I want to start subcontracting....any advice?

[jimmyray1]

I would like to start sub-contracting residential installs in the Dallas area but I'm really not sure what the requirements are as far as insurance and contract agreements are concerned. I've also heard horror stories from guys who've done this and ended up owing tons of taxes. Any advice would be much appreciated. :deadhorse:

[bmathews]

I'll assume you are a business owner wanting to sub out the installs? Being in Dallas, you will undoubtedly get a ton of mexican installers. I'm not being derogatory either. Just stating what there is, a heavy mexican population in Texas. I'm in Austin, only 3 hours away. White dudes tend to do a crappy job in these parts and most tend to be alcoholics or drug addicts. Otherwise they would have a job at a company. You need to check with your insurance company regarding requirements. If they are contract labor, they are typically covered under your insurance. If you classify them as sub-contractors, then they need their own. As far as taxes, verify that they are truly legal. I believe the IRS website can help you with that. If they don't pay taxes or file. There are guidelines to help you with that. Your accountant should be able to assist you.

[energy star]

I think he wants to be the sub.

[nvr2old]

Why?

[bmathews]

Why?

Maybe he's one of those guys that can't hold a job? As far as being the sub. That's pretty much gonna depend on what company you sub for. Which from what I've seen in my area. Most of them really screw the subs and backcharge them for all sorts of crap. With taxes, you need to save about 25% of what you get paid if they don't withhold taxes.

[Roadhouse]

Or he can find a few companies like the ones I work for that all work is licensed and insured through the main contractor and just get paid sub rates. In other words, you don't neccassarily have to own your own sub business to work and get paid sub. My last hourly was $XX an hour a few years ago and I won't work for less than $XX hvac or $xx electrical.

And I agree, save 25% of every pay check or job you receive pay in a seperate account specifically for taxes.

[btuhack]

You need to get your pro membership in place and post this type of question there. When the mods migrate this to the pro section, which they will, you can't read the responces with your current member status.

Good luck with the subs and be smart.

[Stamas]

It is stepping out of the boundaries here. OP, get your post count up, apply for Pro and discuss this over there.
Road, how about not putting those #'s in open threads please.

[Roadhouse]

My fault Stamas, thanks.

[trey r]

Or he can find a few companies like the ones I work for that all work is licensed and insured through the main contractor and just get paid sub rates. In other words, you don't neccassarily have to own your own sub business to work and get paid sub. My last hourly was $XX an hour a few years ago and I won't work for less than $XX hvac or $xx electrical.

And I agree, save 25% of every pay check or job you receive pay in a seperate account specifically for taxes.



I don't know about Texas, but in N.C. you can't sub. You must be on the mechanical contractors payroll.

[energy star]

I think you can subcontract in every state, even in NC. Every general contractor hires sub contractors. You put in a commercial HVAC system in North Carolina? Did you hire a system balancer? Thats a sub contractor.

[trey r]

I think you can subcontract in every state, even in NC. Every general contractor hires sub contractors. You put in a commercial HVAC system in North Carolina? Did you hire a system balancer? Thats a sub contractor.


No, a licensed GC hiring a licensed mechnical contractor isn't the same.

A mechanical contractor in N.C. cannot sell a job using his license then sub out to an unlicensed person(s). To work under my license you must be directly on my payroll.

[energy star]

The OP asked what it takes to be a sub contractor. Yes he would require his own license and insurance. That's what sub-contracting is. You said in NC you can't sub a job out. That is incorrect. If you (the sub contractor) have a mechanical license & and insurance, you could sub work out in NC. Why would you want to? Don't know. Maybe his company is slow, perhaps he wants to just specialize in one specific area of the trade. You are assuming that all sub contractors have no license or insurance. That is not the case. So for the OP, if you want to be a sub contractor, get a mechanical license, insurance and a business license and send out a form letter to every HVAC contractor stating that you will sub out the rough-ins or start ups on any job they have. Just because someone is a sub contractor does not mean they don't have the required licenses, he just doesn't have any work.

[Roadhouse]

Some of you seem to have a terrible misconception that subs don't make any money or don't have enough work. Move to Houston and you'll quickly find it the complete opposite, most subs who are running their own sub contracting company triple the income of individual hvac contractors and with less headache.

