Choosing An Umbrella Company – Advice From An Expert
When choosing an umbrella company to use for your freelance business, there are a number of things to keep in mind. Many companies use flashy advertising gimmicks which can be misleading and they may even make false promises, so it's important to get as much information about the company as you can.
First of all, many companies advertise themselves as IR35 compliant, but in reality, with the changes in the laws, all firms are. A company's compliance is immaterial since the only option anymore is to be paid via PAYE, yet many companies use it as a marketing tool. One sign that a company is not trustworthy is if they claim that you can submit expenses without receipts. That may be true, but the HMRC will likely investigate the company eventually, and you will be held accountable for any expenses you cannot prove.
Look at the firm's fee structure before you sign up. While you won't find many, there are some companies will charge a rate based on your earnings rather than a flat fee. This could cost you quite a bit more if your earnings are high, and will increase with your earnings. Another thing to watch out for is hidden sign up and exit fees, as well as penalties if you decide to terminate your contract.
A good question to ask a perspective umbrella company is how quickly they pay. Some companies take too long to send invoices and release payment. This will leave you waiting to get paid. Also, see if they hold money out for things like holiday pay. This may be something you want, but if it isn't, it's best to know upfront.
Make sure they have good customer service. It's great that they have a quick online system, but how do they do when you need to talk to a live person for assistance? If you call with a problem, how long will it take them to get you the help you need? Find out if you will have to deal with whoever answers the phone or if you will have a designated manager for your business.
Ask the umbrella company for client testimonials and references. Word of mouth is always a powerful statement about a company, so ask colleagues and friends for referrals. More than likely, they will have plenty to tell you about both good and bad umbrella companies, so use their experiences to your advantage. If you ask the right questions and know what to look for, you will have no trouble finding the right umbrella company for you.
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