Ensure Subcontractors Use Own Tools and Equipment

What happens here

Independent contractors must primarily use their own tools and equipment. If a subcontractor consistently uses your company's tools, vehicles, or heavy machinery without a formal leasing agreement, the IRS may interpret this as an indication of an employer-employee relationship. While occasional use or formal leasing may be acceptable, heavy reliance on your equipment weakens their independent status.

Goal: Verify subcontractors provide their own tools and equipment, or have formal leasing agreements if your equipment is used.