Should I Become a Subcontractor?
A subcontractor is an individual or firm that is contracted to perform a job by a prime contractor. One of the most common areas for subcontractors is the construction industry. Construction subcontractors work on construction sites, whether large or small. Physical risks vary by job, but the construction field requires the use of safety clothing and equipment, such as hats, goggles, and gloves, to keep workers 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 periods.
Subcontractors are expected to have different abilities, depending on their areas of expertise. These may include building and construction knowledge, listening and critical thinking abilities, personnel management skills, coordination skills, monitoring and negotiation skills, a working knowledge of CAD and user interface software, an advance understanding of industry-specific tools and equipment, and project bidding skills. According to the U.S. Bureau of Labor Statistics, the median annual salary in 2018 was $45,170 for carpenters, $55,190 for electricians, and $52,590 for plumbers. Construction-related salaries vary by location and specialty, so you will want to check data specifically for your area.
Steps to Become a Subcontractor
What steps do I need to take to become a subcontractor?
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 areas 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.
It's a good idea to 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 work often need specific licenses to practice, 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.
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 and employer, 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 contracts.
Step 6: Pursue a Bachelor's Degree
A subcontractor who wants 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.
Subcontractors typically have high school diplomas with some education and training beyond high school. They have expertise in their specializations, and they earn a median annual salary of $45,170 to $52,590, depending on their areas of expertise.