How does an umbrella company work?

Working through an umbrella company is one of the most straightforward ways to operate as a contractor. However, if you are new to contracting or have never used an umbrella company before, how does an umbrella company work? Continue reading to discover everything you need to know.

How does an umbrella company work?

Umbrella companies offer a straightforward way to get paid as a contractor, and you can register for the service and be ready to get paid in a matter of minutes. So, how exactly does an umbrella company work?

Below is a step-by-step guide to provide you with an overview of how an umbrella company works.

Register with the umbrella company

Once you have chosen the umbrella company you would like to use, you must register for the service. You can do this over the phone (by calling 01707 871622) or via an online registration form (available here). Registering with an umbrella company should take at most 10 minutes, and you will be asked to provide information about your agency or end client, as well as personal information such as your address and bank account information and information about your assignment.

Complete onboarding with the umbrella company

Once registered with the umbrella company, you will be sent a welcome email. The welcome email will provide important information regarding your employment. The welcome email will also tell you what documents and information they need from you to complete the registration and ensure you are ready for payment; these include:

• A signed contract of employment
• A copy of a recent P4 or a completed New Starter Checklist
• Proof of your identity and right to work in the UK

Please note an umbrella company cannot legally pay you until they have received these documents.

The umbrella company will contact your agency or end client

When you register with the umbrella company, they will contact your recruitment agency or end client to let them know you’ve registered and exchange contracts and payroll information.

Submit your timesheets each week/month

When working for your end client, you may be required to submit a timesheet or the hours you’ve worked to your umbrella company. If you are a client of Churchill Knight Umbrella, you can do this via My Digital. Not all recruitment agencies or end clients require you to submit a timesheet to the umbrella company, but you may still be required to submit one to the agency or client. Please get in touch with your umbrella company if you are not sure.

Your agency or end client will send funds for the work completed to your umbrella company

When you submit your timesheet to your umbrella company, they will raise an invoice with your recruitment agency or end client for the work you have completed. Your agency or end client will then send the umbrella company funds for the hours you’ve worked.

Some recruitment agencies are self-billing. This means you do not need to submit a timesheet. When you are due to be paid, they will send the umbrella company the funds for the hours you’ve worked and a remittance (a breakdown of the payment).

The umbrella company will process your payment

The umbrella company will deduct the required tax from your gross pay and pay the net amount into your bank account. You will also receive a payslip every time you are paid, which details the amount you have been paid and the tax deductions made.

Using an umbrella company is a straightforward way to get paid, and we hope this article has helped you gain a better understanding of how an umbrella company works.

Churchill Knight Umbrella is a SafeRec-certified umbrella company

If you are an employee of Churchill Knight Umbrella, you will receive a payslip audit report from Payslip Buddy (powered by SafeRec), which is emailed to you every time you are paid. This is free of charge for all Churchill Knight Umbrella employees and allows you to check that we are paying you compliantly and all deductions are correct. You can log in to Payslip Buddy anytime to check previous payslips.

Request a tailored take-home pay illustration

If you want to find out how an umbrella company works, our expert Sales Consultants would be happy to explain the service and provide a tailored take-home pay illustration. To speak to our Sales Consultants, please call 01707 871622 or request a call at a time that suits you.