How Do Plumbers Get Paid?

Getting paid as a plumber is highly dependent on the type of employment that an individual plumber has.  A plumber who is an employee of a company will get paid with a “normal” paycheck, while plumbers who are individual contractors will get a set amount per job.  Plumbers who own their own business will actually receive their income from being a business owner.

Plumbers, like many other vocational careers, have a couple of different options when it comes to their employment.  Some plumbers choose to become a regular employee at a company.  This can provide steady income, but little chance to expand earning potential.

Other plumbers choose to work as independent contractors and/or own their own business.  While this can lead to a less steady source of income, it can also allow a plumber to expand their earning potential. How a plumber gets paid is dependent on what type of employment he or she has.

Each type of employment comes with different restrictions.

Employee

Earning money as an employee is the type of compensation that most people are familiar with.  A company collects money from paying customers, and uses a portion of that money to pay a salary to its employees.  The employer is responsible for handling taxes along with Social Security and Medicare payments.

Being an employee may also mean being eligible for benefits such as reduced health insurance and a retirement savings account. Working for a salary usually means that a person can count on getting a paycheck at a set time and for a set amount, making it easier to budget and reach some financial goals.  Performing extra work or taking on more clients does not automatically give an employee a raise.

It can be difficult, however, to get a pay increase.  Most companies and organizations that pay plumbers a salary will tend to only offer nominal raises. These types of work situation are common for plumbers who are employed by larger companies, non-profits, and government organizations.

While a significant portion of plumbers work for a regular salary, however, it is not the most common type of employment for this field.

Independent Contractor

As an independent contractor, a plumber will work for clients, some of whom will likely be their own companies.  Essentially, the plumber signs a contract with each client individually.  In some cases, these contracts may only cover one job.

In other cases, the contract will cover a series of jobs.  For example, a general contractor may contract with a plumber to install fixtures in every house in a subdivision that is being built.  While the job may take months to complete, the plumber is not an employee of the general contractor.

They essentially operate as their own business. The advantage of this situation is that the plumber can choose who and who not to work with.  Clients that are problems; they misrepresent the scope of work or they do not pay on time, can be dropped.

The burden of collecting payment is often specified in the contract.  It is possible , for example, for a plumber to contract with a larger company that will “hire out ” his or her services to a variety of other customers.  The larger company would then be responsible for collecting payments from those customers and paying the plumber the amount agreed upon in the contract.

Independent contractors are responsible for paying their own expenses and taxes. This usually means that a plumber working under this type of arrangement will need to supply their own tools, handle their own invoicing, and pay for expenses such as their cell phone. The IRS deals with this income under a section of the tax code that deals with persons who are self-employed.

This means that all of the expenses related to their job can be deducted, but they must pay their own income tax, Social Security, and Medicare on their own.

Business Owner

A small number of plumbers will go a step beyond a sole proprietorship to own their own business.  This situation can be very similar to working as an independent contractor, but business owners will need to register their businesses in most municipalities.  As a business owner, there are also a few special situations that need to be considered.

While an independent contractor can take the money they make from a job and deposit it directly into their personal bank account, a business owner will need to keep separate books for their personal and business accounts.  Separate books allow the plumber to treat their work as a separate entity, allowing them to have a few advantages when it comes to taking loans and protecting the business. A business owner will also be able to hire employees, allowing a plumber to expand his or her business and gain income from their labor.

Of course, the taxes on a business are much more complicated, and many business owners choose to employ accountants in order to determine how and when they should take payment from the business.  The accountants will also work to reduce the business’ tax burden.