Working with Subcontractors Requires Knowledge and Management Skills

Businesses today need to take advantage of any options available to them in order to get ahead of the competition and improve their bottom line. One of the ways that many business owners can help their company is by using subcontractors. Working with subcontractors can save your company money, but it does require some knowledge and management.

Advantages of Subcontractors

There are a number of advantages to working with subcontractors. First and foremost, you can utilize subcontractors rather than hiring employees outright. This is often a very good business decision, especially for businesses that are just starting out. You may not know how many people you will need to use. By hiring subcontractors you can provide work to them as it is needed. You won’t need to worry about providing them with company benefits or insurance plans, so you can save money on your bottom line.

Choosing Subcontractors

The most important decision you will make is which subcontractors to hire.  Since they are not permanent employees you are able to test them for a period of time to ensure that they are working out. If not, you can hire another contractor. You should be prepared to pay for quality workers. Higher pay means more experience, better work ethic, and improved skills. There are many places to find workers. Put together a test that will allow you to review the proficiency of the applicants as you hire them.

Subcontractor Agreements

It is important that you have your subcontractors sign agreements with your company. The agreement should include basic personal information as well as data about the job itself. The contract should provide a job description including expectations as well as payment information. It is helpful to have the subcontractor agreement be drafted by a qualified commercial law attorney to ensure that it complies with the governing laws and that it protects your business. The agreement should include a non-disclose statement that keeps your important business information private.

Payment of Subcontractors

You need to create a company policy regarding payment of employees, including subcontractors. The policy should address how and when the subcontractor will submit an invoice, and how and when the invoices will be paid. You will need to decide how payment will be made. For example, you may choose to pay subcontractors with a check mailed to them, through direct deposit, or through a vendor such as PayPal. Check with your attorney or accountant to determine how taxes should be handled.

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice regarding Working with Subcontractors, or any other commercial litigation matters, please feel free to contact Joel E. Sannes at 480.461.5307, or log on to,  or contact an attorney in your area. Udall Shumway PLC is located in Mesa, Arizona and is a full service law firm. We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.