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How to hire a subcontractor

In need of an extra pair of hands, or an expert to help complete a project? Subcontractors are the perfect solution. Here’s how to hire a subcontractor, how to pay a subcontractor, and more.

Why do firms hire subcontractors?

Hiring a subcontractor can facilitate your business’ growth, helping you adapt to a range of business opportunities. Subcontractors can be the answer to your prayers when you need a skilled expert to assist with a project.

What are subcontractors?

Subcontractors are tradespeople who undertake a section of the work for a company’s project. As a contractor, subcontractors are accountable to you for the work they do.

However, while the quality of a project relies on their skill and expertise, you’re responsible for the tasks they perform.

Without having to commit to permanent hire, subcontracting is a flexible way for you to take on larger projects. By employing their specialist skills, you can also adapt to project demands.

This lets you carry out work you wouldn’t usually have time for.

Top tips on choosing the right subcontractor

Bona fide subcontractor at a building site

Obviously, you want to ensure you find the right person for the job. So, it’s important to perform a comprehensive check of potential candidates. They should have a solid reputation with outstanding recommendations.

Consider these factors when hiring a subcontractor:

  • Trade experience and qualifications
  • Business website and social media profiles
  • References from former clients
  • Portfolios of previous work

Using Checkatrade to look for tradesperson is a great way find a suitable subcontractor. You can view reviews, photos, qualifications, and accreditations to ensure they’re reliable and have the experience and expertise you require.

Subcontractors must work efficiently and to a high standard, but also be able to handle the scale of a project.

There’s a vast difference between plumbing as part of a kitchen renovation and installing a plumbing system for a housing. For this reason, try to hire subcontractors you’re confident can match the speed and scope of your work.

You should also consider how to pay a subcontractor and the rates they charge, which we’ll cover later in this guide.

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Creating a subcontractor agreement

You should provide every subcontractor a clear description of the work they’ll undertake before going any further in the process.

A subcontractor agreement should clearly and comprehensively outline the employment relationship.

The agreement should cover these components:

  • Project objectives
  • Subcontractors work duties and time schedule
  • Fees and payment schedule
  • Materials required and whether your business or the subcontractor provides them
  • Procedure to resolve disputes
  • Terms of contract termination

Does a subcontractor need insurance?

To hire a subcontractor, the insurance policy will differ. Subcontractors can be split into two groups, bona fide and labour-only.

Labour-only

Labour-only subcontractors work with your equipment and under your company’s direction. They should be treated as employees, so will be covered by your public and employer liability insurance.

Make sure you include these in your insurance premiums – even if only on a short-term basis.

Bona fide

Bona fide subcontractors are generally skilled specialists. They typically supply their own equipment and work under their own discretion.

These individuals will not be covered by your insurance, so make sure they have their own. You should enquire whether your subcontractor’s insurance has an indemnity limit, which will cover any possible liability.

Verifying subcontractors

Every new subcontractor must be verified with HMRC before any payment can be made. Verification will inform you of the correct CIS tax rate you should charge.

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How much should a contractor pay a subcontractor?

When considering different subcontractors, they should all provide you with a quote. This is one of the reasons why hiring a contractor is different to an employee.

Make sure the quotes cover all costs as you don’t want to end up paying out more unexpectedly. Next, compare each quote and decide which person will provide the best service for the best price.

How to pay a subcontractor

You should cover the payment amount, method and schedule in the subcontractor agreement.

If you’re wondering how to pay a subcontractor, you’ll need to set up a clear and fair payment schedule. This will be dependent upon specified dates or stages of the project.

Most subcontractors will expect an initial deposit to secure their services and cover material costs. Be wary of firms asking for large deposit, as this can be a red flag.

Paying subcontractors directly is the most common form of payment. However, you can also pay through a third party. Read about our hiring tips for more advice on payment terms.

Payroll folder and spreadsheet

How to work with a subcontractor

Hiring subcontractors means your workload will become more focused on project management. This lets you focus on the responsibility of managing deadlines, quality control, and communicating with different parties.

Scheduling

To keep your project moving forward, each team must be able to complete their work without delays. For example, insulation installers can’t carry out work until the plumber has completed theirs.

This requires comprehensive and detailed scheduling, covering every aspect of the project. Ensure you plan a little slack into your time frame to prepare for every situation.

Communicating

Explain the details and blueprints of the project to your subcontractor. Your subcontractors will be skilled tradespeople. This means they won’t deviate from the plans if they’re explained clearly.

If you expect delays with your project, let them know in advance so they can work around it.

Don’t micromanage

You shouldn’t need to micromanage your subcontractors. Give your subcontractors the space to complete the job in the way they know how. This means you can focus on managing the project as a whole.

How do you find quality subcontractors?

Word-of-mouth recommendations are the

How do you find quality subcontractors?

most common method of hiring subcontractors. Tradespeople will have a considerable network of connections. So, they should open you up to plenty of competent subcontractors.

Signing up to Checkatrade will allow you to connect with highly recommended local tradespeople.

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Subcontractor hiring FAQs

Should I hire a subcontractor?

Hiring subcontractors is a great way of adapting to different job situations and capitalising on worthwhile business opportunities. Once you’re confident employing subcontractors, you can take on larger, more profitable projects.

Do subcontractors need to pay tax?

Subcontractors tax largely depends on if they are registered with the CIS. Subcontractors who are registered with the CIS will be deducted 20% of their invoices paid directly to them.

If subcontractors are not registered with the CIS, they will be deducted at a rate of 30%.

Whether you are CIS registered or not, the invoices for materials or tool hire will not receive any tax deductions. This means you will be paid 100% of these costs by the contractor.

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