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What is the difference between a general contractor and a construction company

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Understanding the Difference Between a General Contractor and a Construction Company in the US

When it comes to construction projects, it is essential to understand the distinction between a general contractor and a construction company. This article aims to provide a clear overview of the differences between these two entities, highlighting their roles, benefits, and when to engage their services.

I. What is a General Contractor?

A general contractor is a professional who manages and oversees construction projects from start to finish. They act as the primary point of contact, coordinating all aspects of the project, including labor, materials, and subcontractors. Key points to note about general contractors are:

  1. Responsibilities:

    • Planning and scheduling the project timeline
    • Procuring necessary permits and licenses
    • Hiring and managing subcontractors
    • Ensuring compliance with building codes and regulations
    • Budgeting and cost management
    • Overseeing quality control and project safety
  2. Benefits of Hiring a General Contractor:

    • Expertise: General contractors possess vast knowledge and experience in construction.
    • Time-saving: They handle all project coordination, allowing clients to focus on other matters.
    • Network: They have established relationships with subcontractors and suppliers.
    • Quality Assurance: General contractors ensure high standards
A contractor can work for a company and is paid for their services but is not technically on the organization's payroll. They can also do work for multiple companies at one time. A contractor is a self-employed worker who operates on a contract basis for clients.

What is the difference between a CM and a GC?

The most significant differences between a construction manager and general contractor come before construction on a project even starts. General contractors come onto a project after the design is already complete, whereas construction managers play a critical role in contributing to the design of a project.

What is the role of a GC in construction?

A general contractor (GC) oversees and coordinates the day-to-day activities on a construction jobsite. They are also responsible for subcontractor management and workforce scheduling. In some cases, they may order materials and be responsible for ensuring that they get to the job site in a timely fashion.

What is the advantage of general contractor?

Reduced Stress and Hassle. Another benefit offered when a general contractor is hired is that the owner of the building does not have to be bothered with the overall construction process. It is the commercial contractor who is responsible to manage the execution of the construction project.

What is the relationship between a company and a contractor?

A company should not dictate or control the means or methods of a contractor's performance. Rather than giving specific direction as to how to perform, if the end result is that the services are not performed in accordance with the parties' agreement, the company can exercise contractual remedies.

Is contracting and construction the same thing?

General commercial contracting involves managing all of the components of a commercial project, like constructing a custom stone sign with fresh landscaping surrounding it. Unlike construction companies that typically handle only one facet of a project, general commercial contractors oversee the entire process.

What does it mean to work for a contractor?

Contract employees, also called independent contractors , contract workers, freelancers or work-for-hire staffers, are individuals hired for a specific project or a certain timeframe for a set fee. Often, contract employees are hired due to their expertise in a particular area, like writing or illustration.

Frequently Asked Questions

What's the difference between a contractor and a subcontractor?

Typically, a contractor works under a contractual agreement to provide services, labor or materials to complete a project. Subcontractors are businesses or individuals that carry out work for a contractor as part of the larger contracted project.

What makes someone an independent contractor?

You are probably an independent contractor if:

You work for more than one company at a time. You pay your own business and traveling expenses. You hire and pay your own assistants. You can earn a profit or suffer a loss as result of your work for the company.

Is it better to be an employee or an independent contractor?

Advantages of being an independent contractor over being an employee include more control since you're your own boss. You might earn more as an independent contractor, and the tax benefits can include deducting your business expenses. The drawbacks to being an independent contractor include more responsibility.

What are the disadvantages of being your own general contractor?

Cons of being your own contractor

The job will likely have more problems, due to your lack of experience. Quality of construction may suffer due to your lack of experience. You will be absorbing most of the risk for cost overruns, and for construction problems that occur during the job and after you move in.

How is a CM or GC typically chosen?

The Construction Manager/General Contractor (CM/GC) project delivery method allows an owner to engage a construction manager during the design process to provide constructability input. The Construction Manager is generally selected on the basis of qualifications, past experience or a best-value basis.

