As many umbrella’s look to make contracting as easy as possible for their clients, the process is usually quite hassle free.
Details of your expenses should be included on your timesheet, receipts for major expenses – for example, a hotel room – should also be provided to your umbrella company.
How will IR35 affect me?
As a contractor working through an umbrella company, you are technically an employee. This means you will be inside IR35 for as long as you choose to work in this way. This eliminates a considerable amount of bother on the part of the contractor.
You will not have to worry about the status of each individual contract like you would if you set up your own limited company.
Who will take care of my paperwork and admin tasks?
A top umbrella company will issue you with your own business manager, who will deal with all your administration. They will take care of your tax calculations, invoices and they will ensure that you are paid properly by your current client.