The U.S. government is one of the largest spenders in goods and services, and the pandemic has only intensified its efforts to stimulate the economy through various government projects. While government contracting may seem daunting due to its ever-changing rules and regulations, as well as unique accounting practices, it offers significant opportunities for private businesses to grow.
Subcontracting is an excellent way to dip your toes into the world of government contracting. Let’s explore the essential steps to kickstart your subcontractor journey:
- Register: Regardless of whether you are an individual, freelancer, or a team of professionals, register your business and ensure you comply with tax obligations. Visit the IRS website (https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee) for valuable tips on tax compliance.
- Establish Expertise in Your Field: General contractors seek subcontractors who specialize in specific areas. Identify your niche and strengthen your expertise in that field. Continuously learn and grow to stay at the forefront of your domain.
- Understand Your Rights as a Subcontractor: As a subcontractor, you function as an entity offering services to others rather than as an employee. Familiarize yourself with your duties and rights by referring to resources such as the Code of Federal Regulations, the Federal Acquisition Regulation, and the U.S. Small Business Administration (if applicable to your small business status).
- Attend Events and Expand Your Network: Engage with the government contracting community by participating in virtual or in-person events. These gatherings provide opportunities to connect with established subcontractors and prominent general contractors. Building lasting relationships and connections can open doors to future collaborations.
- Explore Relevant Websites: Visit websites such as the U.S. General Services Administration and the Department of Defense, Office of Small Business Programs to explore potential subcontracting opportunities. These platforms offer valuable information and resources to aid in your journey.
- Review Your Contract: Thoroughly review the contract that outlines the responsibilities and duties of both the general contractor and subcontractor. Pay close attention to clauses related to flow-through, indemnification, compensation, and delays. Consulting with an experienced lawyer can ensure a thorough understanding and protect your interests.
- Obtain Appropriate Insurance Coverage: Consider securing Commercial General Liability (CGL) or other relevant insurance to protect yourself and your team during your subcontracting work. Evaluate different levels of coverage and select the most suitable option for your business.
By following these steps, you have embarked on your subcontractor journey. Continuously acquire knowledge, prepare your team, and immerse yourself in the world of government contracting. It may take time and involvement in several subcontracts, but eventually, you will gain valuable experience and access to federal contracting opportunities. If you require additional confidence and assistance, particularly in government contract accounting, Peter Witts CPA PC can provide guidance on what to expect, where you stand, and how to commence your government contracting endeavors.
Becoming a successful subcontractor in government contracting requires dedication, ongoing learning, and a strong support system. Embrace the experience, seize opportunities, and unlock the potential for growth in this lucrative sector.