Are subcontractors and independent contractors the same thing?

The main difference lies in who isemploying the person. If a worker is employed by a company directly, they are an independent contractor. If the worker is hired to perform a specific task for a general contractor, they are a subcontractor.


Why are contractors treated differently?
A contractor must operate its own business, file its own separate taxes and be outside of the direction and control of the hiring party. A good example of a contractor is your graphic design firm or IT firm that performs functions outside of your core business.

Who is the main contractor in a construction project?

The Main Contractor oversees and manages the construction of a building project. The work is delivered under a contractual agreement. There are a number of forms of contract and it is important to understand, the role of the Main Contractor will vary depending on the type of construction contract.

Are all 1099 employees subcontractors?
A subcontractor is a worker who is not your employee. You give a Form 1099 to a subcontractor showing the amounts you paid him. The subcontractor is responsible for keeping his or her own records and paying his or her own income and self-employment taxes.

How do you manage an independent contractor?
7 ways to manage your contractors effectively
  1. Get clear about why you hired them.
  2. Ask what they want out of your partnership.
  3. Set your expectations.
  4. Onboard them.
  5. Treat them like a team member.
  6. Respect their independence.
  7. Offer feedback.
How do I protect myself when hiring an independent contractor?
Get Proof of Bonding, Licenses, and Insurance
  1. A valid contractor's license.
  2. Liability insurance to cover any bodily injuries and property damage that might occur during the job.
  3. Worker's compensation insurance to cover employee injuries.
What is the problem with the independent contractor?

Unfortunately, if the company gets the classification of independent contractors wrong, bad things can happen. The company could be liable for employment taxes, back wages (including overtime), unemployment insurance claims, workers' compensation claims, violations of the FMLA, claims involving benefits, and more.

What is the difference between a general contractor and a construction company

What not to do with an independent contractor? Here are five common mistakes employers make:
  1. You assign employees to help the contractor.
  2. You give the contractor a dedicated workspace.
  3. You provide paid time off (or other benefits).
  4. You work with the contractor on a long-term basis.
  5. You have the contractor perform core business functions.
What are the three controls for independent contractors?

The facts that provide this evidence fall into three categories – Behavioral Control, Financial Control, and Relationship of the Parties.

What are examples of independent contractors?

People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors.

What are the four 4 factors used to determine whether someone is an independent contractor?

The law further states that independent contractor status is evidenced if the worker: (1) has a substantial investment in the business other than personal services, (2) purports to be in business for himself or herself, (3) receives compensation by project rather than by time, (4) has control over the time and place

How do I know if I am an independent contractor or an employee?

The basic test for determining whether a worker is an independent contractor or an employee is whether the principal has the right to control the manner and means by which the work is performed.

  • What percent of people are independent contractors?
    • Nearly twice as many workers—and 28 percent of all workers—reported having any self-employment work in the past week as those who reported independent contracting as their primary job—just 14.4 percent of all workers. This has contributed to ambiguity regarding size of the self-employed population.

  • How many independent contractors are in the US?
    • The last several years have seen a significant increase in the number of Occasional Independents, from 15.8 million in 2020 to 36.6 million in 2023-an increase of 130% in three years.

  • What industry has the most independent contractors?
    • TalentWave reports that the top 10 industries for freelancers include:
      • Computer & IT.
      • Administrative.
      • Accounting & Finance.
      • Customer Service.
      • Software Development.
      • Medical & Health.
      • Project Management.
      • Research Analyst.
  • What percentage of the workforce is 1099?
    • The fact that platform 1099 workers made up only a very small share (1.4 percent) of the California workforce in 2016 may be surprising, given how much attention “gig” work has gotten. But other research has arrived at similar estimates.

  • How many 1099 contractors are there in the US?
    • In 2022, the number of independent workers in the United States increased significantly, regardless of the frequency of work. In 2022, there were about 31.9 million occasional independent workers in the United States, an increase from 15.8 million in 2020.

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