Recently we have more clients who want to pay cash to save on HST. For a variety of reasons, this is not something we are willing to do, both to protect ourselves and our clients. I am curious about other contractors experiences with clients wanting to pay cash, and how they handle it.
Nothing you can do about it and nothing is wrong about getting paid cash, it's fully legit as lone as you pay hst to RC in the end of the year.
I ask how they would like to pay before giving them a quote on a first visit. If they say cash - add 13% on top of the quote without telling them.
If you quote job at 10k, give em 11.300 in your quote, make a proper final invoice that says 10k + 1300 hst. Tell them your all legit and pay taxes so you give them 13% discount and you will take care of hst. You look good in front of the house owner but realisticly just overcharging those 13% to begin with.
You can get paid in cash as long as you pay your GST. still make them sign a legal binding contract stating your getting paid in cash and incorporate the GST in the cash price. They say the client is always right so sometimes we have to do what we have to do just to get the project.
I totally agree with Alex. Just bury the GST/HST in the Estimate. If they agreed to your price that included the HST and then at the end of the job after you give them your final Invoice they tell you they want to pay in cash, obviously then they expect a 13% (Ont.) Discount on the job. This is not right and not legal. I have been a Sole Proprietor for over 20 years and have charged
GST/HST from day one. Three times in the last 20 years I've accepted cash jobs ( all over $ 500.00 but less then $ 3,000.00 ) If I reported these jobs as income. obviously I must pay HST on it. I have been audited by CRA once about 10 years ago , they said it was
a mini audit and fortunately was only out by $ 50.00 so they haven't been back since.
People building new homes get a lot of this back from the Gov. and if they are paying cash to there Contractors. Who do you think is getting screwed. It's not the home owner.
This is a slippery slope.
Tell the client that you take all forms of payment, cash is one of them. The real question is not about the form of payment but the desire to avoid paying taxes.
Say to the client, if you go to McDonalds and offer to pay cash will they give you a discount?
Go to the local grocery store and offer to pay cash for a discount; how about city hall?
Technically I think it is illegal to 'up your price' to appear to be giving a discount. I think the federal competition bureau is looking at a major Canadian company right now for that reason.
I don't understand why there is this mindset that trade professionals will work for a discount if you pay cash. If professionals don't want to claim their HST, it does not matter what form of payment you make (or take), they won't claim it. Anyone who accepts payment (regardless of the method) that is not following the rules puts but themselves and the client at risk.
When will people understand that trunkslammers are not the realistically priced saviours of the construction trades?
Kudos to any business that plays by the rules.
Datawise Solutions Inc
Thank you everyone for your responses. John, you hit the nail on the head for me in regards to this issue.
We had to address this issue again today, and were upfront with the client, that we would not offer a discount for paying in cash, and explained that it was for the clients protection as well as our own. The client must have appreciated this, because he has hired us to complete his job.
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