contractors

A contractor is a person or organization contracted to perform work or provide services under a defined agreement. Contractors are typically independent from the client’s payroll and may operate on a project basis within a specified timeline, budget, and scope. They provide specialized skills, equipment, or capacity that the client lacks internally and may work on-site or remotely.

There are several contractor types, including independent contractors who operate as sole proprietors or through their own businesses, subcontractors who perform work under a prime contractor, and prime or general contractors who manage a project and coordinate subcontractors. Staffing suppliers and consulting firms may also function as contractors.

Contrasts with employees: contractors usually control how they perform work, may supply their own tools, and handle their own taxes. As a result, they are often not eligible for employee benefits. In many jurisdictions, misclassifying workers as contractors can lead to penalties; correct classification depends on factors such as control, ownership of tools, and opportunity for profit or loss.

Regulation and risk: many trades require licensing or registration. Clients commonly require liability insurance and performance bonds. Contracts specify scope, deliverables, milestones, payment terms, change orders, warranties, and remedies for breach.

Lifecycle and management: contractors are typically engaged through bidding or proposals, followed by negotiations, contracting, delivery, acceptance, and closeout. Effective management includes clear scope, communication, risk management, compliance with safety and data protections, and vendor performance evaluation. Common sectors include construction, information technology, engineering, and professional services.