That handyman who accepts cash w/ no receipt

Cash Generator

Hello Baroners: Should one ever have work done by someone sketchy? How comfortable are you with paying cash? Are there any pressing legal/tax or warranty issues?

It may not surprise many of you that qualified construction experts may not always have a bank account. Working with workers who provide a service to your home requires a few extra steps to ensure a satisfactory (or better) outcome.

First: Ask the contractor how he/she would like to be paid. I always front-load this conversation by stating early on, “Do you accept Zelle”. – If they accept this, it solves two major issues. The contractor knows you are a serious customer, and you have a pretty fair idea about receiving an invoice and ensuring you don’t have to run to the ATM upon job completion. * prompt vendor payment builds good relationships and makes for an excellent conclusion of work. * Baron also suggests never negotiating the price offered by the vendor. It is advisable to seek out a new vendor if any aspect of the offer is unreasonable.

If they accept cash only, there may be a good reason for this (other than the suspicion that the job may be ‘under the table’). There is no good reason to explore this with the vendor. However, the next statement from you should be something like, “I’ll probably need to go to the ATM to pay you.” As before, this sets the mind of the contractor at ease. A personal check may be another option based on your preferences.

Baron recommends a more thorough project explanation with any contractor so that both parties know what to expect. Ask about the completion timeline, the specific part name, his/her availability, and my favorite: cause/prevention/their opinions about how best to maintain the completed job. State-licensed individuals usually are worth the extra costs. However, if you both are satisfied after these discussions, then paying with cash is the least of your concerns.

Some property owners cringe at paying in cash. This is understandable. However, Baron’s experience — especially now with the shortage of qualified workers who can match your timeline — is that cash-only workers require a bit of extra work and should not be dismissed by this factor alone. Keeping records of the payment (screenshots of the vendor’s texts and even shots of invoices) is of greater value than overcoming the payment method. Baron recommends keeping an electronic folder with payment information for each property. ** Also, if the worker performs exceptionally, keeping their contact information for future work could save you time in the future. 🙂

Tax and legal issues

For federal tax purposes, records must be kept for several years. Also, the records must include information such as the vendor name, their contact information, the location of the work, the date, the costs, and ideally, a detailed description of the work performed and the parts included. * Big box hardware stores offer free ‘PRO’ accounts which allow the property owner to maintain surprisingly detailed invoices. That said, if you are wary about not receiving a ‘proper’ invoice, Baron suggests making one yourself and having the vendor sign “payment received” on it. (It may be that the vendor does not like the hassle of ‘writing’ or the chore of keeping records for small jobs.) In so doing, you will be able to keep the IRS satisfied and also save yourself from possible legal (warranty) implications down the road.