7 Things To Know About An Umbrella Company
One of the most challenging parts of being a contractor is relinquishing power over to someone else. You have a vision and goal in mind but are afraid that someone else may not see it the same way. It is also important to understand your strengths and weaknesses as a contractor and search for help when needed.
But, you also realize that a lot of the administrative work is getting in the way of your production time. This is where you could use some help to take some of the burden off your shoulders. Outsourcing your company can create a lot of anxious moments but getting additional help could help you get some expertise in areas where you are more uncomfortable. Choosing an umbrella company could be your solution.
What is an Umbrella Company?
An umbrella company is a third-party supplier that acts as an employer on behalf of the contractor’s employees. The umbrella company will work with the agency on behalf of the contractor to make the deal work so he/she can carry out the assignment.
This is an opportunity to garner up some assurances that you will get paid and taken care of by the agency. It also helps to provide the perfect type of payroll service for you. Having an umbrella company can help keep your eyes on the prize, without having to worry about tasks that will take you away from your project.
Financial Responsibilities
The umbrella company will take care of all the financial responsibilities that come with the job. You will be responsible for completing time sheets for yourself and your employees and sending them over to the umbrella company.
The umbrella company will also handle any invoices that you may have. They also take care of any of the necessary deductions that goes along with the salaries. They will also work with you to reclaim any legitimate business expenses that you incur.
Questions to Ask
There are a plethora of umbrella companies to choose from, which can be overwhelming. You are giving up some of your control to a company that you don’t know a lot about. This is where having a list of questions to ask can help to ease your mind about which company is right for you. Many of these questions will be answered directly on companies’ websites, but I recommend asking them over the phone or face to face. This will insure that they are staying consistent with the message being portrayed on their website.
What is the Company Margin?
This is obviously an important question to ask. What is the gross fee per week or month. This will allow you the opportunity to compare other companies and what they charge for their margins. Research has suggested that you be aware of companies who charge a percentage of the invoice value. This will end up coming out of your pocket. This is a red flag to go in a different direction.
What is the Company’s History?
As with any partnership that you want to form, you want to have some solid background knowledge on the company. How long has it been in business? What do other companies have to say about it? How many other contractors are working with them? Be sure to check out as many reviews as you possibly can and use your network of sources to help with feedback.
What is the Payroll Setup?
You want to be able to have access to all the information that the umbrella company is handling, so finding out how they run their payroll program is important. Are the timesheets set up the old-fashioned way or is it set up directly through technology? If the umbrella company doesn’t allow you the opportunity to look at the timesheets and expense claims at any time, you will not want to work with that company. They should be as transparent as you want.
How Are Payments Processed?
What is the payment schedule that you can expect from the umbrella company? Are there any additional fees that you are not aware of? It is important to see if you are being charged additional funds for financial transfers to banks. Many banks can make and receive payments on the same day without any fees attached to them. The umbrella company should be working with those kinds of banks to save you extra fees.
What About an Insurance Policy?
Does the fee that you pay the umbrella company cover business insurance? It is expected that contractors hold professional insurance, so you will need to make sure that the umbrella companies cover your specific work and skills. You don’t want to be stuck with conflicting insurance policies.
Will You Have a Dedicated Account Manager?
This is a question that should be near the top of the list because of the importance of making a direct connection with someone at the company. You do not want to have to keep speaking to different individuals who are not familiar with your account. Make sure that you are appointed one account manager to deal with for any questions or concerns. This will give you the peace of mind that just one person is focused on your account.
Do you feel as though having an umbrella accountant is the right move for your company? Many contractors can be torn between a limited or umbrella service. But, taking the umbrella route is certainly something worth looking into to provide some protection as a contractor. They can offer services that an independent contractor could not offer to its employees.
Post a Comment