Subcontractor Agreement Template

By State

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Mississippi
• Missouri
• Montana
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• Virginia
• Washington
• West Virginia
• Wisconsin
• Wyoming

Why Use a Subcontractor Agreement?

Subcontractors are often brought in when a general contractor needs specialized skills or additional labor to fulfill a client contract. This document ensures:

• Work is completed on time and to specification
  
• Everyone understands who is responsible for what
  
• Legal protections are in place in case of disputes or project delays.
  

The subcontractor is not an employee and must operate independently, supplying their own tools, managing their taxes, and being accountable for their work.

IRS Form W-9 Requirement

Before any work begins, the subcontractor must complete IRS Form W-9, which provides their legal name and a Social Security Number (SSN) or Employer Identification Number (EIN). The hiring contractor must keep this on file for tax reporting purposes.

 

How to Hire a Subcontractor (5 Steps)

1. Define the Scope of Work

Before reaching out to anyone, create a clear, detailed job description. Include:

• Specific tasks to be performed
  
• Materials or tools required
  
• Square footage (if applicable)
  
• Deadlines or milestones
  
• Standards or specifications
  

2. Find Qualified Candidates

Look for subcontractors via:

• Referrals from industry peers
  
• Review platforms like Yelp, Google, and BBB
  
• Professional networks or trade directories
  

Reach out to a few candidates, share the scope of work, and confirm their availability and interest.

3. Request Bids (Optional)

If multiple subcontractors are being considered, request bids or proposals. These should include:

• Total estimated cost
  
• Timeline
  
• Staffing plan (if applicable)
  
• Breakdown of materials or equipment they’ll supply
  

You may skip this step if you’ve already chosen a subcontractor.

4. Draft the Agreement

The agreement should address key details such as:

• Payment terms (fixed fee, hourly, milestone-based, etc.)
  
• Responsibilities (who provides materials, tools, transportation)
  
• Deadlines and schedules
  
• Insurance coverage (especially general liability insurance)
• Right to view the master contract with the client (if applicable) 

5. Finalize and Begin Work

Once the agreement is signed:

• Provide any necessary access or site orientation
  
• Pay the subcontractor based on the contract schedule.
• The agreement remains valid until the job is completed or terminated in writing.

 

Subcontractor vs. Employee

Understanding the distinction is critical for legal and tax compliance:

Employee	Subcontractor
Taxes withheld by the employer	Responsible for their taxes
May receive benefits	Does not receive benefits
Follow company policies	Operates independently
May require training	Already trained and skilled

Tax Filing Responsibilities

• If a subcontractor is paid more than $600 in a calendar year, the hiring contractor must issue IRS Form 1099-NEC (formerly 1099-MISC) by January 31 of the following year.
  
• The subcontractor is responsible for reporting that income and paying their self-employment taxes.
  

What Not to Provide a Subcontractor

Do not treat a subcontractor like an employee to avoid legal confusion (or IRS misclassification). Avoid:

1. Offering Benefits
   Subcontractors are not eligible for health insurance, 401(k), PTO, or other employee perks.
   
2. Providing Tools or Materials
   A true subcontractor brings their equipment and supplies unless otherwise agreed in writing.
   
3. Withholding Taxes
   Pay subcontractors the full agreed amount. They’ll handle their tax reporting.
   
4. Providing Training
   Subcontractors should be skilled professionals. If a candidate needs training to do the job, they may be better classified as an employee.

“Subcontractor” State Definitions

• AL – § 34-8-1(c)
• AK – AS 23.20.526
• AZ – ARS 32-1101(3)(b)
• AR – § 18-44-107(4)
• CA – § 2782.05(i)
• CO – § 24-91-102(4)
• CT – § 4e-1(29)
• DE – § 2501(8)
• FL – § 713.01(28)
• GA – § 13-10-80(a)(5)
• HI – § 444-1
• ID – § 72-102(13)(a)
• IL – 720 ILCS 5/33E-2(k)
• IN – § 5-16-5.5-1
• IA – § 572.1(11)
• KS – § 16-1802(h)
• KY – § 45.560(4)
• LA – R.S. 37:2150.1(13)(a)
• ME – 39-A §105-A(1)(B)
• MD – § 8–101(o)
• MA – MGL c.142A § 1
• MI – § 570.1106(5)
• MN – § 161.321(1)(c)
• MS – 35.IV.10.01(102)
• MO – § 292.675(8)
• MT – § 28-2-2101(9)
• NE – § 45-1202(6)
• NV – NRS 40.630
• NH – § 281-A:2(IV)
• NJ – § 2a-44a-2
• NM – § 60-13-3(A-B)
• NY – § 756(4)
• NC – § 22C-1(6)
• ND – § 35-27-01(7)
• OH – § 1311.01(D)
• OK – § 61-222(7-8)
• OR – § 701.410(1)(d)
• PA – § 1201(5)
• RI – No specific statutory definition.
• SC – § 29-6-10(6)
• SD – § 43-07-01(1)
• TN – § 62-6-102(4)(A)(ii)
• TX – § 28.001(B)(6)
• UT – § 38-1a-102(33)
• VT – § 4001(6)
• VA – VA Code § 2.2-4347
• WA – § RCW 18.27.010(12)
• WV – § 21-11-3(q)
• WI – § 66.0901(1)(d)
• WY – § 39-16-301(vi)