Looking for Payroll Services? Here’s how to Choose an Umbrella Company - Featured Image

Looking for Payroll Services? Here’s how to Choose an Umbrella Company

If you’re a recruitment agency looking for the best umbrella company to partner with, you’re probably wondering where to begin. How do you determine the company who will align best with your business, your goals, and the needs of your contractors?

In this article, we’ll run you through nine criteria for selecting the best umbrella payroll company for your business to partner with.

After reading, you’ll have the intel you need to make an informed decision, and you’ll be in good stead to revolutionise your organisation’s payroll affairs.

Why your company needs payroll services

Before we get to that, though, maybe you’re wondering why your company needs payroll services at all? Maybe you’ve got an in-house team who’ve got things under control already. Or maybe there’s just not enough internal demand to justify outsourcing things.

If that’s the case, take a look at our guide on how to find out if your company needs umbrella payroll services.

Inside you’ll find several ways your business could benefit from partnering with an umbrella company. This covers everything from reducing the logistical challenges associated with running a business, to putting yourself in a position to offer more generous benefits to your employees.

How to choose an umbrella company

When you decide to partner with an umbrella company, the next step is identifying the company that best aligns with your organisation’s goals and priorities.

Here are nine things to help you decide.

Do they have the right expertise?

The first thing you want to look at is the expertise on offer. Is your prospective umbrella company partner good at what they do? And do they have the credentials to back up the claims they make about their service?

When placing responsibility for your administrative and tax affairs in the hands of an external organisation, you want to be sure they're safe hands.

Look at the claims they make, the credentials they use to back them up, and the feedback from customers who’ve experienced things first hand. Also, look into the people at the helm of the organisation, and what sort of internal philosophy and guiding ethics they bring.

The best umbrella payroll companies continually improve their knowledge and expertise and are not content to ride the wave of past success. UK tax legislation is continually evolving, and your partner organisation should pride themselves on being at the forefront of the industry.

You can also ask for evidence of compliance audits to ensure your umbrella company is compliant with all relevant legislation.

What’s their reputation like?

Further to the above, dig deep into customer testimonials and feedback. Build a solid understanding of whether customers -past and present - are happy with the service they received.

Try to prioritise feedback on third-party websites, if possible, as this is less prone to being cherry-picked and usually provides a more genuine and balanced impression of the company. Look for persistent negative comments as well as positive ones.

This is an industry where prestige and experience count for a lot. Choosing an umbrella company with a good track-record gives you the peace of mind that you're not being taken for a ride. Spending time on this step can pay dividends later.

How do they make their payments?

Realistically, reliability and ease of payment are likely to be one of your biggest priorities when choosing an umbrella company. Does your prospective partner process payments quickly? Are there charges for same-day payments? Do testimonials from existing customers praise quick and easy payment, or do they begrudge slow payment accompanied by hassle?

An understanding of how your umbrella company makes payment, and what guarantees they make around this, should be one of the first things you look to establish. The more clarity you can offer to your contractors, the more satisfied they’ll be working with you.

Do they offer any perks?

Some umbrella companies offer enrolment in pension schemes, referral benefits, and myriad other perks. Others offer their employees access to industry-specific benefits, or to material that will help them as they progress through their career.

At Optimum Pay Group we’re proud to enrol our employees automatically into our generous Nest pension scheme. This stems from a belief that work should be an investment into your future, as well as your present.

Look to understand which perks - if any - your prospective umbrella company partner offers. These may not be deal breakers, but they’re definitely deal sweeteners.

What costs do they carry?

Cost is the only way that legitimate umbrella companies can compete, and whether you’re an agency or a contractor, you will be directly impacted by the fees charged. Some of these fees are levied on individual invoices, while others are associated with joining and leaving the partnership.

While some companies may advertise high net take-home pay figures, you should be wary of these. Illegitimate companies may operate outside the law, and attempt to entice people in with the lure of a quick buck. However tempting this may be, bear in mind that such practices are likely to result in HMRC investigation later down the line, and this can be incredibly costly.

When deciding on an umbrella company, look at the gross weekly or monthly fee. Also look to understand whether they charge a flat fee or a percentage of the invoice value. The latter can be tempting initially, but can quickly become very expensive when your earnings increase.

Think about long-term costs and decide whether anything feels too good to be true. If it feels like it then it probably is, and it's not worth taking unnecessary risks only to be out of pocket later on.

Are they a genuine employer?

To offer statutory benefits like sick pay, holiday pay, parental pay and so on, an umbrella company must provide an overarching contract of employment. This contract formalises the professional relationship between agency, contractor, and umbrella company, and is the basis upon which everything is built.

You need to understand whether the umbrella company you’re considering partnering with is a genuine employer. If not, it’s likely that they’re cowboys.

Are they IR35 compliant?

The IR35 legislation sets out differences in taxation between employees and limited company directors. It distinguishes between legitimately self-employed contractors and 'disguised employees' - people whose relationship with an employer aligns more closely with traditional employees than outside contractors.

While this may not sound important, IR35 is designed to ensure that the relevant amount of tax is paid by employees and limited company directors, and it sets out the criteria defining each. The legislation looks to prevent people switching statuses for the sole purpose of enjoying greater tax efficiency; instead, defining your status by the nature and responsibilities of your role.

If your contractors are found to be violating the rules, you or they may be placed under HMRC investigation, which can result in paying back all of the tax that should have been paid.

It's simpler than it sounds, and it's vitally important that you're compliant. A good umbrella payroll company will help you to understand the IR35, and will be able to advise on compliance for yourself and your contractors under our employ.

Who will answer your calls?

If you ring up with a query or concern, are you going to spend an hour on hold before speaking with someone who has zero experience with your account? Or will you get through quickly to a dedicated account manager who knows the ins and outs of your situation?

The latter is obviously far preferable, especially when it's your time and money on the line. At Optimum Pay Group we’re proud of our customer service staff, and they’re praised time and time again by our satisfied customers.

Are they user-friendly?

In our technological world, you should expect an umbrella company to have intuitive and easily-accessible systems where you can check your time sheets and expenses at any time.

Look to understand whether this is part of the service you’ll receive, or whether you’ll be grappling with archaic and complicated user interfaces.

Choose Payroll with Optimum Pay Group

At Optimum Pay Group, we pride ourselves on delivering high-quality umbrella payroll services to all of our customers. We pay on time, in full, every time.

And it’s not just us who thinks so, either. We have hundreds of reviews from satisfied customers, and the number is continually growing.

We’d love to count you amongst our customer base, so give us a call and let’s see how we can work together.

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In Conclusion

Umbrella payroll is less complicated than it sounds, and partnering with the right company promises a wealth of benefits for your organisation.

For the layman, choosing the right umbrella payroll company to partner with can be confusing. There’s lots of jargon, and it’s hard to distinguish who’ll align best with your business goals and priorities.

It’s our hope that this article has given you everything you need to make an informed decision. The nine criteria we outlined will stand you in good stead to evaluate what an umbrella company is offering and to identify the right partner for your business.

Get in touch today and find out how our umbrella services can help you.

 

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