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Summary:

If you’ve reached the point of having more work than you can handle, there are several ways to handle the overflow. One of the easiest, in some ways, is to hire subcontractors to do part of the work for you. But before you rush out and […]

ScreenshotIf you’ve reached the point of having more work than you can handle, there are several ways to handle the overflow. One of the easiest, in some ways, is to hire subcontractors to do part of the work for you. But before you rush out and offer part of your next job to your closest web-working buddy, there are a few things that you need to consider. Here are four of the biggest pitfalls to watch out for.

1. No Handshake Deals – If you’re going to bring on a subcontractor, make sure you both sign a contract laying out what the job is and how much you’ll be paying. I’ve sung this tune in the past, and I’ll sing it again: a contract won’t prevent all possible disagreements, but it will eliminate many and give you a basis for resolving the rest. If you ever have a job go completely sour on you, to the point where your client won’t pay, then you’ll be happy to have a contract spelling out your responsibilities in place.

2. Be Serious About Taxes. That’s a general rule of thumb for web work, of course. But it’s even more important if you’re dealing with money for multiple people. Worst case: you end up owing money because of what you’ve paid to contractors, as well as what you kept for yourself. I’m not an accountant, but at the absolute minimum, you need to get a W9 or W8 form from every subcontractor, or withhold money off the top. You also need to ensure that you don’t accidentally treat them as employees, or pay the price in increased paperwork and liability. These rules are for the US, of course, but there are analogous issues in most countries.

3. Treat Your Subs Fairly. There may be short-term profit in handing off the worst work to subcontractors and underpaying them, but that’s no way to build a long-term relationship. You’d be far better off to treat contractors the way you yourself would like to be treated in their shoes. That means paying a fair rate for the work that you sub out, as well as assuming your share of the risk.

4. Choose Subcontractors Wisely. I won’t say that you should never work with friends, but I’ve seen far more relationships busted up by going into business together than I’ve seen strengthened. You’ll also want to beware of using the job-bidding sites to send work out to the absolute cheapest subcontractor. Treat this as any other hiring opportunity: ask for references, interview people, and don’t just grab the first person you run across.

While paying attention to these four areas won’t guarantee a good subcontracting experience, ignoring them is almost certain to bring about a bad one.

What tips do you have for working with subcontractors?

image: stock.xchng user clix

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By Mike Gunderloy

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  1. I also like to give a test task first – to get to know each other, see our style of work etc – before committing to some serious work. I usually follow this rule when getting into partnership with someone, if I’m the part that is being ‘hired’ and so on. It’s sometimes better to be disappointed fast than be stuck in a (supposedly) great paying but dreadful relationship

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  2. I’ve just started using subs. Can anyone point me to a generic contractor to contractor agreement?

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  3. I’ve always been a fan of Nolo Press for that sort of thing – http://www.nolo.com/ – assuming that you’re not yet at the point where you’re prepared to pay a lawyer to customize one for you. For a free alternative, try poking around http://www.docstoc.com/ .

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  4. The point about not treating subcontractors as employees is important in the UK as well. If HMRC decides that a subcontractor is being treated as an employee then they have to pay income tax and NI on what you pay them, and *you* have to pay Employer’s NI. The accountants fees to sort it all out won’t be cheap either.

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