Frequently Asked Questions

What are the responsibilities of a subcontractor as defined by the IRS?

The responsibilities of a subcontractor, as defined by the IRS, are manifold. Subcontractors are considered separate entities and are therefore expected to manage their own self-employment taxes and keep track of their income. They are also responsible for managing their own work and schedules. Essentially, subcontractors are contractors who work under other contractors. Subcontractors are required to sign an agreement with the contractor, similar to the one the contractor signs with the company. This agreement outlines the subcontractor's assignments and responsibilities, due dates for work, pay rates, and rules and regulations. Subcontractor agreements, which are formed between primary contractors and their subcontractors, detail the specific services or products that the subcontractor is providing, the payment for these contributions, and any necessary warranties. These agreements may also include insurance clauses, default clauses, change orders, and indemnity clauses. Subcontractor contracts are most common in construction projects, but they can be used in any project. For example, marketing firms often hire subcontractors to handle design, writing, and editing tasks.