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.

The first thing you should know is that while many umbrella companies claim to be IR35 compliant, the truth is that they all are. Since the only option is to be paid by PAYE, being compliant is irrelevant and is just an advertising manipulation trick. Another thing to watch for is companies that advertise that you can claim expenses without receipts. Without receipts, you open yourself up to an investigation by the HMRC and you will be liable for any expenses you can’t prove, and this activity is closely watched.

Carefully examine the company’s fee structure. While most charge a flat fee for services provided, some charge rates that are income based. If you are a high earner, you will pay more for the same services as someone who earns less. If your income increases, so will the rate you pay, so it is best to make sure the firm charges a set amount monthly. Watch out for set up or exit fees, and make sure there are no penalties for terminating your contract.

Ask the company how long it takes them to pay clients. Some umbrella companies are slow to send out invoices, and in turn, are slow to pay. For some freelancers, timely payment is a very important detail, but can easily be overlooked. Find out if they take money from your pay for future payments like holiday and sick pay. This may be a desirable service for you.

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.

Don’t be afraid to ask the umbrella company for references from satisfied clients and testimonials. One of the best ways to find a reputable company is to ask your friends and colleagues for referrals. It is likely that they will be able to give you a list of companies to avoid as well as the names of some solid and reputable companies as well. As long as you know what you want in an umbrella company and can ask the important questions, finding the right one will be easy.

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