Subcontractor: Definition, Types and Difference From Contractor

By Indeed Editorial Team

Updated March 30, 2022 | Published November 23, 2020

Updated March 30, 2022

Published November 23, 2020

Many businesses employ subcontractors to complete projects that require a certain amount of expertise. Individuals skilled in a specific area, such as construction, can use their talents to create flexible and rewarding careers as subcontractors. These professionals are often in high demand and involved in a variety of industries. In this article, we describe common types of subcontracting work, the difference between subcontractors and contractors, and the benefits of being a subcontractor.

What is a subcontractor?

A subcontractor is a professional who performs a task on a contract basis. Subcontractors are usually specialists in one specific area of a project and have developed strong skills in their area of expertise.

You will often find subcontractors in these industries:

  • Administration

  • Construction

  • Creative

  • Engineering

  • Health care

  • Industrial

  • Retail

  • Technology

Related: Q&A: Should I Be an Employee or Independent Contractor?

What is the difference between a subcontractor and a contractor?

A contractor is hired by the client to complete an assignment or project. A subcontractor is hired by the contractor. A contractor is ultimately responsible to the client for meeting deadlines and communicating issues or delays regarding the entire project. A subcontractor would report any concerns to the contractor, not to the client, and would be responsible only for their portion of the project or assignment.

Types of subcontractors

Nearly any professional with a specialized skill can advertise themselves as a subcontractor. Some skills, however, are more in-demand and lead to more successful subcontracting careers than others. Some of the most common types of subcontractors work in the construction and technology industries. Types of subcontractors include those skilled in:

  • Carpentry: Subcontractors skilled in woodwork can get hired to work on a variety of indoor and outdoor projects, anything from building and repairing kitchen cabinets to bridge construction.

  • Demolition: Contractors hire demolition subcontractors to destroy and remove existing structures on properties or building sites. These subcontractors understand the risks involved in demolition and how to operate the equipment and machinery needed to tear things down.

    Electric: Electrical subcontractors safely set up electrical systems for homes and businesses. They install and repair wiring, appliances, fixtures and other equipment needed to light and power a building.

  • Excavation: Excavation subcontractors get hired early in a building project to prepare a site for construction. They use heavy equipment to move dirt and create a level building site and they dig trenches for pipes and utilities.

  • Flooring: A floor-laying subcontractor can install carpet, vinyl, laminate and wood floors. They prepare floor surfaces, measure and cut the materials and install them and apply finishes.

  • Foodservice: Companies such as banquet halls, restaurants and event planners might use subcontractors to cook and supply food items such as baked goods.

  • Heating and air conditioning: HVAC subcontractors specialize in installing, maintaining and repairing equipment and ductwork required to heat and cool a building.

  • Landscaping: Subcontractors with landscaping experience lay sod and plant trees, shrubs and flowers in outdoor spaces. They might also perform maintenance tasks such as mowing, trimming, mulching and fertilizing.

  • Masonry: Subcontractors skilled in stonework are hired to cut and install granite or marble counters, stone fireplaces, yard pavers, brick exteriors and any other stone surface.

  • Painting: Once walls have been built, a subcontractor might be responsible for painting and finishing a building's interior and exterior. Rental apartments are also commonly painted between tenant leases.

  • Roofing: Roofing subcontractors inspect, repair, install and seal building roofs of various materials, including wood, shingles, aluminum and synthetics.

  • Security: Companies might hire security subcontractors to protect businesses, buildings and individuals on a temporary basis. Special sporting events or celebrity events, for instance, may require security.

  • Technology: Technology subcontractors help companies set up networks, computers and servers, install software, troubleshoot problems and create and maintain websites.

Subcontractors also specialize in less-common jobs such as artificial turf installation, mobile home setup, leather crafting, cable splicing, posthole digging and nearly any other job one might need to be completed.

Related: Becoming an Independent Contractor: Pros and Cons

How does subcontracting work?

Contractors hire subcontractors to help them complete specific jobs that are usually part of a larger project. Because subcontractors are highly skilled in certain areas, they can often complete those tasks faster and better than the contractor could. The contractor also saves money because they're not paying the subcontractor a salary, benefits and insurance as they would a full-time employee. Subcontracting typically follows these steps:

  1. A business or individual hires a contractor to complete a project. They agree upon a price.

  2. The contractor hires subcontractors to do specialized work on certain parts of the project. For example, they might hire a subcontractor to complete the roofing or HVAC system. The contractor might have established relationships with subcontractors they like to work with, or the contractor might accept bids from several subcontractors and hire the best one.

  3. The subcontractor and contractor agree to a set fee for the work. They typically sign a contract with the payment details and terms of the job.

  4. Subcontractors receive work instructions from the contractor. The contractor typically asks for updates throughout the project.

  5. When the subcontractor has finished their portion of the project, the contractor pays them. Some contractors pay upon completion, and others only pay the subcontractor after being paid by the client.

Subcontractors often develop long-term, trusting professional relationships with one contractor who hires them for all their jobs. Subcontractors might also work for many different contractors and companies and submit bids to get jobs. Usually, a subcontractor must be properly licensed as a corporation or an LLC in their state to work legally.

Related: 12 Jobs in Construction That Pay Well

Benefits of subcontracting

Subcontracting can be a rewarding career for people who enjoy flexibility and freedom. The benefits of being a subcontractor include:

  • Independence: Most subcontractors are freelancers or independent contractors. They report to contractors during short-term projects but otherwise work for themselves. They can set their own schedules, hours and availability.

  • Work with a specific skill set: Subcontractors are often specialists within their fields so they tend to enjoy work in which they excel. A subcontractor employed to install kitchen tile will use their artistic skills and expertise in working with different materials to produce a beautiful and functional result.

  • Tax deductions: Because the IRS considers subcontractors to be small business owners, these professionals might qualify for tax deductions based on their business expenses. They might be able to claim deductions on travel expenses, supplies, rent, utilities and vehicle payments related to their work.

  • Consistent work: Successful subcontractors who develop professional relationships with one or more local contractors often have plenty of work. Subcontractors with highly specialized skill sets, such as electrical or steelwork, might always be in demand.

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