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What is the average salary for a general contractor?

How much do top contractors make? What is the average salary for a general contractor? Keep reading to learn how to become a general contractor in the U.S. and what you can expect to make.

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The average general contractor salary range in the U.S. varies based on several factors, from experience to the scope of their work. As a result, it helps to define a general contractor's work before discussing their salary.

General contractors are usually responsible for all that happens in a construction project (from groundbreaking to completion). They generally hire subcontractors specialized in different construction work. Tradesmen can be hired instead of subcontractors for small projects.

General contractors, therefore, take a day-to-day scheduling and supervisory role as subcontractors handle construction material, labor, construction equipment, and other services needed to complete a construction project. General contractors are usually hired by owners of construction projects or construction managers who work directly with construction project owners.

What is the average salary for a general contractor?

The average annual general contractor salary in the U.S. as per 2022 statistics from different employment marketplace websites is as follows:

How much do the top contractors make?

According to ZipRecruiter, the top earning general contractor can earn as much as $143,000 annually. The top 90th percentile or top 10% earners make approximately $99,000 annually.[1] PayScale's annual general contractor salary estimates for top-earning contractors stands at $138,000. [2] Talent.com’s top earner estimate is $136,500.[3] Employment marketplace website Comparably.com’s top 86% contractors make as much as $339,343 annually [4]

Factors affecting general contractor average salary

As seen above, the average salary of general contractors ranges from $62,532 to $73,714. This range and salaries that fall outside this range i.e., for top earners, vary widely based on the following factors:

1. Location

Some areas will pay general contractors better than others. This can be attributable to the economic differences in different places and the availability of skilled contractors. Some regions will have more construction projects than others, while the supply of skilled contractors is low. Such areas offer better salaries. Generally, northeastern U.S. general contractor salaries tend to be higher than those in other regions.

2. General contractor role

General contractors with more complex and/or wide roles will generally earn more for obvious reasons (such as they are bound to do more and/or difficult work) than contractors with typical roles. A commercial or residential contractor handling a large project will also tend to earn more since they need more resources to get the job done when compared to contractors in small home renovation projects. According to ZipRecruiter, senior general contractor job categories (named based on scope) pay the most.

3. Experience

General contractor experience is another critical factor. Like other professions, experienced contractors make more than entry-level contractors. According to PayScale, entry-level general contractors (with less than 12 months of experience) earn approximately $32,300 per year. Contractors with entry to mid-level experience (1 to 4 years) can earn approximately $40,000 per year.

Contractors with 5 to 9 years of experience earn approximately $51,750, while highly experienced general contractors (with 10 to 19 years) earn approximately $67,160. Those with over 20 years' experience earn approximately $83,200. 

  • Entry level (0-1 yrs.): $32,300
  • Entry to mid (1-4 yrs.): $40,000
  • Mid to expert (5-9 yrs.): $51,750
  • Highly experienced (10-19 yrs.): $67,160
  • Seasoned (20+ yrs.): $83,200

These estimates are for the average base salary based on a 40-hour work week. What's more, there may be variances based on how a general contractor chooses to work.

Establishing a business when you have some mid-level experience can pave the way to higher earnings in the future, compared to working as an employee. The average general contractor salary for contractors working with established businesses is $70,000 - $90,000 annually.[5]

4. Bonuses

General contractors in the U.S. may also get bonuses in addition to their salaries. The bonuses average 4% of the basic salary. For instance, a general contractor with a $40,000 salary will get an additional $1,600 in bonuses or more if the bonus is higher due to factors like good performance.

5. Profit sharing

Some general contractors may also have contracts that have profit-sharing clauses in them. This is usually the case with contractors employed in large companies or those who have established businesses working alongside other professionals or investors. If there is a profit-sharing agreement in place, the general contractor's salary will be higher during a profitable year.

How much do contractors make per hour?

Going by the general contractor pay estimates above, pay per hour averages at $25 to $32. The pay can obviously fall outside this range based on the factors discussed above.

  • ZipRecruiter: $30
  • Comparably: $33
  • Talent.com: $32
  • PayScale: $30.28

How do I make money as a contractor?

As seen above, the answer to "how much do contractors make" varies. To make the most, you should consider getting adequate experience first (5 or more years). It also helps to move and seek opportunities in a high-paying area since the location can determine pay. What's more, establishing a business tends to offer higher-paying opportunities than working as an employee. Taking on larger or more demanding jobs will also help you make more money.

How to become a general contractor

There are 3 main steps to becoming a general contractor in the U.S. The steps are as follows:

Step 1: Meet educational and/or experience requirements for general contractors

General contractors are expected to have degrees in construction-related fields. The most common include construction management or civil engineering. You should complete an associate's or bachelor's degree in a construction-related field to meet the basic education requirements. These programs can last 2-4 years. You can choose to pursue advanced education to be more competitive once you start looking for a job.

