New to contracting - umbrella advice please!

**Clippy** · 3 April 2010, 23:21

Originally posted by Liz View Post

Hi,

I have just got a new job after 7 months unemployment following redundancy, and it is a contract. I have never contracted before, so am just learning what its all about! I have checked advice on the forum and I know this is probably a frequent question, so I apologise if it is tiresome to anyone, but I couldn't find recent advice for it. Basically, I am completely confused regarding what umbrella company to use - the more I check advice in various places, the more confused I get. Please could anyone give me some advice on what umbrella company would be the best for me to use. Also, if there is any advice you think would be helpful to a new contractor, that would be great.

Thanks!

Which elements are confusing you?

**Liz** · 3 April 2010, 23:23

I need join an umbrella company urgently, but have no idea on the best company to use - have read good and bad things on quite a few, so every time I think I know who to use, I then get unsure again!

**Zippy** · 3 April 2010, 23:43

Liz,

you have to have a ltd co or umbrella in place prior to signing the contract. The contract isn't with you personally. Most will advise you to set up your own ltd co but if you can't be arsed go with the cheapest umbrella, as the rules re expenses etc are all the same.

**TykeMerc** · 4 April 2010, 01:21

Originally posted by Zippy View Post

Liz,

you have to have a ltd co or umbrella in place prior to signing the contract. The contract isn't with you personally. Most will advise you to set up your own ltd co but if you can't be arsed go with the cheapest umbrella, as the rules re expenses etc are all the same.

As Zippy said the contract is either with your own Ltd or an Umbrella as agents can't deal with you as a Sole Trader.

Their expenses rules are pretty much the same, but I wouldn't necessarily go with the cheapest as service levels are important, doubly so when you consider the Umbrella is getting paid the money and then paying it on via their payroll.
Unfortunately it's not unknown for an Umbrella to go bust and leave multiple contractors without their hard earned cash. I don't know just how many people ended up badly out of pocket when Prosperity4 ceased trading, but I understand it was in the thousands and apparently Tarpon is run by the much same group that ran P4...

**Liz** · 4 April 2010, 09:38

Can anyone recommend a decent Umbrella to go with - I have seen details of a number of them (Parasol, ContractorUmbrella, Springboard, and a few more), but would rather get the views of whether they are decent companies than go in blind, and risk making a big (and potentially costly) mistake!

**Nicely Nicely** · 4 April 2010, 10:10

I have been LtdCo and now I'm with a brolly for reasons.

Go LtdCo. Contrary to what the brollies tell you, you can get a LtdCo set up, plus business bank account, then get money out of it many days faster than setting up a brolly account and getting money out of that.

Plus what the brollies tell you about expenses is bollocks. You get taxed to buggery or risk being taxed to buggery + penalties + interest in the future. You can claim for far more stuff through a LtdCo than through a brolly.

I shopped around for my brolly, got a big popular name and found their support is crap. Their web site looks fantastic and they make great promises, but once they have your money it is another matter.

Also, the paperwork for expenses for a brolly seems to be harder than when I had a LtdCo. And the paperwork in general they expect is not much better than what I had to do for the accountant. Except the brolly adds loads of rules about deadlines for their benefit.

And while I whinged about paying an accountant £1,500 a year, now I'm paying a brolly £1,500 a year.

Being in a brolly is not worth it, I can see no benefit to you going that way.

(I also tried to create a few threads on here about how I think brollies screw contractors over expenses and VAT but they never got through moderation for some reason. Probably because of who the advertisers are...)

**Liz** · 4 April 2010, 12:14

I have had a look at a number of umbrellas (want to go down that route, as there is a very good chance of being made permanent after the contract ends). However, I don't want to take pot luck and perhaps have it come back to bite me! Can anyone recommend a reliable good umbrella company to use, as I am new to it all, so its a bit hit and miss so far. Thanks!

**Zippy** · 4 April 2010, 12:26

Nicely Nicely makes a valid point about the VAT - you don't any of it back on your expenses. With a ltd co you can take advantage of the flat rate scheme and make a few extra quid.
I've used one of the more expensive brollies in the past and I wouldn't say it was a great service. You will have to provide proof of ID etc before your account is activated and you do get the 'you can claim 15 quid a day without receipts' nonsense. You can't, so don't fall for it (you don't have to send the receipts to the brolly, but will have to keep them for HMRC)
Another handy bit of advice is to try to get weekly payment from the agency. It limits the amount you will be out of pocket if they or the brolly go out of business.

**cojak** · 4 April 2010, 12:30

Any brolly recommendations for the OP?

New to contracting - umbrella advice please!