When starting a building project, one of the most important considerations is whether to hire independent contractors or general contractors. Both have their advantages, but there are differences that you need to know about. For example, an independent contractor may be a better option if you hire a contractor for only a short period. There are other differences as well that you need to know about.

When looking to hire an Independent contractor vs. a General contractor, it can be confusing as to the differences, when and how to use each, and how to track and pay each. This blog looks at the pros and cons of each, when to use each, and What are the differences between a general contractor and independent contractors?

What is a general contractor?

Let’s look at an example of the construction industry to help make sense of what a general contractor is. In this field, a general contractor will oversee a construction project. Property owners typically outsource this responsibility to ensure that the job goes smoothly and safely and meets or exceeds functional requirements in terms of quality.

In construction, a general contractor’s (GC) role is vital because they help ensure every job stage is carried out successfully. Home building and renovation projects may require a GC—sometimes known as “building coordinators”—to manage the work of several different tradespeople and ensure that each person completes their part of your project. Some tasks, such as roof replacement or new flooring installation, can be performed independently. However, if you’re planning to build an addition or replace a lot of floorboards at once, it’s wise to get in touch with an expert for guidance.

What does a general contractor do?

A general contractor is responsible for ensuring all plans come together so that a construction project from start to finish goes perfectly. They are a go-between, like an organiser. To bring a project to life in the most efficient way possible, including any necessary materials and personnel, such as tradespeople or construction supplies.

The RFP will provide a good idea of how the GC is being asked to handle aspects of the project, such as managing costs, ensuring timelines are met, and overseeing contractors. You need to understand precisely what kind of delivery method your client has in mind because this will let you figure out what your responsibilities are as the GC and whether or not you have everything on budget throughout all stages of the project.

A general contractor is responsible for planning and overseeing a new construction project from start to finish.

What is an Independent contractor?

Independent contractors are self-employed individuals working for a customer in a contract that does not meet the criteria of an employee. They typically have temporary superior skills or knowledge, which gives them an advantage in hiring their equipment and machinery. Such personnel carry out work for another person or organisation under secrecy but not as employees.

Does an Independent contractor have to pay taxes on this income?

As an independent contractor, one is responsible for their taxes. As a business owner, you should know that you must set aside money regularly to cover your tax obligations. The IRS doesn’t require clients of independent contractors to withhold taxes when they make payments. However, if you’re a self-directed freelancer doing the same kind of work on your behalf, the Internal Revenue Service does require taxpayers to pay their self-employment tax.

Contractors pay their taxes in instalments until April 15th. They can also deduct work-related travel and home office expenditures. But the client as a company is not responsible for withholding employee payroll tax, causing the burden to fall on the contractor.

General Contractor vs. Independent contractor

General Contractor

A general contractor is responsible for the overall management of subcontractors for completing construction or renovation projects. This can be very lucrative in that they often receive a significant amount of money when the project is completed, and some choose this career path because of the money it brings in. However, working as a general contractor during the building process can be difficult due to conflicts with subcontractors over delays or materials. It could potentially escalate into litigation if any party decides to take action against any other.

Independent Contractor

Independent contractors can help take the stress out of a startup. An independent contractor is an independent person you hire to help you with a short-term project. If you’re trying to get your company off the ground and need someone for a limited time, this option is better than bringing on full-time employees. You avoid having to pay overtime, give benefits or contribute toward things like payroll taxes.

Pros and Cons Of General Contractor

Hiring a general contractor may be the best option to get all your home improvement projects done in one fell swoop. Before you make a decision, though, it’s essential to consider the advantages and disadvantages of hiring this type of individual.

Pros of General Contractor

It’s not uncommon for homeowners to be hesitant about hiring a general contractor for a specific project because they don’t understand what’s involved in doing the job well. However, this opportunity has more benefits than disadvantages if you do your research and give it some thought before making a decision either way.

Sometimes the best thing to do is remember that you don’t need an expert in everything; being versatile and experienced in most business areas is just as valuable. An excellent example is general contractors, who are experts at handling a wide range of projects simultaneously – carpenters, plumbers, electricians, etc., rather than just focusing on one specific area. Make sure that you thoroughly check out this type of specialist’s reputation before committing them to perform work for you. You may be able to find a general contractor who can provide regular maintenance for your home or office to minimise costs from professional repairs and the hassle of constant breakdowns.

