Prime contractors don’t train or teach subcontractors—they expect them to do the job that they market themselves as being an expert in.
If you are employed by a prime contractor, you may not need to be licensed, since you are covered under their license. However, as a subcontractor, you work independently and therefore may need to be licensed separately.
Talk to current subcontractors, or prime contractors or employees who used to be subcontractors, about their experiences in the role. If relevant, ask about the pros and cons of working as an employee (which means more direct control over your work by your employer) versus as a subcontractor (which means you’re contracted to complete a specific task without being directly controlled). Subcontracting is very common in the building trades, as well as fields connected to the fulfillment of government contracts.
You may, for instance, have to determine the pros and cons of working as a sole proprietor/practitioner versus setting up a business entity (such as an LLC in the U. S. ). [4] X Research source Consider consulting with an attorney, and possibly also an accountant, who is versed in legal and taxation issues within your field.
Generally speaking, an employer must provide an employee with the tools required to do the job; a prime contractor can expect a subcontractor to provide their own tools to do the job. [6] X Trustworthy Source Internal Revenue Service U. S. government agency in charge of managing the Federal Tax Code Go to source Small business loans or grants may be available for your subcontracting enterprise. Make sure you consider all the details before agreeing to a loan or grant, however.
Create a business website that’s professional and easy to navigate.
Expos and trade shows are great places to meet and mingle with others in your field, especially in the building trades. In other lines of work, professional or academic conferences might also fit the bill. Hand out your business cards and brochures, and direct people to your website. Work on your “elevator pitch”—a roughly 60-second introduction that sums up your abilities and enthusiasm.
Use job boards in conjunction with the personal connections you make through networking and doing work in your local area. Cast a wide net when seeking prime contractors, then narrow your focus to the best options.
You want to do a lot of the same type of work as someone who’s looking to hire a contractor. Check that they are properly licensed, have the necessary insurance, and have done good work in the past.
According to the IRS, for instance, the criteria for drawing the line between an employee and a subcontractor rests on 3 components: the amount of behavioral control the prime contractor/employer asserts (that is, how the work is done); the amount of financial control you have over the work you do; and the way in which the parties view the relationship (as per their contract and actual interactions). If you are determined to be an employee, you’ll likely be eligible for benefits and workplace protections, but also be subject to tax withholding and greater control by your employer.
For instance, if the prime contractor’s contract with the client states that they will be paid within 14 days of the completion of the job, your contract might state that you’ll be paid within 7 days of the prime contractor receiving payment. If possible, negotiate a contract that stipulates that you’ll be paid within a certain time frame (e. g. , within 7 days of completing your part of the job) regardless of when or if the client pays the prime contractor.
If you’re under contract to build a website or wire a home, you may not want the prime contractor looking over your shoulder all the time. However, it is perfectly reasonable for them to keep tabs on you and make sure you’re doing the work according to schedule and quality level your contract states.
If you ever decide to transition from being a subcontractor to becoming a prime contractor, having an excellent reputation in the field will serve you well in building your own client base.
