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A subcontractor agreement ensures transparency between both parties and defines each party's roles, responsibilities, and rights. It also sets out clear payment terms, ensuring that subcontractors receive the pay they agreed to for their work.
8 things a subcontractor agreement should include Business information. Include names, businesses names, and contact information for both the subcontractor and the hiring contractor. ... Scope of work. ... Payment terms. ... Change orders. ... Licensing and insurance coverage. ... Dispute resolution. ... Termination clause. ... Flow-down provisions.
Typically, a contractor works under a contractual agreement to provide services, labor or materials to complete a project. Subcontractors are businesses or individuals that carry out work for a contractor as part of the larger contracted project.
Usually, the main contractor will provide the contract, but some subcontractors have their own agreements. If they do, you will need to agree on whether to use yours or theirs.
Many subcontractor agreements layout the exact timeline of the project, scope of work, communication protocols, and even payment. Some agreements specify ?pay when paid? or ?pay if paid?; these phrases decide when a subcontractor is paid.
In order to be given a subcontract, a business must be in good standing with its home state stipulations, such as having an up-to-date file for its tax returns. For tax purposes, a subcontracting company is required to register with the Internal Revenue Service (IRS) to receive an Employer Identification Number (EIN).
For example, a freelance trainer might be subcontracted to provide training to an end client on a specific area of expertise while the rest of the training package is provided in-house by the main contractor. In such circumstances, the scope of the works requested should be outlined in the subcontractor agreement.
Clarifying the expectations of the parties involved Outline the project scope, timeline, and expectations of both parties. Determine who will be responsible for providing resources needed. Identify the payment terms and schedule. Clearly define the acceptable quality of work required. Agree on a dispute resolution process.