thing you really have to figure out is what type of license,
subcontractor or general contractor, you wish
to have. The best answer to this is ...
Go with what you
If you have experience in one trade (ie: acoustical; framing;
plumbing; etc.) then you probably want to start out with
a subcontractor license. If you have a good amount of experience
working as a superintendent for a general contractor then
you may very well be able to qualify for a general contractor
Curtis (my husband) had been hanging ceilings for
acoustical firms for over fifteen years. When we decided
to start our own company we considered a general contractor
but really he had very little knowledge about concrete,
framing, roofing, plumbing, electrical, etc. While he knows
flow of a project is supposed to go by paying attention
on different job-sites, he still had much more knowledge
own individual trade as far as installations are concerned.
We opted for a subcontractor license in his area of expertise,
suspended ceilings, and have since paid attention at individual
job-sites to learn all we could about the world of general
A popular misconception
is that the general contractor makes the most amount
of money for the least amount of work. While
a general contractor, usually, makes more money on a project
than a subcontractor does, remember that a general contractor
usually also has the highest risk (as well as overhead) ...
of the Subcontractor
Should any of the one to thirty or more subcontractors
on a project not 'perform' on the job, the general
has to make it right or s/he might immediately fall into
breach of contract. S/He might be able to cause the
to perform, and then again maybe not.
The general contractor will either have to perform
the work himself or find another subcontractor, very
possibly at a
higher price than the original subcontractor. Sure the
general contractor can enforce his legal rights against
who has defaulted on his contract but S/he'll have to
initiate legal proceedings.
contractor's workers compensation and liability insurance
rates are usually higher than that of a subcontractor
due to at least a couple things:
1) a general contractor can perform many
different types of work on a project thereby increasing
his chances and
severity of employee injury and
2) a general contractor
is responsible (read as legally liable) for the entire
project, as opposed to a subcontractor
being responsible for only his portion of the project.
Now typically, a general contractor will ask for proof of liability
insurance on your part. This requirement is satisfied
by providing a certificate of insurance through your insurance
agent. The general will require that his company be listed
as an additional insured. This means that if your work causes
harm to someone else in some way, the general contractor will
look to your insurance policy
for reparations, rather than to his own.
The same often goes
for the Owner. It is usually required
that they be listed as additional insured, even the architect
is sometimes included in the requirement!
If a subcontractor does not
pay his employees and/or pay them properly, the general
contractor will eventually be held
legally liable for the unpaid wages as well as interest
Why? Because it is ultimately the general contractor's
responsibility to see that all laborers on the project
are paid full wages
whether those laborers are his direct employees or employees
of a subcontractor. Now we aren't saying that the subcontractor
doesn't get in trouble with the EDD, because the subcontractor
gets into plenty of trouble, but it's the general contractor
who has to fork over if the subcontractor cannot.
General Contractor can then turn around and sue the
Subcontractor, but chances are if the EDD isn't successful
in getting the money out of the Sub then the Sub
probably won't have the funds available for the GC.
A general contractor's
material expenses may be higher. Rumor has it that
a general contractor will sometimes, if
not most times, pay more for material from a supplier
than a subcontractor will pay for that very same material
that very same supplier.
A general contractor almost has to
have at least one employee right away. For every project
that a general contractor has in process, he must have
full-time, a superintendent to manage the varying subcontractor's
schedules and quality of work. He can't be at two different
projects full time on the same day.
Of course, should you choose to be a general contractor
and you'll just be doing small jobs, utilizing just
subs, then you could probably do it on your own without superintendents
(it most likely wouldn't be easy though).
on the other hand, can have two or more
projects at the same time and manage them all (based on
the size and scheduling of the projects) by himself.
has to be on the job only while
he is performing his own scope of work, not for the entire
One thing that
is important for both types of contractors, Subs
and Generals alike, is to have a person other than
handling the administration part of your business.
There are lots of contractors out there who are doing
the estimating, installation and administration all
Most of them will tell you how they wish they had someone
running the office for them. Of those contractors that
have someone running the office for them, most will tell
you how important it is to have that someone running
When we started, I (Diane) was working
a full time job at
a muffler shop and Curtis (my husband) was working full
time at a (now) competitor's business. Since neither
of us was
available to answer the phone at the house/office, we'd
have to collect all our messages at the end of the
day and return
all those calls the next day during our breaks at our
Curtis did all of his bidding and I did all of the
office work at night after we put our kidlets to bed
(at the time
1 1/2 and 2 1/2 years old). We saw the clock strike midnight
enough times to cover every single new year we could
possibly experience, and then some!
I left the muffler shop and Curtis left his employer,
and we both went to work for our company and it's
way since 1995. :)
that in order to obtain a subcontractor license you
must have a minimum of four years field experience
the classification you wish to be licensed in. To obtain
a general contractor license your minimum four years
can fall into any of the classifications that are licensed
by the State of California.
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