In this guide we will explain you step-by-step on how to register with an umbrella company. We’ll answer all the necessary umbrella questions and put you on the right path.
The dependency on umbrella companies has increased tenfold after the IR35 reforms. It has become almost mandatory to use an umbrella company if you want to do contracting. The unregulated nature of the umbrella company market is not helping either.
Having said that, it is not difficult to start using an umbrella company. In this article, we will explain you how you can register with an umbrella company and start contracting.
1. Find and shortlist an umbrella company
The first thing you would need to do is to find an umbrella company. Not just any umbrella company, but an umbrella company that is fully compliant and safe to use. Your agency may recommend you an umbrella company that might be on their PSL (Preferred Suppliers List) which you may use, but you must remember that it is not mandatory to use the umbrella company recommended by them. It is not necessary that the umbrella company recommended by your agency is compliant. Some umbrella companies pay referral commission to the agency or there is a linked incentive of some sorts. So, it is important for you to do a thorough due-diligence before appointing an umbrella company.
Just go on Google and search for “umbrella company” or “best umbrella companies”, and you will find a list of umbrella companies. Explore the websites you get in the search results and see if you can find one that suits your needs.
We also have a team of umbrella companies whom we can suggest, you can have a look at them. Shortlist at least 2 to 3 umbrella companies.
2. Compare the shortlisted umbrella companies
Now that you have shortlisted umbrella companies, it is time to review their services and compare their fees. It is important to note that, cheapest umbrella companies are not necessarily the best and the same also applies to the largest and the most expensive ones.
Umbrella companies usually charge anywhere between £5 to £35 per week for their services. Find out how much they charge and compare their fee with the other umbrella companies you have shortlisted. More than the fee, it is important to compare the services being offered for the price. Sometimes it’s worth spending a bit more for that essential service which might save your time and money in the long run.
3. Contact the umbrella company
Once you have finalised the umbrella company you want to work with, it is time for you to contact them to begin the registration process.
Registering with an umbrella company hardly takes a few minutes. All you need to do is fill in the required details on their website or you can do it over the phone. It is a straightforward process.
They would typically ask basic set of questions such as your name, contact details, assignment details etc. They would also need information about your end-client and recruitment agency. On the other hand, they will also walk you through their services and explain you how they work and further guide you through the next steps of the registration process.
4. Welcome email and Documents submission
Now that you have submitted the required details, this marks an end to your sign-up process. Shortly after the sign-up process is completed, you would receive a welcome email from your umbrella company.
The email would typically contain information about the umbrella company, details about their fee and the service offering and a step-by-step guide to help you complete the registration process.
You would also be required to submit a set of documents, which normally are:
5. New Starter Checklist and P45
As mentioned in the point no. 4, you will be asked to submit your most recent P45 document. This is to ensure that you are put on the correct tax code. Alternatively, your umbrella company would send you a link to the HMRC’s new starter checklist form if you don’t have a P45.
6. Contract of Employment
Once you completed the sign-up process and submitted the required documents to the umbrella company, they’ll contact your end-client or the recruitment agency to intimate them about the completion of the sign-up process. After this is done, your umbrella company will issue you a contract of employment and assignment schedule.
This is the time when you thoroughly review these documents. If you find anything off, this is the time to pull out. If there’s something in these documents that you find not right or not to your expectations, approach your umbrella company, and seek an explanation from them.
7. Payment and deductions
Now that you are setup with the umbrella company of your choice, it is time to get paid. For this, you may be required to submit a timesheet. Some umbrella companies might get this information from your agency. This depends on how the umbrella company operates.
The payment process is simple: The agency will pay your umbrella company the amount they owe to you. Once the agency pays, the umbrella company will make necessary deductions such as tax, national insurance, and their margin fee. They may also deduct apprenticeship levy and pension contributions, if applicable.
Post deductions, the balance amount will then be credited to your bank account. The umbrella company will also send you a payslip which will have details pertaining to your pay and the deductions. It is important to go through the payslip every single time you receive it from your umbrella company. This is to ensure that you are being paid correctly. If you find any inconsistency in your pay, seek an explanation from the umbrella company. If you don’t get a satisfactory response from them, you can report the umbrella company to HMRC.
We hope our guide helped you understand the process of registering with an umbrella company. If you have any further queries related to umbrella company, please feel free to drop us an email on [email protected], or you can contact any of our umbrella company partners and they will be more than happy to help you.
Disclaimer
This article is for information purposes only. We strongly recommend taking professional advice or an expert opinion before reaching any conclusion. You can also write us an email at [email protected].