How to Become A Subcontractor In South Africa

A subcontractor is an individual or a business that signs a contract to perform part or all of the obligations of another’s contract.

Who is considered a subcontractor?

A subcontractor is a worker who is not your employee. You give a Form 1099 to a subcontractor showing the amounts you paid him. The subcontractor is responsible for keeping his or her own records and paying his or her own income and self-employment taxes.

What does it mean to work as a subcontractor?

Subcontracting refers to the practice of bringing in an outside company or individual to perform specific parts of a contract or project. In most cases, a company subcontracts another business to perform a task that cannot be handled internally.

Who are subcontractors in construction?

The general contractors usually provide guidance and manage the construction site. However, the subcontractors are the people who have specialized skills to take care of all the major and minor tasks and ensure the fact that the project does not lack in any aspect.

How to Become A Subcontractor In South Africa

How to Become a Subcontractor: Education and Career Roadmap:

Career Requirements

Subcontractors are expected to have different abilities, depending on their areas of expertise.

These may include building and construction knowledge, listening and critical thinking abilities, personnel management skills, coordination skills, monitoring and negotiation skills, a working knowledge of CAD and user interface software, an advance understanding of industry-specific tools and equipment, and project bidding skills.

According to the SA Bureau of Labor Statistics, the median annual salary was R 677790.62 for carpenters, R 828143.99 for electricians, and R789130.14 for plumbers. Construction-related salaries vary by location and specialty, so you will want to check data specifically for your area.

Below are steps to Become A Subcontractor In South Africa

Step 1: Gain Skills in Construction

Subcontractors are skill-based agents who are contracted to complete a specific portion of a construction project, such as plumbing, roofing, carpentry, or electrical installation, and they need to be proficient in their areas of expertise.

Often, a subcontractor can become skilled by working as an apprentice in a construction field. Many labor unions offer apprentice programs for those interested in training in a specific trade.

There are also trade colleges and technical schools that offer educational programs in construction specialties. Some programs also offer internship opportunities where students can get hands-on training.

It’s a good idea to take classes related to construction while in high school. Some high schools offer classes in trades related to becoming a subcontractor. Vocational programs may be offered in coordination with a technical or community college to prepare students for employment immediately after high school.

Step 2: Become Licensed

Many states and municipalities require licenses for those working in the construction field. Subcontractors who specialize in areas such as plumbing or electrical work often need specific licenses to practice, and a few states also require general licensure for those working as subcontractors.

Licensure requirements vary, but most require the submission of information that can include training background, work experience, and personal references.

Step 3: Learn State and Federal Tax Regulations

Subcontractors are typically classified as self-employed businesses and must pay their own municipal, state, and federal taxes. They will also need to withhold and submit workers’ taxes and file the proper paperwork. Local and state tax requirements vary greatly, and subcontractors may need a professional accountant to help navigate changing tax codes.

The Internal Revenue Service has specific tax forms for subcontractors and offers information on a variety of topics, including payments, deductions, and purchase receipts.

Step 4: Obtain Insurance

Since subcontractors are considered self-employed, they are rarely covered under the prime contractor’s insurance policy and will need to obtain a number of insurance policies on their own.

Most prime contractors require subcontractors to show proof of insurance before they are hired to perform a job. Insurance requirements vary, but typically, subcontractors need to have worker’s compensation and employer, property, and general liability coverage.

Step 5: Devise a Contract Agreement

Subcontractors typically must engage in a written agreement that consists of a description of the job, the cost of materials, and the time needed to complete the job.

Some contracts are even more specific, detailing the materials to be used, how the job is to be performed, and the penalties if the job is deemed unsatisfactory or finished past the deadline.

Contracts are designed to protect both the prime contractor and subcontractor if disputes arise. Some subcontractors use template contracts offered by many construction associations, create their own contracts, or hire a lawyer to help devise contracts.

Step 6: Pursue a Bachelor’s Degree

A subcontractor who wants to advance in the industry may want to pursue a bachelor’s degree in construction science or construction management. A competitive job market means employers and prime contractors are looking for candidates with specialized education.

3 Subcontractor Jobs in South Africa

Outsourcing Specialist

ZTE (Guinea) Cape Town, Western Cape, South Africa

Junior Project Manager

Lactalis South Africa Bonnievale, Western Cape, South Africa

SITE DESIGN (SITE PLANNER)

BLU by Adcorp Johannesburg Metropolitan Area

How do I register as a contractor in South Africa?

7 Steps to Starting a Construction Company in SA

Register your company.

Get a Tax Clearance Certificate.

Get a free B-BBEE Affidavit.

Register with the CIDB.

Get a Letter of Good Standing.

Register with the NHBRC.

Register with the CSD.

How does subcontracting work in South Africa?

In fact, subcontracting part of a tender is so commonly placed that in South Africa there are specific rules regulating subcontracting in executing tenders. According to Investopedia subcontracting is the practice of assigning part of the obligations and tasks under a contract to another party known as a subcontractor.

What are the advantages of being a subcontractor?

7 Reasons Why Subcontracting May Be Right For You

Subs Can Help With Large Projects.

It Is Cost Efficient and Risk Adverse.

Subs Provide Expertise.

Increased Productivity.

No Long Term Commitment.

Subs Have Specialized Knowledge.

Fewer Legal Obligations.

What percentage of the contract will be subcontracted in South Africa ?

Tenderers are required to subcontract 30% of the value of contract, where main contractors fail to subcontract as per the condition of tender they must be disqualified for failing to meet the conditions of tender. 47.

Who appoints subcontractors in construction project in South Africa ?

main contractor

the main contractor usually has the right to appoint subcontractors if not otherwise provided for in the contract (see section regarding nominated subcontractors on page 11), whom he or she will be held responsible and accountable for.

Is it worth being a subcontractor in South Africa ?

The benefits of subcontracting are many. Using subcontractors comes with less commitment and responsibility, and gives your business more flexibility. Becoming a subcontractor means enjoying many of the benefits of working for a company without compromising your freedom as a freelancer.

How many different types of subcontractors are there in South Africa ?

OSHA classifies these four types of subcontractors in construction under one umbrella. However, it does divide further down in order to be more manageable. It can include masonry, stone setting, plastering, drywall, insulation, and even more.

Where Do subcontractors work in South Africa ?

A subcontractor is a type of contractor who works in a specialized area and could be a freelancer, independent contractor, or vendor.

What companies use a subcontractors in South Africa ?

One industry that relies heavily on subcontractors is construction. Project developers subcontract electricians, plumbers, carpenters, drywallers, carpet layers, painters, landscapers, roofers, and flooring specialists to do most of the work.

Can a subcontractor hire a subcontractor in South Africa ?

Can I sub-subcontract out some of my services to a sub- subcontractor? Generally ‘yes’, you can sub-subcontract out work to a third person – unless your subcontractor agreement prohibits this. So you need to make sure you put in place a subcontractor agreement that is right for the circumstances!

Is it better to be employee or contractor in South Africa ?

An employee may be able to obtain better benefits than an independent contractor. An employee will probably not have many costs beyond commuting, business clothes and other costs of the profession. Independent contractors, however, often have office expenses and staffing costs.

Do you pay tax on subcontractors in South Africa ?

All subcontractors must file and pay taxes including state, local and federal income and self-employment taxes on their own. The general contractor must file IRS Form 1099-MISC if the subcontractor earns over R 9003.20.