Bringing on additional help through a subcontractor allows your business to take on larger or more complex jobs, without the commitment of hiring an employee. However, since your business's reputation rides on the work they provide, it's crucial to have a subcontractor agreement in place to ensure your subcontractor's work meets your standards.
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If you bring in a subcontractor, you’re on the line for making sure their work lives up to your businesses standards. The purpose of a subcontract agreement is to protect your business from liability should the subcontractor fail to live up to their end of the agreement. A subcontractor agreement is a legal document that covers what work they’re responsible for, how and when they’ll get paid, and who’s on the hook if something goes wrong. A proper subcontractor agreement protects you, your business, and your reputation if there are delays, issues with the work, or payment disputes. It also makes sure your subcontractor knows exactly what’s expected
Depending on your agreement, they might work under your supervision or manage their part of the job on their own. Either way, at a minimum they should be expected to:
When you take on a job, you usually have a contract with the client that spells out exactly what you're promising to deliver. That’s your main contract.
If you hire a subcontractor, you need to make sure they understand what you’ve agreed with the client. A subcontractor agreement allows you to pass on the job details, plus any flow-down clauses from your client contract — like only paying them once you’ve been paid, or needing the job done by a certain deadline.
A trade partner might be another business you work with regularly, like referring work to each other or teaming up for bigger projects. You might quote separately, split the job, or work side by side — but you’re not managing each other’s work.
A subcontractor is someone you hire to help deliver a job you’ve agreed to. You’re responsible for their work, you’re managing them, and the client doesn’t deal with them directly. This is why it's crucial you are 100% clear with the expectations between your business and a subcontractor. Handshakes are a great way to start a partnership, but they don't count for much if something goes wrong.
Before you write your subcontractor agreement, go back and review what you’ve promised your client. If they’re expecting the job done by Friday, your subcontractor needs to know that too.
One of the most important parts is how and when you get paid — especially if you only get paid once the client signs off. You can pass that same clause on to your subcontractor within the agreement, so you’re not stuck footing the bill out of your own pocket.
A good subcontractor agreement should include:
Looking for more advice on hiring or becoming a subcontractor? Check out:
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