How to Become a Subcontractor

Published: Sep 1, 2022
Most commonly associated with the construction industry, subcontractors are companies or individuals that are hired to carry out specific jobs by a project’s prime contractor. Becoming a subcontractor will allow you to work on a wide variety of sites and build your career in the construction industry.

If you think you have what it takes to be a fantastic subcontractor, take a look at our step-by-step guide on how to get started.

What Does a Subcontractor Do?

Subcontractors take on a wide range of jobs in the construction industry. Often, subcontractors are hired to carry out specialist tasks that don’t fall within the skill set of the main contractor. Common subcontracting opportunities might include:

  • Demolition
  • Roofing
  • Erecting steel frames
  • Pouring concrete
  • Installing HVAC and plumbing systems
  • Carpentry
  • Project manager

Subcontracting work might last weeks or a subcontractor may be hired for a day, or even a few hours, to complete a specific job.

Career Requirements and Eligibility

The exact requirements you’ll need depend on the type of subcontracting work you want to take on. For example, plumbers, electricians and carpenters will need to gain specialized skills and qualifications in their chosen fields before they begin their subcontracting business.

To be eligible to work as a subcontractor, you’ll need to be able to work legally in the US. You’ll also need to obtain insurance coverage and secure a contractor license from your state licensing authority.

Step by Step Process to Become a Subcontractor

If you’re considering a career as a self-employed subcontractor, or if you plan to start a small business offering subcontracting work, follow these steps to learn your craft, legalize your business and get started.

Gain the Required Skills

Before you can start working as a subcontractor, you’ll need to learn the skills required for your industry. One of the best ways to do this is to get an apprenticeship. An apprenticeship will give you the opportunity to work with experienced professionals, get real-life experience in the industry and build up a bank of expertise for your future career.

A lot of trade unions offer apprenticeships. You can also contact your local trade and vocational schools to see if they run any training programs that might suit you.

If you want to excel in the industry, you could consider enrolling in a bachelor’s degree course in a related area like construction science or management. This can give you a headstart and ensure your business is one step ahead of the competition.

Get the Required Licenses and Certifications

Once you’ve completed your apprenticeship, you’ll be able to apply for a trade license in your chosen area. Most states require professionals taking on subcontracting work to get a trade license, some also require them to have a general subcontractor license.

As part of the licensing process, you’ll need to obtain a contractor surety bond. A contractor license bond is there to protect your future customers should you fail to abide by the rules and the regulations of your industry.

Bonds are provided by surety companies. These companies will charge you a percentage of the total bond amount (generally between 1% and 3% for people with a good credit score) to bond you. You can then apply for your business license.

Learn Your State and Federal Tax Regulations

In most states, subcontractors are treated as self-employed businesses and are required to pay their own municipal, state and federal taxes. If you have employees, you’ll also need to withhold and submit workers’ taxes and file the proper paperwork.

The Internal Revenue Service (IRS) provides specific tax forms for subcontractors and offers information on relevant topics including payments, deductions and purchase receipts. You may find it helpful to hire a professional accountant to take care of your taxes and paperwork.

As each state will have its own requirements, it’s important to check with local authorities to ensure your business is tax compliant.

Obtain Insurance

When working as a subcontractor, you’ll generally be considered a self-employed worker. This means that you probably won’t be covered by the insurance policy of the general contractor you’re working for.

Most states will require you to take out relevant policies, like workers’ compensation insurance and general liability insurance before you can get licensed. These policies will help to protect you financially if something goes wrong.

Set Up a Contract Agreement

Whenever you take on a new construction project, you’ll need to sign a contract agreement with the main contractor. This contract should include a description of the job, a list of the materials required and an estimate of how long the job will take to complete. Some contracts can also include information on what happens if the job isn’t completed to a satisfactory outcome or if it’s completed late.

There are templates available online that will help you to create this contract yourself. Alternatively, contact a lawyer and ask them to draft a document for you.

Start Looking for Clients

Now you’ve completed your training, secured your license and got your taxes in order, it’s time to find work. There are a variety of ways to find local subcontracting opportunities. You could have a look at online jobs boards, contact local primary contractors to see if they have any jobs coming up or get in touch with your local municipality to find out about government contracts that may be available in your area.

Finding clients can take a lot of time and energy. However, if you’re good at what you do, offer good value for money and are pleasant to work with, you should find you have repeat customers and word of mouth recommendations before too long.

Networking

To be a successful subcontractor, you’re going to have to network. Networking is a great way to find new work. After all, if a main contractor needs a job completed, they’re likely to ask a construction subcontractor they know and trust before putting the job out to tender.

Try to build good relationships with other business owners by attending local networking events and becoming active in the industry. When you do get a job, make sure you complete it to the highest possible standard to ensure you get hired again and again.

How Long Does It Take to Become a Subcontractor?

The time it takes to become a subcontractor will depend on the type of work you plan to take on. If you need to complete an apprenticeship, it could take you between two and five years to qualify. Once you’ve got your certificate and secured your professional license, you can begin working as an independent contractor.

How Much Does It Cost to Become a Subcontractor?

Again, this will depend on the route you take and the specialty you choose. If you opt to complete an apprenticeship or attend a vocational school, you’ll probably end up paying between $5,000 and $15,000 in fees. The cost of securing a professional license varies between states.

What Are the Benefits of Being a Subcontractor?

Working as a subcontractor has a lot of benefits. As you’re not the main contractor on a job, there’s less risk involved and you’re more likely to get paid in full and on time. Working as a subcontractor also gives you the opportunity to work on a variety of building sites and with a range of general contractors. This can inform your future career plans and help you work out which area of construction you want to focus on.

Last but not least, working as a subcontractor is very flexible. As you’re your own boss, you have a lot of freedom to decide your own schedule. If you need a holiday, you can just take time off. Or if you need to top up your bank balance, you can put in extra hours and boost your pay.

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Robin Kix

Robin Kix is currently the Renewal Department Manager. Since joining Lance Surety in 2014, she has helped thousands of businesses throughout the nation remain compliant at the federal, state and local level. She has significant experience supporting commercial bond lines, particularly in the automobile, transportation and construction industries. Robin and her team work together to create a positive customer service experience at the time of every policy renewal, whether that be finding the best pricing or offering additional assistance.

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