Independent contractors and subcontractors differ based on their respective working models. Although they work in the construction sector, they operate differently regarding their jobs, pay, work schedules, etc. As organizations find ways to achieve with fewer resources, there have been changes in the working relationships in the construction sector.
As a result, companies prefer outsourcing particular operations rather than hiring new personnel.
Therefore, it’s critical to comprehend how subcontractors vs independent contractors affect project duties. Keep reading to learn more.
Who Is An Independent Contractor?
An independent contractor is a self-employed or sole proprietor who enters a contract to complete a business or particular job. Independent contractors typically utilize their equipment and tools. They agree to undertake a project for a specified period and set their work schedules and payment rates.
They have worked as long as they have an agreement with the client. They provide ongoing services, or a one-time task, depending on the service they offer and the sector. According to the IRS, independent contractors are individuals engaged in separate professions that provide services to other business entities.
They include public stenographers, auctioneers, dentists, veterinarians, doctors, accountants, and lawyers. However, a person is an independent contractor if their services are not subject to control from any employer. An independent contractor’s earnings are also liable to self-employment tax.
Who Is A Subcontractor?
Like independent contractors, subcontractors are self-employed individuals paid for short-term projects. However, subcontractors are introduced to clients through independent contractors rather than signing a direct contract to finish a task. Therefore, an independent contractor pays an independent contractor.
The client or company is unaware of who the subcontractor is and does not have a legal duty to pay them. Additionally, the independent contractor engages subcontractors, such as plumbers and carpenters, for a set time until they complete the task. However, a subcontractor is not the independent contractor’s employee and is in charge of covering their taxes.
Neither the independent contractor nor the contracting party provides them benefits or insurance. The subcontractor may send his crew to complete the work.
Who Is Accountable?
Independent contractors engage with corporate representatives or clients to meet the contract’s needs and expectations. On the other hand, subcontractors are people or small businesses that an independent contractor employs to finish the project. Independent contractors oversee their project obligations, business operations, and payments.
They take on more risk when they use a subcontractor. Legal action may be filed against the client if the subcontractors violate the safety rules established by the state. Independent contractors are found liable for any mistakes that occur instead of the subcontractor.
Subcontractor vs. Independent Contractor
Subcontractors and independent contractors receive a particular sum for a specific assignment. They do not legally enter into a master/servant arrangement as defined by law. The main distinction lies in the client employing the person.
Self-employed individuals working directly for a business are considered independent contractors. A worker is a subcontractor if a general contractor engages them to carry out a specified activity.
