How do people start general contractors

One possibility to become self-employed is as a so-called subcontractor. Subcontractors can often be found in the trades, especially in the construction industry, as well as in logistics, local public transport and the service sector.

The use of subcontractors is common for various reasons: Be it to process larger orders when the order situation fluctuates, or because specialists are required. But what does it mean to work as a subcontractor and what are the advantages of starting a business as a subcontractor? And what do you have to pay attention to when you start your own business in this way?

Relationship between client, main contractor and subcontractor

As a subcontractor, you provide services on behalf of other companies and are contractually bound to the main contractor, also known as the general contractor. The subcontractor has no business relationship with the actual client. For example, a builder hires a construction company to do the interior work for the house. The construction company in turn subcontracts individual services such as electrical installation or painting work.

Services provided by a subcontractor are regulated with the main contractor in a work or service contract. Here the contractual partners record the conditions under which the service is provided. The subcontractor is legally independent and economically independent from the general contractor.

Benefits of starting a business as a subcontractor

The main advantage of working as a subcontractor is that you do not have to worry about the procurement of the order if you have contacts with main contractors. Working as a subcontractor is particularly helpful for start-ups in order to build up their own customer base. Even if you don't want to put a lot of energy into marketing your own company, a job as a subcontractor is often the best option.

However, the subcontractor is always dependent on the main contractor. It is therefore advisable to look around for several general contractors in order to secure yourself and to generate your own orders step by step. General contractors are also interested in subcontractors having more than one client so that the suspicion of bogus self-employment does not arise.

Calculate costs as a subcontractor

Since subcontractors are also hired so that the main contractor saves employees with all incidental wage costs and employee rights, subcontractors should check carefully what prices and conditions they are willing to accept for the completion of an order. Often the margins for subcontractors are rather low.

Subcontractors should keep in mind that they will bear all of the costs that a contractor normally incurs. These are, for example, taxes, membership fees at the Chamber of Industry and Commerce, etc., health, pension and other company insurances as well as other operating costs. It can happen that the main contractors' offers to subcontractors are so low that subcontractors prefer to keep their hands off them.

What to do if the main contractor does not pay

As a subcontractor, like any self-employed person, you bear the risk that your client will not pay. In this case it is the general contractor. Under certain circumstances, he can try to assert alleged defects in the service provided. In this case you have the option of requesting information from the main contractor as to whether the larger order placed with him has already been accepted and paid for.

Subcontractors should ideally request this information in writing and also set a deadline. If the client has accepted the overall service and paid the invoice to the general contractor, the general contractor's notifications of defects and thus the reason for the non-payment are not justified.