Many workers, particularly in certain fields like engineering and IT, enjoy the interesting and flexible nature of contract work. Working on projects for a short period of time can be enjoyable and provides varied experience. However, some businesses will only award work to contractors that are registered as a limited company; but a good way to get round this issue, as well as receive a number of other benefits, is to work with an umbrella company.

There are plenty of umbrella companies for you to choose from, but before you decide which one you are going to go with, there are a number of things you should really think about. If you don’t, you might find that your umbrella company is actually costing you a lot more than it should be.

Umbrella companies provide a range of benefits, and in return you will usually pay them a monthly, or perhaps annual fee. Alternatively, they may charge you a percentage of your invoices. This might work okay for some contractors, but those that are earning much higher rates of pay will find themselves handing over a lot more money to the umbrella company. For this reason, umbrella companies that offer fixed fees tend to be the popular choice.

Once you’ve submitted an invoice to your umbrella company, they are responsible for collecting the wages and expenses you are owed, and then paying that money to you as soon as possible - but you need to find out exactly how quickly that tends to be. Same day bank transfers offered by some companies provide the fastest way of getting your money, which is often a key consideration for a lot of contractors.

For a lot of contractors, the services of an umbrella company might be essential, so if you’re going to spend a lot of time working with one of these organizations you should make sure that they are as easy as possible to deal with. The best companies will provide service level guarantees, and an online portal where you can manage your payments and invoices; and if you have any issues, having your own Account Manager should help to get things resolved quickly.

Her Majesty’s Revenue and Customs sets out a number of guidelines and regulations for calculating and deducting National Insurance and PAYE from the money you earn. Your umbrella company will look after all this for you, but you need to check that whichever organization you choose is fully HMRC compliant.

The majority of umbrella companies provide a valuable service for contractors, managing a large part of their admin and ensuring they get paid, so they can spend more time focusing on their projects. These tips will help you choose the right company to work with, and allow you to make the most of the benefits umbrella companies offer contractors.

Related Reading : Umbrella Company

Technorati Tags: , , ,