Construction companies rely on subcontractors
because they provide
workers with specialized skills, such as
electrical wiring, plumbing, drywalling,
excavating, and so on, to employers
who could not afford to keep these
workers on a regular payroll. There are
other advantages, too. When you hire
an independent contractor, you don't
have to pay payroll taxes, such as FICA,
or include that sub in your company's
pension plan or health plan. Nor do you
have to file federal withholding or prepare
income taxes for the subcontractor.
In fact, these advantages are so attractive
that some employers succumb to
the temptation to class workers who are
really employees as independent contractors.
When the IRS catches someone
doing that, there are big-time penalties.