pay subcontractors in cash?

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I had some people work on my old house. I paid the plumber and carpenter with a check. Now the painter wants cash. I don't know if he thinks my check will bounce or if he doesn't want to report the income. What do you think of paying in cash? Is it ok if I get a receipt? Do I need to file a 1099 for these workers?

-- bill harrington (bill_harrington@msn.com), December 11, 2001

Answers

You can pay in cash if you get a mechanics lien release signed before handing over the money, this relieves you from having to pay for the materials twice, in the event that the sub fails to pay the material vendor.

-- mitch hearn (moopups@citlink.net), December 11, 2001.

As a home repair contractor, I have some (longtime) customers that prefer to pay cash, for whatever reason. It's still reportable income to an honest person. I would never demand that anyone pay in cash, unless I'd had one of their checks bounce. But then, I'd never work for them again anyway. Further, beware of anyone asking for money up front, unless it is a lengthy job and it's over the 1st of the month when materials bills become due. Otherwise, he may have no credit established with suppliers. Paying in full when the work is complete, however, is considered very good form. GL!

-- Brad (homefixer@SacoRiver.net), December 11, 2001.

you can pay him in cash,, as long as you have a contract and you have him sign a receipt. You cant 1099 him,, hes a contractor,, not an employee,, but the receipt covers you in case he doesnt fullfill the contract. Dont give him more than the materials cost up front either

-- stan (sopal@net-port.com), December 11, 2001.

In my experience any reputable business person, including subcontractors, will accept a check. He can always take it directly to your bank and cash it immediately if he is worried about it bouncing. When someone asks me to pay in cash it causes me to wonder whether they are trying to hide something, then I want to see proof of insurance, payment of taxes, credit reports, references, etc.

-- Elizabeth (ekfla@aol.com), December 11, 2001.

If you pay in cash you may not have any recourse if you have problems later on. Could you prove that he worked for you and that he was paid for his work? Just something to think of!

-- Debbie T in N.C. (rdtyner@mindspring.com), December 11, 2001.


You can 1099 him. If he was an employee, you would W-2 him.

-- paul (primrose@centex.net), December 12, 2001.

Here's your solution. Have the cash in your pocket to pay him what you owe. Write him a check for that amount. Have him endorse the check back to you. Cash the check for him. He has his cash. You'll have your cancelled check. Simple. I do this all the time with drivers and other casual vendors and it works great.

If he balks at this idea there are other issues involved. Those are his problem, not yours. Doing it this way eliminates any legitimate reason for him wanting cash. I hope this helps.

-- Gary in Indiana (gk6854@aol.com), December 12, 2001.


I am a finish carpenter in Brooklyn, so I have no idea what I'm doing on this board, but anyway... One way things are done around here is to pay half up front, half on completion, or in thirds for jobs that last a while, that may give you some insurance against a disappearing painter, however, I agree with the others here who say that you will be better off with a contractor who will/can accept a check.

-- Don W. (planeticket99@yahoo.com), December 13, 2001.

If he is worried about the check being good, you can also pay by certified check or money order (from the post office or if your bank/ credit union will do them for free, get them there). The money is taken right out of your account then and there.

Also, does his contract with you specify cash in writing? Most will say you can pay by cash or check (or credit if they take it).

Another way to do it is if there is a general contractor involved (you didn't say), make it a two-party check so that both have to sign it, should you have mechanics' liens problems later.

I don't think you have to 1099 any of them, unless they are your employees. My guess is that they're independents. There is a checklist at the IRS website you can use to determine which category they fall under.

-- GT (nospam@nospam.com), December 17, 2001.


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