Should I Become a Subcontractor?
A subcontractor is an individual or firm that is contracted to perform a job by a prime contractor. There are a variety of fields that utilize subcontractors, such as Internet technology, manufacturing, and aerospace, as well as government agencies. One of the most common areas for subcontractors is the construction industry.
The work environment, advantages, and disadvantages of a career as a subcontractor will vary greatly by field. For instance, Internet technology subcontractors will work in an office setting or perhaps from their home, while construction subcontractors will work on construction sites. Physical risks vary by job: writing subcontractors are exposed to few if any risks while working, although the manufacturing field requires the use of safety clothing, gear, and procedures to keep worker free from harm. Subcontractors are frequently self-employed, allowing them the freedom to control their own workdays and availability. This career can be very stressful, however, because of lulls between contracted work.
|Degree Level||High school diploma, though postsecondary education can be helpful|
|Experience||Depends on state and specialty|
|Licensure and Certification||Depends on state and specialty|
|Key Skills||Building and construction knowledge, listening and critical thinking abilities, personnel management skills, coordination skills, monitoring skills and negotiation skills, working knowledge of CAD and user interface software, advance understanding of industry specific equipment, project bidding skills|
|Salary (2015)||$87,400 per year (Median salary for construction managers)|
Sources: O*Net OnLine, U.S. Bureau of Labor Statistics
Step 1: Gain Skills in Construction
Subcontractors are skill-based agents who are contracted to complete a specific portion of a construction project, such as plumbing, roofing, carpentry or electrical installation, and they need to be proficient in their area of expertise. Often, a subcontractor can become skilled by working as an apprentice in a construction field. Many labor unions offer apprentice programs for those interested in training in a specific trade. There are also trade colleges and technical schools that offer educational programs in construction specialties. Some programs also offer internship opportunities where students can get hands-on training.
- Take classes related to construction while in high school. Some high schools offer classes in trades related to becoming a subcontractor. Vocational programs may be offered in coordination with a technical or community college to prepare students for employment immediately after high school.
Step 2: Become Licensed
Many states and municipalities require licenses for those working in the construction field. Subcontractors who specialize in areas such as plumbing or electrical often need specific licenses to practice their trade, and a few states also require general licensure for those working as subcontractors. Licensure requirements vary, but most require the submission of information that can include training background, work experience and personal references.
Step 3: Learn State and Federal Tax Regulations
Subcontractors are typically classified as self-employed businesses and must pay their own municipal, state and federal taxes. They will also need to withhold and submit workers' taxes and file the proper paperwork. Local and state tax requirements vary greatly and subcontractors may need a professional accountant to help navigate changing tax codes. The Internal Revenue Service has specific tax forms for subcontractors and offers information on a variety of topics including payments, deductions and purchase receipts (www.irs.gov).
Step 4: Obtain Insurance
Since subcontractors are considered self-employed, they are rarely covered under the prime contractor's insurance policy and will need to obtain a number of insurance policies on their own. Most prime contractors require subcontractors to show proof of insurance before they are hired to perform a job. Insurance requirements vary, but typically subcontractors need to have worker's compensation, employer and property and general liability coverage.
Step 5: Devise a Contract Agreement
Subcontractors typically must engage in a written agreement that consists of a description of the job, the cost of materials and the time needed to complete the job. Some contracts are even more specific, detailing the materials to be used, how the job is to be performed and the penalties if the job is deemed unsatisfactory or finished past the deadline. Contracts are designed to protect both the prime contractor and subcontractor if disputes arise. Some subcontractors use template contracts offered by many construction associations, create their own contracts or hire a lawyer to help devise a contract.
Step 6: Pursue a Bachelor's Degree
Subcontractor who want to advance in the industry may want to pursue a bachelor's degree in construction science or construction management. A competitive job market means employers and prime contractors are looking for candidates with specialized education.