Subcontracting, also known as outsourcing, is where work that a contractor cannot do is passed onto a subcontractor, whilst the contractor remains responsible for that work.
There are two main reasons for subcontracting your work, these are:
- if you do not have time to complete all the work at busy times of the year, e.g. Year End
- if you are ill or away on holiday
You cannot subcontract work you are not qualified to do.
Because you are responsible for the work you subcontract, your insurance will not cover you for work you are not normally licensed to undertake by ICB, even if the person you subcontract to is covered. For example, you cannot take on a client and subcontract their payroll work if you are not qualified to provide payroll services.
You remain liable
You are still liable for the work carried out and will remain the point of contact with your clients. If mistakes are made your client will make any claims against you for damages, leaving you to subsequently claim against the subcontractor.
You should use the ICB's free bookkeeper search to find a member with a Practice Licence. You do not want an un-qualified, uninsured bookkeeper's mistakes jeopardising your relationship with a client and you will have recourse to ICB jurisdiction if the worst happens.
Preparing a contract
Make sure you have a contract with the subcontractor that lists what work is to be done, for how long and for how much. Your contract must also cover data protection issues because your subcontractor becomes a third-party 'data processor'.
Your subcontractor is legally required to have AML supervision if they are doing bookkeeping work. You also have a duty to ensure that your subcontractor understands their AML duties and you must provide any training as necessary.
> Data Protection Act
> Letter of Engagement
Advice on running your own bookkeeping business and information on ICB's Practice Licence scheme.
The Luca Awards are the profession's annual celebration of outstanding achievement and contribution.