We suggest that you contact a general contractor when you are looking to save money. They can handle any project that you may have taken on but which could have been done by someone else. Once you develop a relationship with a reliable contractor, they can help you get additional work done at a reasonable price while staying within your budget.

Cons Of General Contractor

It would help if you were very specific with your project’s scope of work to ensure it’s successful. The contractor or company you hire should not do a poor job and ensure the project doesn’t fall apart at any given point. When negotiating with a potential contractor or service provider, ask if they have worked on similar projects, whether they were completed successfully on time, how many, and how much time was needed to finish them. With that said, remember that every project is unique, so find out what you can expect with this one specifically and all associated costs.

Find any extra costs the company will charge you if you need to extend the timeline for your business plan projects or even change the details of your request. Also, specify if you will be responsible for any added fees if something goes wrong with the project, such as changes in schedule or standards.

Even if you have an architect to help with the job, creating building plans is incredibly intricate and must be given a lot of time and attention. Rendering these plans can take longer than anticipated depending on how complex they are due to the amount of detail involved in each project—especially when working around areas that require a push. For example, electrical wires or other utilities can always create inspiration in programs like AutoCAD when it comes to placing objects, so make sure your general contractor knows what they are doing. You must understand the licensing laws if you don’t have a licence to be a contractor yourself.

A contractor that works for you should not be burdened by too many other projects, preventing them from handling yours as best they can. It’s important to know whether or not a contractor will be able to bring your ideas from the drawing board into reality because if this venture requires expert work, then you will have to hire a professional who can match your standards to ensure that everything is done right. Therefore, research ahead to know the right person for the job.

Pros and Cons Of Independent contractor

As an entrepreneur, you need to be familiar with the pros and cons of working with independent contractors. There are several things one has to take into consideration before approaching any situation relative to hiring a contractor.

Pros Of Independent contractor

You will probably save money. While most employers pay Independent contractors more per hour than they would pay employees to do the same work, there are quite a few additional costs you will have as an employer that you wouldn’t have if you had hired an employee instead – such as benefits, office space, and equipment. Furthermore, legal requirements make it necessary to hold back on some of your employee’s wages. Make sure that when looking into this matter, you consider all of your options carefully and weigh them all up before making any decisions.

Hiring an independent contractor for a specific task or project has its perks. You can hire someone to complete a job or objective and terminate their services as soon as the assignment is over without worrying about laying them off and dealing with unnecessary drama.

Cons Of Independent contractor

It is easy to read through all of the benefits of hiring ICs and think it would be great to work with such specialists only. But there are also some significant drawbacks to using ICs — and even though your business may be completely legit in your classification decision, it’s always possible a government agency may investigate and question the status of your relationship, so make sure to tread lightly when using employees as ICs.

While you still have to look out for subcontracting companies and make sure they’re paying their taxes, you can get away with not giving them too much attention. Keep in mind that hiring independent contractors is also more affordable. Moreover, due to the number of government laws nowadays, it’s more likely that an individual who is not classified as an employee may demand compensation and benefits, thus increasing your expenses immensely.

If a business must use ICs, it should handle them carefully so as not to upset its employees and avoid accidents. If a company needs employees for day-to-day work, the best option is to hire them. Employees remain with the employer long-term and are more reliably available when needed. I come and go, which can only disrupt operations on an ongoing basis. Also, shifting from ICs to employees is expensive.

When hiring an independent contractor (IC), you have a lot of power, and the IC tends to have very little. You decide the total amount of work, who is hired to do it, and how much they get paid. If your IC starts causing more trouble than they’re worth, you can stop using them, in which case they’ll probably be depressed for a few days, but after that, life will go back to normal for them – maybe even better than before since now they won’t spend their Sundays working.

Conclusion

A general contractor is any business or individual hired to complete a construction job. This type of contractor is responsible for the project in its entirety and hires the subcontractors necessary to complete the work. There are advantages and disadvantages to using a general contractor. The best way to know if hiring a general contractor is right for you is to understand the differences between a general contractor and an independent contractor.