Contractor ethics

[cdottrot]

Would you feel uncomfortable if a contractor offered to accept cash so that you could avoid paying taxes?

Edit: Dangit...meant to post a poll.

Ah well, this'll do.

Story: The contractor we were strongly considering was pretty insistent I was making a mistake when I refused to pay cash direct - 'why let the tax man bend you over?' were his words, I believe.

We initially wanted to go with him because he seemed to know what he was doing - at least a lot more than the other contractors - the ones who got back to me anyways. I'm having second thoughts now.

What do you guys think?

 

[blkhonda1991]

I've heard people insist on both ways when it comes to paying contractors. i have no problem paying cash if i get a deal but i also still require that i have a reciept from the contractor saying i paid in full and signed by both of us. Just make sure you dont pay the contractor more than the work completed or the job will never get done.

 

[LEVE]

I'd find another contractor. Any contractor who'd bend the rules like this... will take short cuts. Then whose bending over?

 

[TK LP]

What taxes would you have to pay? He's the one getting the income.

 

[dmeadow]

That's for his benefit, not yours. Find another contractor. Lord knows if this guy does anything on a business-like basis. Like pay (or carry) insurance, get the right permits, etc.

 

[blkhonda1991]

I'd find another contractor. Any contractor who'd bend the rules like this... will take short cuts. Then whose bending over?

or just wants some extra cash in his pocket at the end of the day. ive had good contractors that dealt only in cash and at the end of the day his work was as good as if not better than any other contractor who would have taken a check and charged me more. i guess it really comes down to how much you trust the contractor, get references!

 

[haugy]

RUN AWAY!!!

Paying in cash leaves no paper trail.
This if for him, not you.
If you know how to do it, you can deduct the expenses of your building OFF your taxes, but you have to have a paper trail.
Shady shady shady.

I won't deal with a guy who only wants cash. If it's a small job that is done in a day, maybe. But other than that, an ongoing project, NO WAY.

 

[MattT]

The guy is right. If you don't pay cash you will have to pay extra to the gov't.

Cash discounts with small contractors is standard practice IME. I'd be suspicious of one that wouldn't give a discount.

 

[brownbagg]

I work construction, always remember, Contractor, a con with a tractor

 

[T1320T]

Move on man. If he's insistant on tweaking the law that's a strong indicator of his character. If he'll screw someone else (even if it is the "tax man"), chances are he'll screw you too.

 

[dmeadow]

I'm often reminded of that scene in one of the Police Story movies when Ricardo Montalban is dragging Priscilla Presley around the baseball stadium with Leslie Nielsen chasing them. At one point they are sitting in the bleachers and Priscilla asks Ricardo "how did you get so evil?" and Ricardo answers "I was a building contractor in another life."

 

[willymakeit]

As mentioned . Get a receipt,lein waivers. Make sure about the insurance [ work comp certificates are issued by the ins. co. not the contractor] and references. Method of payment doesnt matter.

 

[dmeadow]

The guy is right. If you don't pay cash you will have to pay extra to the gov't.

Could you 'splain that, please?

 

[ket-tek]

Story: The contractor we were strongly considering was pretty insistent I was making a mistake when I refused to pay cash direct - 'why let the tax man bend you over?' were his words, I believe.

Huh? He means the tax man will bend him over.

Can't really judge the quality of his work by the comments made. But, you can judge his business ethics. If he is insistent and being a smart-*** about it to you then I would probably walk away on principle, as your the customer and you run the show.. That's what most contractors have forgotten. Quick cash, bare minimum to pass inspection, and out of there.

Now on the other hand in the past after I've decided to go with someone for a job and they have completed the work, and at the time of payment I have asked if I paid cash would they knock any money off, and they usually will. (still getting a receipt though)..

I've seen a contractor get offended by someone wanting to pay cash on the side for a big job, his response was along the lines of he is trying to run a 100% legit business and stand out from the unfortunate excess of shady jerkoff contractors wanna-be's out there.

So it can be an iffy thing to deal with. I usually don't pay a dime til all work is complete, sign a contract sure, or if it big money job like a house or huge garage maybe 1-2k down good faith money not materials money (and check not cash). But a good contractor with a good reputation and business will have accounts for materials and supplies. So many contractors out there owe the supply houses past due amounts or can't get credit with them, have burnt all their bridges and are COD only. It's only a matter of time before a customer gets burned with one of these guys.

 

[Boyd Who]

Paying cash up here can save a person from 5 to 12% sales tax, depending on what type of work was done.

