A Comparison of General Contractor vs Independent Contractor

A general contractor in the construction field comes under a formal agreement or a contract with the house owner. The contract binds the contractor to look after the requirements of the complete project such as planning and organizing the whole project, select the subcontractors, and to buy all the materials for the project in the agreed bid amount.
There are many examples where you will find companies function as the general contractor where the owner hires the company directly. The same companies work as a subcontractor when they work on the project assigned by someone else other than the homeowner.

Depending on the nature of the project the contractor works on the work. Either the contractor work side by side with other workers to complete the project or they work as supervisors and managers overseeing all the work and progress of the work. Contractors who are successful in the construction business grow in number quickly by hiring new employees and get more managers on board to look after the administrative tasks of the company.

A general contractor works with several people during the project. The contractors must make sure that they have a proper legal cover, and it is essential to operate under the ambit of legal agreements. You need to develop a full contract that covers all necessary provisions for working with homeowners and other subcontractors.

Contractor Agreements Forms Are Essential

Independent contractors work with any business, person or entity under a separate contract or legal agreement. Unlike a regular employee, an independent contractor does not regularly work with the client but is available to hire to work when a construction project is on hand. In most cases, the independent contractors are freelancers who receive their payment on completion of the project.
Contractor keeps a check on all confidential details and will not release the information to any third party under any circumstances. The independent contractors receive their compensation under the provisions of Form 1099-MISC to report non-employee fee, and the business has to file such payments on Copy A with IRS by the end of January.
In the United States, any business or company involved in an enterprise or corporation paying more than $600 to an independent builder in one year is obligated to inform this to the Internal Revenue Desk Services (IRS) as well as to the contractor. The report goes on the file on the Form 1099-MISC 1 2.
Similarly, when you compensate someone over $600 who is not on your payroll and function as a subcontractor, you must submit a Form 1099-MISC (PDF), and a copy of 1099-MISC (PDF) is for the record of the independent contractor.

Hiring a Contractor

Make sure that all terms are part of the contract including all relevant details such as the commencing date of the project, the aspects of the project to cover, the payment details, the complete details and all other formalities on paper.
By provision, independent contractors run a stand-alone business, and as such, you do not have to settle the federal and state tax for the contractor and to your billing. On my first project, I appointed qualified independent contractors for all the electrical, plumbing and heating work for the building.
You should ensure that all details about the project are in clear term in the contract. You should have in writing the payment terms, the need for hiring labor, and all the types of products to use.
Any contractor covering a project over $4000 need to obtain a permit from the Secretary of State, so you should always check the list of authorized contractors to make sure you come in agreement with a qualified contractor.

Working as a Subcontractor

When your business requires more help, going for a subcontractor makes economic sense and offer more savings than when you hire regular employees. Whether you work as a main contractor or a subcontractor, you set your working parameters and negotiate all the critical details such as payment of the work, and how to get in the contract with other construction businesses. You need to make sure that you go through the fine print to the contract before you come under an agreement.