Becoming a contractor may have a number of administrative responsibilities that can cause stress and absorb your free time. Hiring can be financially attractive, but it can also be quite difficult to find out that you need to look for new contracts, negotiate with employers or agencies and manage your finances and taxes. Managing financial and tax affairs can be a daunting task for a good accountant, not to mention a new contractor.
Using the services of the parent company, you can significantly reduce the amount of documentation, and this will leave you precious time to focus on your contract and, more importantly, enjoy your free time. There are several important advantages of using a professional parent company, which I will discuss below.
You will have a fixed monthly fee, which will be agreed in advance with the selected parent company so that you know exactly what your expenses will be. You will also not be charged during periods when you are not working. If your parent company has a good payment system, you can also receive money faster. You should also be able to easily submit your time sheets and expense reports, and most umbrella companies should have an online IT system that allows you to do this quickly and easily. You must also have access to your online account and view its historical data. Umbrella also offers a retirement plan and a life insurance plan, and can also provide private health and travel insurance.
The main advantages of using an umbrella company are:
- You can avoid the stress of running a limited company.
- You do not need to participate in the preparation of spreadsheets, VAT declarations, salary issues, business accounts, taxes, etc.
- The main advantage of short-term contractors is the lack of an expensive process of starting a business, and then organizing its dissolution.
Contractor umbrella company can offer you various types of services. Available options are listed below.
PAYE Umbrella or salary scheme only
This is the most common type of umbrella device, and it does not attempt to resolve the IR35 side. All his income will be paid only at the expense of wages, and he also allows reasonable and permitted expenses.
Umbrella companies can also offer alternative solutions, which include loans in foreign currency and offshore agreements, and these are just some of them. These solutions are promoted on the basis that their payment method gives them an edge over standard and UK companies. Before acquiring any of these solutions, you must accept the fact that you are not indifferent to the proposed solution and make sure that the agreement is legal and appropriate to your personal circumstances.
To find the best umbrella company, you need to know the speed of its processing, as well as the quality of its service. One of the most common claims against umbrella companies is that the points mentioned above do not meet the expected level. Some umbrella companies now offer warranty service or your money back. It is best to clarify the following issues with the parent company in advance.
How quickly will they send an invoice to the agency after receiving their schedule?
How fast will you receive your payment as soon as you receive money from the agency for your work?
You should also be aware that Umbrella is actually hiring its contractors, and because of this, they will save some of their money to cover things like vacation pay so that they can pay later. You must specify in advance exactly when you will be paid and for what reason you should keep the money.
Most agencies will recommend an umbrella company, and these umbrella companies will be judged by the quality of services provided to both the agency and the contractor. Remember that the agency is looking for a smooth option.