What is the Difference between Subcontractors and Independent Contractors
“Contractor” means a person hired to carry out work or services according to the agreement. It is a self-employed specialist who is liable for his/her profit, taxes, medicare, insurance, and retirement. These are full-time workers in turn work for a single organization that retains taxes and pays benefits for its employees.
Cost estimating software should be used today by modern specialists in all projects. It is a key to success. Especially when it comes to the construction sector. Contractors have to pay taxes and profits to subcontractors together with other team members (estimators, managers, builders on the site, etc.). A general contractor can hire an independent contractor, which is the same as a sub.
Subcontractors VS Independent Contractors in Construction
Many experts name independent contractors as the alternative party to the subcontractors hired by the general contractor (GC). Nevertheless, there is a range of small differences between these two definitions in the construction sector. Most of them cover operational and legal backgrounds to take into account.
A distinction between subs and independent contractors is:
- contractors hire subs if they need an expert in a specific sphere;
- subs get a part of what contractors receive for a whole job and contractors (in turn) earn money per job or by the hour;
- subs offer more narrowly focused services and are well qualified in such spheres as an example, plumbing or electrical.
Subs deal closely with contractors to be sure their part of the job is performed properly. Taxes are one of the aspects of the piece of liabilities for contractors and subs. Contractors and subs pay taxes once annually. Pay attention to such costs as internet provider services or rent for premises.
What Are the Benefits of the Independent Construction Contractor?
There are a lot of advantages to working for yourself. To start working as a sub, an individual should develop some specific skills and get the necessary certifications. The most difficult thing is to get the first project. It is extremely essential to perform it perfectly. Clients often deal directly with independent contractors, who pay the chosen professional subs they hire to carry out various project tasks.
What about the Advantages of Subcontractors in the Construction Niche?
There may occur such situations when something goes wrong on a project. It may be problematic to understand and specify who is responsible for the mistake. Contractors and subs have different responsibilities that can influence the insurance regulations an individual has to consider before his next project.
A contractor is responsible for performing the contract which means the carrying out of the entire project. Subs help a contractor to do it. They report to the contractor about undertaken operations on the sites and the deadlines met or failed. Nevertheless, the area of responsibility when it comes to subcontractors is quite limited.
At the same time, independent contractors are obliged to do more things from a legal point as well:
- The contractor is ultimately responsible to the client.
- The contractor needs to perform estimates, provide reports, and budget plans.
- When subs are responsible to the contractor, but not directly to the client, the independent contractor has responsibilities to all the parties of the signed contract (the customer, the GC, etc.).
General liability insurance ought to be the first insurance document an owner buys. This policy will protect him from lawsuits. A cyber liability policy in turn protects from the expenses of an information breach or cyberattack.
To sum up, the most significant difference between subs and independent contractors is the area of their responsibilities. Additionally, the more complicated legal background has those construction market players who would like to run their business independently. The subs can perform successfully in the niche with limited responsibilities but rights too.
It is better to become an independent contractor if you are interested in scaling up your business. Subcontractors are mostly skillful narrow-direction specialists who are satisfied with orders from contractors for generous and regular payments (with no desire to run an independent business or grow as a separate-standing company in the local markets).