Keep in mind, some states can still allow you to be a general contractor if you lack the educational requirements but meet the skills and necessary experience. For instance, the general qualifications of contractors in California require one to be 18 and above with experience/skills needed to handle contractor duties (manage daily construction business activities, including supervision).

Step 2: Get a general contractor license

Once you meet the educational requirements, if any, you need a license before you become a general contractor. Every state has its own contractor's license board. These boards give licenses to contractors after they meet certain exam requirements unique to the contractor license they are seeking.

For instance, the CLSB ( Contractors State License Board) is the licensing board charged with issuing general contractors licenses in California. As mentioned, conditions for licensing will vary by state. However, you should expect to take a special exam/s before you can apply for a license. The board decides if you qualify to sit for examination when reviewing your application.

States like California can issue you with a general contractor's license if you show you have the skills/experience. You could also get a license if you are represented by a qualifying individual (with the necessary skills and experience) i.e.., one who has 10 years or more of immediate experience before filing the application. They should also have certain years of experience in specific fields i.e., 4 or more as a foreman, journey level, supervisor, or contractor in the classification in question. Most importantly, the experience must be verifiable.

There are agencies like NASCLA ( National Association of State Contractors Licensing Agencies) that provide detailed information on contractor licensing across all states, including state exams. Check what your state requires for licensing via NASCLA or your state department. Generally, you should get your license when you meet state requirements for licensing and pass the state exam. Exams generally test knowledge/understanding of building codes, state laws (on contracting and construction), and business management.

Step 3: Choose a business entity and register your business

As discussed above, general contractors who choose to venture on their own tend to earn more than those who are employed. If you choose to be self-employed, you need to choose a suitable business entity. Luckily, states issue general contractor licenses to individuals as well as business entities like LLCs, partnerships, and corporations. Such a license belongs to whoever has the individual license, the partnership, LLC, or corporation as registered with the state.

Comparison between sole proprietorships, partnerships, LLCs, and corporations

When deciding which business entity to choose for your general contracting business, compare sole proprietorships, partnerships, LLCs, and corporations:

Formation

Sole proprietorships are generally similar to partnerships in formation and other aspects like tax treatment. The main difference is partnerships are formed by two or more people, while sole proprietorships are formed by one person. Sole proprietorships and partnerships can be compared to LLCs in membership. While LLCs can be formed by one individual (single-member), they are generally formed by two or more people, which widens access to funds/investors.

Trade name/legal name

LLCs, sole proprietorships, and partnerships can all operate using a trade name. However, a sole proprietor doesn't have to use a trade name. They can operate under their legal name, but it's more professional to use a trade name.

Registration paperwork

Sole proprietorships are the easiest to form. While you need to file articles of organization with your state to form an LLC, this isn’t required with sole proprietorships. LLCs must also register the trade name they wish to use.

If you get a license and start doing business using your name, you will have automatically established a sole proprietorship without the need to register. Partnerships need articles of partnership (a contract that says how partners will do business). Unless you want a trade name that requires a DBA (or doing business as) name, sole proprietorships have the least paperwork requirements.

Taxation

You should also consider taxation treatment before you decide which business entity to use and register. Sole proprietorship income is taxed as individual personal income, which is simple. Single-member LLCs enjoy the same tax treatment. The same applies to partnerships. However, (multi-member LLCs formed by many people must report business income using form 1065. Members also need to meet other tax obligations, such as showing their business income % in Schedule K-1 when filing individual tax returns. 

However, LLCs can enjoy more tax flexibility than sole proprietorships and partnerships. LLCs can elect corporate tax status and decide how they will be taxed. LLCs can choose to be taxed as sole proprietorships, S or C corporations. In fact, the main difference between LLCs and corporations is taxation. S-corps are pass-through entities (can pass income to business owners or investors, and such income is taxed as individual personal income). C-corps can offset credits, losses, and deductions. Other benefits include lower dividend tax rates and zero taxation on retained earnings.

Once you register your preferred entity, you can commence business as a self-employed general contractor. The Small Business Administration (or SBA) has detailed guidelines based on state. Generally, you’ll need your state-issued general contractor license to register a general contractor LLC or corporation in your state.

Once you register your business, you can scout for a suitable location. As discussed, some locations will pay more than others. You can also focus on getting experience or furthering your education to get a general contractor salary.

References

1. Ziprecruiter: https://www.ziprecruiter.com/Salaries/General-Contractor-Salary

2. PayScale: https://www.payscale.com/research/US/Job=General_Contractor/Hourly_Rate

3. Talent.com: https://www.talent.com/salary?job=contractor

4. Comparably: https://www.comparably.com/salaries/salaries-for-general-contractor

5. TRADEMANCE: https://www.tradesmance.com/career-central/how-much-do-contractors-make

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