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A contractor is a manager or skilled tradesman who is employed by a client to perform a job. Licensing requirements vary by locale.
In general terms, a contractor may be anyone who agrees to fulfill the terms of a legally binding contract or agreement, but it is most commonly used to refer to licensed experts in the construction industries who hires workers who construct the project for a client. Contractors may or may not become personally involved in the actual construction.
Although the requirements vary somewhat from state to state, and according to the specific type of licensure, a contractor is required to maintain licensure in any state that he or she wishes to work.
Licensed contractors may bid on projects that they are interested in performing, basing the amount of the bid on the estimated cost of materials, wages for laborers and subcontractors, and the contractor's desired fee for coordinating the project. The contractor is ultimately responsible for the quality of the completed project.
Contractors may be licensed as general contractors, or they may be licensed in a specific industry, such as concrete contractors, landscape contractors, roofing contractors, HVAC contractors, plumbing contractors, woodworking contractors, electrical contractors, and others. Many contractors hold licensure in multiple related fields.
Some contractors are massive international firms working worldwide, others are licensed to bid in multiple states, while others are small, owner-operated firms serving a much smaller area, which may be restricted to one city and the immediately surrounding community.
In another context, a contractor may be someone who agrees to perform work for a fee, without being actual employee of the company that contracts with him. Generally, this occurs when a business is faced with a one-time or periodic job that doesn't justify hiring a new employee, and opts instead to hire an independent contractor to perform the task or complete the project without an employment agreement. Taxes are not deducted from the negotiated fee paid to the independent contractor, and the company issues a federal 1099 form indicating the contractor's income at the end of the tax year.