I do tons of small jobs in my line of work and if a customer wants to pay cash that's fine. They get to save 5%. I still record the transaction as if they paid the tax so the govm'nt gets their cut, I just absorb the tax myself. I get alot of repeat customers because of that and I still make a decent living.

 

[cdottrot]

The issue for me being 'to pay HST, or to not pay HST'. Not really an issue, I'm definitely going to pay the taxes. His point of view is that he'll charge HST if not cash, and that I'm stupid for not going the cash route. He did not actually say that, but heavily implied that.

Amazing amount of replies so fast! Confirmed my thoughts, thanks.

This also isn't a small job (well...relatively speaking) - it's the demo/foundation/slab, around $9k with taxes. Regardless of the price, it speaks volumes about a person's ethical standard, which I think is a direct line on how they'll view the end product.

 

[Shadowdog500]

I've seen this, but now or days I wonder if they are on long term unemployment and are doing side jobs "under the table".

 

[mooman]

Sounds like if you go with him, you'll be on a Holmes on Homes show later.

 

[gorilla]

If you allow him to avoid paying his income tax's don't we all have to pay more to make up for it? This is a huge problem in California with all our undocumented immigrants.

 

[MattT]

Could you 'splain that, please?

If the customer doesn't pay cash the contractor is forced to pass on all the taxes to the customer. End users are the only ones who actually pay tax. Everyone further up the chain builds taxes into their prices.

 

[folgers]

This also isn't a small job (well...relatively speaking) - it's the demo/foundation/slab, around $9k with taxes. Regardless of the price, it speaks volumes about a person's ethical standard, which I think is a direct line on how they'll view the end product.

I think you are right. I've been in contracting and around contractors for many years and 95% of the work is done on the books. What I've seen happen is that an old established customer may have a small job to do and he'll offer to pay cash to make the job worth doing. I don't have a problem with that. But I don't think contractors should seeking cash on large jobs, and to me 9k qualifies as a large job.

 

[bazzateer]

My builder is excellant. All his work is by word of mouth recommendation and repeat business. He never needs to advertise. I've had him do work for me in the past as have many friends, family and neighbours. No-one has been disappointed and no-one has paid full market price. His general fees are neither high nor low, somewhere in the middle.
However, he is aware of my need to keep costs down and is happy to build my garage in stages as and when I can afford each stage. He is also happy to discuss financial 'flexibility' of the kind discussed in this thread.

They say you can have two out three: Cheap, Quick, Good - pick two. I'll be going for Cheap and Good, just means it won't be quick.

 

[sneezer41]

If a contractor 'insists' on cash, that is a red flag. If he offers a discount, I see no problem. The gov't gets their pound of flesh often enough

 

[nate379]

$7000 paving job and yes I wrote a check, but not out to business but to contractor's name.

I had been working for about 36hrs straight when they came so I could barely see straight, much less think. I realized after what they were doing. Job was done well though.

 

[cowboyjosh]

Yeah, no, I'd run away from this clown. The only time to maybe pay cash is when your doing a small repair under a couple hundred bucks, not for a major project. If he doesn't want to pay taxes I bet he also doesn't pull permits. Sounds like a future episode of Holmes on Homes to me.

 

[rockchucker]

Just because a Contractor is offering to work with cash does not have ANY bearing on the quality of his work. There is a little of "I don't want to pay the taxman for the politicians sitting pretty" in all of us. I do it every once in a while on small jobs for repeat customers. If he is not having to pay his Taxes then chances are you will actually get a better build due to him not having to fork out 33% to Uncle Sam.


Do what you want but if the guy does top notch work then that is a RARE quality these days. I don't advertise and I am busy all year round just from word of mouth. Why? Because I provide top quality finished product.


Just my .o2

 

[DuluthMN]

Take his bid and offer him half that in cash.

 

[cdottrot]

It isn't so much that he was insisting on cash - I've seen a few episodes of Holmes on Homes, so I knew that much - it was just that he viewed me as a fool for wanting to pay tax on it. He's happy to do the work either way.

My line of thinking was: 'If he's willing to cheat the government and considers me a fool for not going along with it, what happens when something doesn't go to plan on the job?' Is that the kind of person I want to be dealing with if something unplanned or awful happens?

 

[kc-steve]

If the customer doesn't pay cash the contractor is forced to pass on all the taxes to the customer. End users are the only ones who actually pay tax. Everyone further up the chain builds taxes into their prices.

THAT is Soooo true. Everyone should remember that next time a politician promises to raise taxes on corporations.

