Saturday, November 11, 2017

Why you should be cautious when hiring a subcontractor.

When you call a company to come out and give you an estimate whether a painter, carpenter or other you typically meet someone from that company as you would expect but what if once the job starts a totally different company shows up to do your project? Plus you weren't told.

Me I would be upset, I made a connection with the person who came out to give me an estimate I had been dealing with their office the whole time and now I have a whole new company who I never met, do not know my expectations and their whole agenda is to hurry up because they need to go fast to make their money.

Why do companies use subcontractors in the first place?

  • Cheap labor
  • No liability
  • They do not do that type of work
  • No taxes paid (payroll taxes)
  • No workers compensation
Some companies this is their whole business model, there is no way to monitor quality because if they really are a subcontractor they can't have any say in the work, schedule or when and how the job is being done or they are not a true subcontractor in the first place which most likely is the case.

One other very important issue is workers compensation, guess who is on the hook if someone gets hurt and you find out yes the company you hired has it but the subcontractor doesn't carry it and should have been. You're opening yourself up to liability with your home and insurance.

If a company is going to use a subcontractor (and some may be good) it must be written in your contract. 
Watch yourself when your hiring a contractor and make them be upfront, you will see in the future this will be a key area the IRS will target and many contractors will be put out of business or at the least owe a ton of back payroll taxes.

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