Quick Menu
Day to Day Processes
Umbrella Companies help to reduce the day to day administration associated with being a freelance contractor, especially when compared with going into business with a Contractor Limited Company. This reduction in admin means that you can spend more time concentrating on your career rather than thinking about VAT Returns or Annual Accounts.However, there are certain basic tasks that you still need to take care of each month. Therefore it’s a good idea to know what tasks you need to take care of and what tasks your Umbrella Company will take care of.
Contractor Tasks
Each week or month you will have two important tasks that you need to undertake:- Complete Contractor Timesheets: In order for an Invoice to be raised you must send in a completed timesheet, even if you use a self billing system. Once the Umbrella Company has received your timesheet an Invoice is raised to the client/agent. Ensure the timesheet is fully completed before sending and keep a record of the sent item i.e. If you are sending the timesheet by fax get a delivery report, if sending by email save the email in sent items.
- Submit an Expense Claim: In order to claim business expenses need to complete an expense claim form and submit receipts to prove the expense was incurred. It is important to ensure that the expenses claimed are within the Umbrella Companies expense policy, if not they will be disallowed which could lead to a hold up in payment. If you are required to keep hold of receipts yourself make sure you keep them safely for at least 6 years. If the HM Revenue and Customs undertakes a PAYE Investigation of the Umbrella Company and it is not possible to produce the receipts you could have additional Tax/NI to pay
Umbrella Company Tasks
Your Umbrella Company will take care of a whole host of tasks that you will probably never even be aware of e.g. VAT returns, PAYE Payments, PAYE Returns, Annual Returns and Accounts etc. On top of these tasks the Umbrella Company also undertakes many day to day tasks, including:- Dealing with Agency/Client Contracts: The Umbrella Company will arrange all contracts, send company documents to the client/agency, check that contracts do not break site based rules, deal with contract extensions, arrange for changes to terms and conditions were required etc
- Raising Invoices: As soon as a contractor timesheet has been received the Umbrella Company will raise an Invoice to the Agency/Client, check contract rates are correct, speak to the Agency/Client to confirm the Invoice has been received on a new contract
- Credit Control: The Umbrella Company will deal with any credit control issues if the Client/Agent has not paid an invoice. Ultimately this is the contractors liability but all actions are normally undertaken to receive unpaid funds
- Receives and Checks Payment: Once a payment has been received the invoice values need to be confirmed and the money assigned to a contractor. If there are issues with the payment the umbrella company will resolve them
- Processes Expense Claims: For an expense claim to be paid it needs to be checked and processed. If there are any disallowed items the contractor is normally informed and any issues resolved.
- Deducts Tax and NI: Income Tax and Class 1 National Insurance is deducted from salaried income using the appropriate tax codes and banding. PAYE payments are made by the Umbrella Company to the HM Revenue and Customs
- Pays into your Bank Account: Once Tax and National Insurance have been deducted a net payment is made into the bank account of the contractor normally using the 3 day clearing BACS payment system. If urgent funds are required it may be possible to arrange a same day CHAPS payment.
- Sends Payslips: Payment Notification is sent to the contractor to confirm the total payment made and any tax and national insurance deducted. Payslips should always be kept to prove how income was received.
