Financial Responsibilities for a Contractor

A general contractor license holder is a self-employed individual who takes up contractual assignments and projects. One of the great things about having a contractor’s license is that the holder doesn’t have to deal with the typical employer and employee relationship. This gives them the freedom to work in a more positive way. But this does not mean that their work is taken casually. A contractor should take on the employer responsibilities and tasks and make sure that they are meeting their obligations, particularly the financial ones—which are usually tied to legalities.

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File Taxes

General contractors are responsible for their own accounting or bookkeeping. The general contractor is responsible for paying and filing the taxes on the income they earned from their clients. With this, a client should give the contractor’s license holder a W-9 tax form prior to issuing payments. By the coming January of next year, the client gives the general contractor the Form 1099-MISC, which includes the payment amounts made previously. The general contractor must get all of the Form 1099s from all of the income that they gained throughout the year. Afterwards, they should file this with the Internal Revenue Service, as well as the state revenue office (if there is income tax collected on the state level). For example, you have to file in the Florida revenue office if you have a Florida contractor’s license. The general contractor must also claim entitled deductions for spending on mileage, office supplies, advertising, equipment, and the like.

 Get Benefits and Insurance

 Being a general contractor, clients do not pay the general contractor salaries or insurance. Of course, this varies depending on state laws. Check with the office of the state attorney general to verify if your specific situation as a general contractor goes under the management and control of a client. If such is the case, you are qualified for worker compensation and insurance benefits. Hence, as a general contractor, you should research on how to get insurance prior to beginning any assignment or project. If you are the holder of a contractor’s license in Florida, head on over to the Florida attorney general’s office for further clarification.

Handle Billings and Collections

Employees expect that they be paid regularly. On the other hand, for general contractors, they bill clients as they go along, depending on the work performed. Being a general contractor, you are responsible for the accounts receivables. Thus, you should collect all unpaid invoices that your clients owe you. If the client were not paying based on your invoice terms and conditions, you would have to send them reminders so that you can follow up.

Fortunately, as a general contractor, you do not have to do all of the heavy lifting. Contractors Reporting Services in Tampa, FL assists you in all your license needs. If you have questions or clarifications with your FL contractor’s license, visit us during office hours on N Nebraska Ave.