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Printable checklist

Subcontractor compliance checklist

Before a subcontractor starts work, you need a signed subcontract, a W-9, a certificate of insurance that meets your requirements, proof of workers’ compensation, and a verified licence. Before every payment, re-check insurance, collect the lien waiver for that payment, withhold retainage, and — on prevailing-wage jobs — confirm certified payroll is in. Print this checklist or use it as your AP payment gate.

Last updated · Aequo AP editorial team

Before the subcontractor starts work

Collect and verify these documents before the first day on site; most of them are also preconditions for the first payment.

  • Signed subcontractScope, price, retainage rate and release terms, insurance and indemnity requirements, lien-waiver requirements, and the right to withhold payment for non-compliance.
  • Form W-9Legal name, tax classification, and taxpayer identification number (TIN). Needed for 1099 reporting; without a TIN you may have to apply backup withholding.
  • Certificate of insurance (COI)Coverage types and limits that meet the subcontract, policy dates covering the work, correct named insured and certificate holder.
  • Additional-insured endorsementWhere the subcontract requires it, the policy endorsement itself — the certificate alone does not amend the policy.
  • Workers’ compensationProof of coverage, or the exemption documentation your state accepts.
  • Contractor licenceLicence number, classification, and status verified on the state (or local) licensing board’s lookup for the trade and location of the work.
  • Bank details verifiedBank account confirmed by a call-back to a known phone number, never by reply to the email that sent it.
  • Prevailing-wage flow-down (if applicable)On Davis-Bacon or state prevailing-wage jobs: the wage determination and certified payroll obligations included in the subcontract.

Before every payment

Re-check the items that expire or change between pay periods; this is where most compliance failures happen.

  • Invoice or pay application approvedWork verified by the project manager; billed amount within the subcontract and approved change orders.
  • Retainage withheldAt the subcontract rate (and any statutory cap), recorded as retainage payable — not netted inside A/P.
  • Lien waiver for this paymentConditional waiver for the amount being paid now; unconditional waiver for the prior payment once it has cleared — on your state’s statutory form where one is required.
  • Insurance still currentNo certificate expired or below the required limit since the last payment.
  • Certified payroll received (if applicable)Weekly certified payrolls with signed Statement of Compliance for every week the sub worked on a covered job.
  • Lower-tier waivers (if required)Waivers from the sub’s own suppliers and sub-subcontractors on larger contracts.
  • No bank-detail change pending verificationAny change since the last payment confirmed by call-back before funds move.

At closeout and retainage release

Release final retainage only after the work is accepted and the final paperwork is in.

  • Punch list complete and work acceptedWritten acceptance by the project manager or owner as the subcontract requires.
  • Final conditional and unconditional lien waiversCovering the full contract amount including retainage.
  • Closeout documentsWarranties, as-builts, O&M manuals, and attic stock where specified.
  • Retainage release approvedPosted against the retainage payable balance, within any statutory release deadline.
  • Year-end 1099 dataPayments to the subcontractor reconciled to the W-9 on file for 1099-NEC reporting.

Detailed guides for each item

Each checklist item has a deeper guide covering the rules and the workflow.

Aequo Build

Turn the checklist into a payment gate with Aequo Build

Aequo Build checks several of these items automatically when you start a payment: an approved invoice, insurance certificates that are current and meet your requirements, a received W-9 for 1099-eligible vendors, and — when you turn on blocking for non-compliant payments — a verified lien waiver. Subcontractors can upload COIs and lien waivers and submit W-9 details through a portal link, and retainage is withheld at the subcontract rate when the invoice is approved. Licence checks, closeout documents, and certified payroll remain manual items on this list.

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Frequently asked questions

What documents do you need from a subcontractor?

At minimum a signed subcontract, a W-9, a certificate of insurance meeting your requirements, workers’ compensation proof or exemption, and licence details. Then a lien waiver with each payment and final waivers at closeout.

Do I need a W-9 from every subcontractor?

You should request one from every subcontractor you may need to report on Form 1099-NEC. The W-9 gives you the correct name and TIN; if a payee fails to provide a TIN you may be required to apply backup withholding.

How often should subcontractor compliance be checked?

Onboarding documents once (and on renewal), payment-specific items before every payment, and final items at closeout.

Related guides and tools

Subcontractor COI trackingBlock payment when insurance expires.What is certified payrollWH-347, Davis-Bacon, and weekly submission.Lien-waiver risk assessmentRetainage calculator

Sources

This checklist reflects common practice. It is not legal, tax, or insurance advice; requirements depend on your contracts, your state, and the project.

  1. IRS — About Form W-9, Request for Taxpayer Identification Number and Certification
  2. IRS — Backup withholding
  3. IRS — Form 1099-NEC and independent contractors (FAQ)
  4. ACORD 25 Certificate of Liability Insurance, 2016/03 specimen (hosted by NY Department of Financial Services)
  5. U.S. Department of Labor — Form WH-347, Payroll (for contractors’ optional use)

Part of the Construction AP Knowledge Centre.