Steve

 

[HoustonPSD]

I dealt with a lot of shady contractors after Hurricane Ike hit us. When I say dealt with, I mean sent them on their way and asked them kindly to not call back. I even had one guy tell me he would write a higher quote for insurance for my roof and charge me $6k less (roof cost ~$22k) and let me keep the difference. I felt like I was on that show "What Would You Do?"

I also remember a particular roofer that stopped by my house (everyone is a roofer after a hurricane). He walked around the house and spit out a number. I followed him back to his truck...it was a nice F350. I asked him how long he had owned the truck...a couple years he said. I looked in the bed...not one scratch and a towel under the ladder that was hanging over the tailgate. Nothing wrong with keeping your truck nice, but I'm not going to let you cut your teeth on my house construction.

 

[MichaelP]

To begin with, "Contractor ethics" is an oxymoron.

As for bending over, you have to realize that they will bend you over in any case. The payment form or amount makes no difference in this respect.

So prepare your barrel and get comfortable.

 

[babzog]

I paid my renovator from an invoice (ie: taxes paid) since it was a big job and I was picky about the finish.. wanted something on the books in case of problems. We had a great working relationship. I paid my painter in cash, no invoice. We also have a great working relationship. Depends on the job, the contractor and your comfort level.

 

[gabedad]

contractor ethics ? Should those two words even be said together?

 

[ket-tek]

Want it done right do it yourself...

Just be the contractor, and cut out the middle man and save like 70%. More legwork but just pull your own permits, draw plans or buy them, and bring in the subs yourself. That's about all most contractors do, drive around in expensive trucks and talk on the phone..

There are good ones that are much more proactive, but there are very few of those left.

 

[cdottrot]

ket-tek: I think you're referring to a General Contractor? The contractor I am talking about will only be coming in to demo, dig, lay up forms, and pour. We're doing everything else. We are taking care of the permits, so far as I know.

 

[bazzateer]

contractor ethics ? Should those two words even be said together?

If you're a contractor with a lisp and you come from Essex, then yes.

 

[ket-tek]

Oh, gotcha. I thought you meant a GC.. Well, since most all his time is labor and getting the equipment to the site, then most of the money will be straight labor tax free to the customer because he supposed to claim it and pay on it. In which case he will do it for some less and not list it as income.

But it's still crooked, and illegal on his part if in fact he doesn't claim it. Though everyone here has done side work for cash. But doing it thru a business front on a regular basis is hurting the economy just like the buying from china issue that the same contractors probably ***** about.

But you figure if someone charges $1000 for a service and pays like $400 income tax on it or they could just charge $800 cash and not claim it, you save $200 and he makes $200 extra. Everyone wins! Until there is a problem with something.....

 

[cowboyjosh]

I dealt with a lot of shady contractors after Hurricane Ike hit us. When I say dealt with, I mean sent them on their way and asked them kindly to not call back. I even had one guy tell me he would write a higher quote for insurance for my roof and charge me $6k less (roof cost ~$22k) and let me keep the difference. I felt like I was on that show "What Would You Do?"

I also remember a particular roofer that stopped by my house (everyone is a roofer after a hurricane). He walked around the house and spit out a number. I followed him back to his truck...it was a nice F350. I asked him how long he had owned the truck...a couple years he said. I looked in the bed...not one scratch and a towel under the ladder that was hanging over the tailgate. Nothing wrong with keeping your truck nice, but I'm not going to let you cut your teeth on my house construction.

Good thinking looking in his truck bed for wear and tear; here in Colorado guys after a HAIL storm will roll into town, some will fly and THEN rent a F350 or van and play roofer.

I don't know if anyone heard about that Fourmile fire in Boulder, Co earlier this month, well unfortunately I had 8 homes I had built in the past 10 years get destroyed in the fire, and 9 were damaged by smoke, water, etc. My customers whose homes are still standing told me tales of how many people come out of the woodwork and claim to be "Restoration Contractors" who can mitigate the smoke and water damage to the inside and outside of the house. For a couple folks who lost their home and called me inquiring about re-building told me stories of guys telling them that their house was built wrong to begin with, had it been built correct, it would have been FIREPROOF, give me a effin break.

Its a damn shame there are folks and businesses that are only out to kick a fellow man in the nuts when they are already down.

 

[drmoonshine]

I don't think I would do unless I got a contract signed.

 

[december45]

I have on a couple of occasions, offered cash money for a reduced price, in other words the contractor is left to his own conscience and i get the job done for less money.... this works on occasion, and there has to be a certain level of trust between you ... however if a contractor ever insisted on cash i would find another contractor, im more comfortable when its my idea and i offer the cash, NOT when he insists.