Hiring and Managing Subcontractors as a Web Designer
As your web-design consulting business expands, you may find that you’re getting more work than you can handle. One way to handle your growing business is to find able-bodied freelancers like you and then manage them as the project’s producer.
For example, one client may want you to develop a series of four design directions at the very same time that another client needs other work done. In such cases, you may subcontract another designer to help you create a few of the design directions so you can get everything done on time.
When hiring subcontractors, their rates may often be close to your own rates. Plan for your subcontractors by getting a fixed-bid estimate from them that you can then roll into your overall project budget.
Marking up their services by about 15 percent is acceptable. After all, you need to be compensated for the time spent managing them.
Look at your initial client contract to see whether hiring subcontractors raises any legal issues. Often, a client simply signs the project proposal and no other legal agreement. In such cases, you are free to hire and manage subcontractors as needed. If the client, however, asks you to sign a work-for-hire agreement along with the proposal, such agreements sometimes forbid any subcontracting activity.
As for signing any agreements with your subcontractors, you too may keep your own standard work-for-hire agreement on hand for them to sign, especially for larger projects. For small projects, however, the subcontractor usually just puts a mini-proposal together that shows the work to be done, the price, and the schedule, and that’s enough to go on.
At the end of the project, the subcontractor sends you an invoice. Keep these invoices in a safe place and make sure that they include the following information (you need it for tax purposes at the end of the year):
First and last name
Social Security Number or Federal ID number
It’s sort of like sending out a cynical version of holiday cards: At the end of the year (in the United States) you must send out 1099 forms to every subcontractor to whom you’ve paid more than $600 throughout the tax year. Total up the amount you’ve paid them and fill out one 1099 form for each person. You can find these forms at any office supply store or at your local post office.
You must send the 1099 forms out in the mail by the end of January, or you may not be able to claim the invoices as expenses on your own taxes. Talk to your tax professional.