A contractor is someone who agrees to fulfill a legally binding agreement, often in the construction industry, hiring skilled and unskilled workers. They must be approved by an examining board and responsible for the quality of work performed. They may also be hired by companies to carry out work for a fee.
In general, a contractor can be anyone who agrees to fulfill the terms of a legally binding agreement. Most commonly, the term is used to describe a construction industry expert who hires both skilled and unskilled workers to actually build a financed project. A contractor must be approved by an examining board before being able to bid on the project. This offer is based on the estimated cost of building materials, subcontractor and worker wages, and the project coordination professional’s fee.
While a contractor’s primary concern is to hire qualified subcontractors (skilled craftsmen), he or she may also carry out some construction work as well. Most develop good working relationships with other construction specialists, so they often hire the same companies and specialist workers for each contracted project. The contractor is ultimately responsible for the quality of work performed by the people he hires, so it doesn’t always pay to hire unknown entities to cut expenses.
A professional contractor should also have an understanding of their limitations. The client works with an architect and a financier long before the first shovel of earth is removed. During the bidding process, a contractor may need to work with the building architect to discuss potential issues with a design element. If the complexity of the building design or potential cost overruns threaten to overwhelm the person’s skills, they should step back and allow someone else to win the bid. A good contractor understands that project success depends on their ability to hire the right independent subcontractors and follow through with the client’s wishes.
In another sense, a contractor could also be anyone who agrees to carry out work for a fee. This often occurs in companies that cannot afford to assign or hire a new employee to perform a specific job. The job itself may not be long-term enough to justify the expense of a new hire, or the wages may not be enough for established employees. Companies in this situation often hire independent contractors to do the work without a formal employment contract. The rate of pay is discussed with each self-employed person and a legal agreement can be produced. After completing the work, an independent contractor receives the full amount of wages without any tax deductions or other withholdings. At the end of the tax year, the company issues a federal Form 1099 showing the worker’s miscellaneous income earned.
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