An umbrella organization can help independent contractors in running their limited company. The organization will act as the contractor’s employer and as well as the middle man for the contractor and their end client or recruitment agency. The main task of an umbrella organization is to take care of the admin tasks such as taxes and accounting.
Reasons Why Contractors Need The Help Of An Umbrella Organization
- Umbrella companies are beneficial to new contractors since they do not have to set up a limited company at their own expense with no guarantees that it will last for a long time.
- Contractors who are planning on short-term work can go for the simple option of working under an umbrella organization.
- Umbrella companies can help contractors that have a contract inside the IR35.
- Contractors will get the same benefits as the regular working employees.
- Contractors can get a pension when they retire.
More About Umbrella Companies
An umbrella organization can give contractors the best of both worlds; the convenience and benefits of an employee and the independence of being a contractor. If you are a contractor or maybe you are thinking of venturing into this field, then it is best to reach out to an umbrella organization to help you get started.
Some contractors may forego the idea of getting help from an umbrella organization because of the fees but if you want to focus more on your workload and just do away with the paperwork or admin tasks; then you can surely recognize the importance of the Umbrella company.
Fees And Costs
There is no standard fee for umbrella companies since it will depend on several factors. Here are the categories for the fees and costs of an umbrella organization:
- Fixed fee: Contractors are charged either weekly or monthly a fixed amount for the services rendered by the organization.
- Percentage fee: The umbrella organization will charge a specific percentage of the value of the invoice of the contractor
Consider both options and find the best one that will give you the most value for your take home pay. Discuss the options with the organization and ask all necessary questions so that both parties can come up with a mutual decision.
How To Choose A Reliable Umbrella Organization
The umbrella organization must have the right credentials and license to operate. They should be FCSA accredited and must have a good track record in providing service to contractors. It is also important to research if they have any additional or hidden fees.
Another way to find a good umbrella organization is through personal recommendations from trusted colleagues or friends. However, you have to make sure that the recommendation is indeed legitimate and not fueled by an incentive provided by the organization.
Lastly, just take ample time in researching different umbrella companies that offer their service in your area. Make a list of the companies and take note of their services and fees so you can have a basis for comparison.
