Contracting and What it Entails


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Categories : General

A general contractor is responsible for the overall coordination of a project. A general contractor must first assess the project-specific documents (referred to as a bid, proposal, or tender documents). In the case of renovations, a site visit is required to get a better understanding of the project. Depending on the project delivery method, the contractor will submit a fixed price proposal or bid, cost-plus price or an estimate. The general contractor considers the cost of home office overhead, general conditions, materials, and equipment, as well as the cost of labor, to provide the owner with a price for the project.

Civil engineering procedures published by the institution of civil engineers defines a ‘ general contractor ‘ as ‘a contractor who undertakes the whole of the construction of a project , but usually in turn sub-letting parts of his work to specialist or trades contractors and others as sub-contractors ‘.

Independent Contractor vs. Employee

An independent contractor is a person, business , or corporation that provides goods or services under a written contract or a verbal agreement. Unlike employees , independent contractors do not work regularly for an employer but work as required, when they may be subject to law of agency. Independent contractors are usually paid on a freelance basis. Contractors often work through a limited company or franchise , which they themselves own, or may work through an umbrella company.

It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay social security and medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.

There are many nuances and exceptions in the laws, tests, and definitions of what differentiates independent contractors from employees. With the constant small tweaks and adjustments to laws and varying tests from different government agencies, it can be difficult to keep things straight.


If you’re the adventurous, entrepreneurial type, then working as an independent contractor might be a great career choice for you. Independent contractors are sometimes called ics, consultants, freelancers , free agents or just contractors. Regardless of the label, all are essentially the same in practice, including a self-employed designation when it comes to u. S. Tax purposes. That’s because the internal revenue service has only two distinctions: an independent contractor or an employee.

Ordinarily, independent contractors can’t collect unemployment from their state unemployment insurance agency when they are out of work. This is because they are not employees and ordinarily do not pay unemployment taxes.

Although you might do essentially the same work, the irs views contractors and employees — and the businesses that hire them — differently. Determining whether the person providing service is an employee or an independent contractor is based primarily on the degree of control and independence over the work.