Updated on December 16th, 2022
A professional service subcontractor agreement sets out the terms by which an individual or entity is hired to provide services to a prime contractor. The prime contractor holds the main contract with the actual client and will be responsible for paying the subcontractor and be liable for their work. The hired party will be required to use their skill set to contribute towards the completion of the main contract. The agreement will detail the specific services that the subcontractor is hired to complete, as well as the compensation they will receive, and when the project will be finished.
Professional service subcontractors are individuals who are trained in a specific skill, trade, or field. As a subcontractor, they are hired by a contractor to work on a principal contract. The contractor will be responsible for paying the subcontractor and ensuring that they fulfill their service agreement. To operate professionally, the subcontractor will often need to acquire a license, registration, or certification in their field. Furthermore, they will need to work and declare taxes as a self-employed individual.
Professional services are skill-based services that require special training. Professional service subcontractors can work in a wide variety of situations in which a contractor may require a specialist’s services. For instance, an accountant may be hired to keep records and oversee the financing of a project or an architect may be subcontracted to design blueprints for a planned renovation.
Examples of the types of specialists that may be hired to perform professional services include the following:
- Equipment operator
Professional service subcontractors will often charge fixed hourly rates for their services. The rate, schedule, and method of payment will usually be negotiated prior to signing the agreement. However, they may require a single flat fee payment for a limited project/assignment, or demand payment on a weekly, monthly, or quarterly basis instead. The master contract’s budget must also be taken into consideration.
A subcontracting contract is usually drawn up after negotiations have been made between the service provider and the prime contractor regarding the terms. The completed professional services subcontractor agreement will need to include the following information:
- The names and addresses of both parties.
- The name and address of the client.
- The services for which the subcontractor is hired.
- The subcontractor’s responsibilities.
- The location of the job.
- The contract’s start date.
- How and when the contract will be complete.
- The terms of payment.
- The subcontractor’s independent contractor status.
- Both parties’ signatures.