[Roadhouse]

And btw, I never asked to be a "sub contractor", I was hired on originally hourly three years ago. Then one day out of the blue a few years back the boss doesn't pay me my weekly salary as I was expecting (also all of my work was done WITH him on the jobs) , he up and pays me quadruple what I was expecting. Say what? And from there on in he's paid me sub rate daily per job(s).

He's preparing me to take over his company is what it is as he's been doing this for 30 years now, starting as a sub himself and only being a main contracting hvac company for five years now, and now as he said the other day, "It's your turn now."

side note, also he gets I think it is 2% of all equipment purchases back in toOls and has over 8k in vouchers to the supply houses that he said he's gonna give me some if not all of it.

Now wonder we have so many dang toOls and loaded trucks. :)

I'l be sub, a bub, a dub, a nub, I don't care, just bring the work.

[trey r]

Some of you seem to have a terrible misconception that subs don't make any money or don't have enough work. Move to Houston and you'll quickly find it the complete opposite, most subs who are running their own sub contracting company triple the income of individual hvac contractors and with less headache.



I'm under no misconception and I don't recall anyone other than you mentioning money.

What I am saying is you are engaging in hvac without a license or insurance. By doing so you are assuming some of the risk.

[energy star]

Roadhouse I have to agree with Trey r, you may considered an employee in your situation.

[Roadhouse]

I consider myself an employee that still pays his own taxes. As for the other two hvac companies I have since begun working for as I pick and choOse the jobs I want if I have the time, it's the same. I started with them ONLY sub rates in the same boAt as with what my main boss put me in although my main boss pays me the most.

Lot's of big hvac companies who ONLY sub out and have no in house installers/techs around these parts. They pay beans though as I've quit working for a few.

I think it mainly boils down to who pays the taxes or rather when.

[bwalley]

I think you can subcontract in every state, even in NC. Every general contractor hires sub contractors. You put in a commercial HVAC system in North Carolina? Did you hire a system balancer? Thats a sub contractor.

In Florida a subcontractor doing A/C work must be licensed, they can't just sub work unless they are properly licensed, an occupational license is not the same as a contractors license.

[energy star]

I know. I have stated that in prior posts. As long as you have ALL licenses required, you can sub contract in any state, anywhere.

[classical]

In Texas it requires no license to provide sub contract labor, the licensed contractor is responsible for the quality, design and warranty of the work and any liability derived from the work or workers.

[jimmyray1]

Thanks for the advice....for the record I've been a residential installer for about 6 years now, I've never had a problem holding a job with a company. I would just like to get my feet wet doing my own thing, that and we are incredibly slow right now.:deadhorse:

[Roadhouse]

Thanks for the advice....for the record I've been a residential installer for about 6 years now, I've never had a problem holding a job with a company. I would just like to get my feet wet doing my own thing, that and we are incredibly slow right now.:deadhorse:

The only thing going to be different is your pay.

[trey r]

The only thing going to be different is your pay.



and your liability.

[Puzzler]

Can't speak to contracting licensing requirements in Texas, or business licensing laws, but those are definitely rules you will want to know before you get started. A little concerned with some comments made by another poster, where it sounds like he is talking about getting paid as an independent contractor rather than as an employee. And it didn't sound like the 'employer' was doing the right thing: Surprise! I'm not paying you as an employee anymore, I'm paying you as an independent contractor. (I will use the phrase 'independent contractor' to refer to how you are paid, to avoid confusion with the phrase 'subcontractor,' which has a different connotation.)

Regardless of that poster's particular situation, jimmyray1, you should know that there are companies who will want to pay you as an independent, and this is actually illegal: it's tax evasion. This is because in an employee/employer situation, both the employee & the employer pay half of the total social security and medicare taxes. (I think SS is 12.4% of pay, so the employee pays 6.2% and the employer pays 6.2%. I think MCare is 2.9%, or 1.45% each). If the company pays you as a independent contractor, you are responsible for paying 100% of those taxes, and the company doesn't have to shell out that extra 7.65% (6.2% for SS and 1.45% for MCare).

Here's the thing: they are not allowed to just 'decide' they don't want to pay those taxes, and make you an independent contractor. If you are treated as an employee - like for instance, they tell you when & where & how to work - then they must pay you as an employee.