Top tips for choosing a contractor service provider

Freelancers often face a bewildering range of choices when weighing up the options for managing their financial affairs. As the number of people freelancing has increased rapidly in recent years, so has the number of new companies offering support services to them.

The Freelancer and Contractor Services Association (FCSA) represents those companies that aspire to be the market leaders in that industry, and in this article Chairman Stuart Davis offers Contract Eye readers his top tips of what to look for in a good service provider – both umbrella companies and contractor accountants.

1. Spend the time in choosing the right partner…

As a freelancer, you have made the choice to take greater control of your own affairs. But the rewards of freelancing are naturally linked to greater risk; freelancers are required to manage that risk and take greater responsibility for their own financial affairs than workers in a traditional employment structure. Like any good business, the ideal is to minimise risk whilst maximising return and whether you have chosen to freelance by running your own business or through an employment solution, the choice of business partner makes a lot of difference to your future security. A good service provider will be conscious of the need to be wholly compliant whilst doing the up-most to make your life as a freelancer as easy and straightforward as possible. Anything less than this could see your arrangements being ruled as non-compliant and pose a significant financial, or indeed legal, risk to yourself.

2. Don’t settle for second best…

Choose a service provider that doesn’t just meet the minimum standards but goes beyond them. Always choose a provider with a track record for compliance and a reputation for best practice.

To many readers this may sound obvious, but all too often freelancers simply treat the service they pay for as nothing more than as an adjunct to their day-to-day work. Investing a small amount of time and effort finding, researching and comparing the range of service providers in the market can save freelancers the worry and concern of working with a provider who all too often might seem content to work against you rather than with you.

FCSA recommends not basing your decision simply on financial illustrations. Using uniform assumptions, the illustrations provided will give similar results. The difference is in the fees. Most of the theoretical tax planning opportunities for freelancers are well-recognised and can easily be incorporated into an illustration. You can measure providers by how well they help you work compliantly with legislation; obtain tax planning opportunities and what kind of services they have to run your day-to-day business affairs.

3. Always look for transparency…

A good service provider will be transparent in the advice they give you. If the freelance lifestyle is for you, then you are more likely to be the type of person who welcomes the ability to choose what path to take on the basis of those options available to you. Take this same approach to choosing your service provider. When choosing whether to be in business on your own account or work through a recruitment business and or via an umbrella scheme, ask your potential service provider for all the facts and honest advice on the pros and cons of each option. If they aren’t prepared to advise you in this way, or seem to be pushing you unduly towards a single option only, then move on elsewhere.

When examining what services they do offer, find out how far they will go to make your life easier. It is the difference between the provider providing you with advice and support on, for example, what travel expenses you can and can’t claim, and them simply sending you a copy of the official guidance. Life as a freelancer can be stressful as it is, so why make it even more so?

Finally, if you are in business on your own account, look for a service that will review your contract and working practices on each assignment to ensure that your assignment is not caught by IR35 for example. This is a key service that enables credible tax planning, so you shouldn’t expect to pay extra for it.

4. Invest in your relationship…

Ensure that the provider you choose is prepared to do the work necessary to keep you happy. A good service provider will recognise that you are employing them to make your life easier.

The best providers will recognise that you don’t want to waste time chasing them for information they should have sent you weeks ago. If you choose to operate as your own business then you should expect to be able to access your information, whatever the time or day of the week. The best way of ensuring that this is the case is via an online customer portal that allows you to issue invoices or submit expense claims. If you choose to work through an umbrella company than a good provider will chase your employment agency to make sure they pay correctly and on time.

5. Presentation matters….

The best service providers will do what’s necessary to present you with the required information in a clear and accessible format, along with the necessary advice. This shouldn’t be an optional extra; this is a key part of the greater responsibility you have as a freelancer for your own financial affairs. It is absolutely vital that you are able to access information in a clear and understandable format to help you make the decisions that you are accountable for. For example, if you are have chosen to run your affairs as your own business, then you should expect financial calculations provided with every invoice raised and for monthly management accounts to be produced.

In conclusion

To sum up, Stuart Davis told us:

“Your choice of service provider has the potential to allow you to fully reap the benefits of freelance working. Our advice is simple – review the options and make an informed choice. If you invest a small amount of time and effort in finding the right provider when you are looking, then you will reap the benefits for the whole of your career as a freelancer”.

Last updated: 7th November 2014