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I hired a finish carpenter(unlicensed) for an hourly wage of $25. He has been working for me for 6 months and I have been paying him cash. I gave him a $200 Christmas bonus. I am letting him go in 5 days because I am out of money to finish the job. Do I owe him a bonus? If so, how much? Why. Why not.
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Certainly not, the cash WAS the bonus.
*Marquita: I am agent S.Foster with the I.R.S.badge# wemakeubleed$$Could you kindly e-mail the finish carpenters name and current address so that we can send him his tax rebate on the taxes and fines we will collect from him shortly? Thank-youha :) :)
*Marquita,(I like that name, it's my mom's middle name.)Something just don't smell right here. How many square feet of flooring was this guy working on ? How many square feet did he get done ? How many hours did he put in/charge for ? What kind of flooring is it ? Underlayment ? Lots and lots of etcetera questions, but those will do for now...
*Why don't this smell right? When on my own.....I charged an hourly rate on alot of jobs, got paid alot in cash.....and paid my quarterly taxes my self. Where's the problem. And....quite a few times.....customers didn't listen when I said they needed to increase the budget to get the job 100% finished. In answer to your question.....if he was honestly expecting to be able to finish the job.....and hadn't scheduled any other work because he thought you could afford to finish the job.........and you are about to tell him that he better find new work real quick to pay off the x-mas presents......but......he was a good worker, and you'd like him to come back and finish when you have the money.......instead of swearing each time he hears your name.........maybe a bonus.......wouldn't be such a bad idea. Or....you both knew the whole situation the whole time.....and he was just digging the hourly thru winter......then no harm, no foul. Or.....you expected your money to get you thru the job....based on what he said up front, but he was ripping ya off....then....definitely no bonus. But....just because a carp charges hourly, and the client pays cash, and the client runs outta money.......doen't mean anything fishy is going on. Jeff
*Thank you for your response. I see that there are already some differing opinions on my question.This job has been a money pit from the get go for many reasons and I am not inclined to give a bonus at this point.The carpenter does excellent work, but his attitude has rubbed me the wrong way. A month or two into the job he started bugging me for a "commission". Five or six percent would do for him. Well, at a budget of 110K that is roughly $6,000. When I told him I didn't appreciate his pestering and that I signed no contract with him stating I owed him 6%, he backed off and apologized for his "sick sense of humor". I am now over budget with the job incomplete after 6 months. I appreciate his help and knowledge he has given me,but I feel like he has this "you owe it to me" attitude. He is a single guy; no wife or children to support and I feel like the cash money was a good deal for him.
*i But....just because a carp charges hourly, and the client pays cash, and the client runs outta money.......doen't mean anything fishy is going on. Jeff You are, of course... assuming ... that I thought something fishy was going on because the carp charged hourly, the client pays cash, and the client runs out of money.There's more to it than that, bro. Unfortunatly, what buzzes here is mostly instinct. Gut feeling. But I have learned that gut feelings are not usualy best ignored.I would still like to have the answers to my questions. While instinct is a good thing, facts are better, and that is why I asked the questions. I was not accusing anyone of anything. I probably should have just asked the questions without voicing the opinion until I had better facts.
*Luka,You asked about flooring...the carpenter is not doing any flooring. He and I put up cedar paneling on my ceiling and then I dropped off the carpentry and began painting while he has been doing case,base, trim and hanging doors.
*2 more cents in the pot:You're GCing your own project, right?According to my math, you've paid this finish carp about $26K in cash for his work. Without knowing what the scope of the work was and his responsibilities toward the end results and the percentage of the job completed and a bunch of other things, it's not fair to you or him to ask for speculation on our part.For all we know he could have been milking the job for all it's worth and was successful in hiding that from you or he could have been doing a bang-up job and your expectations far exceeded your planning abilities and the pitiful budget you set.You note the last statement was a little bit anti-you in tone but it was intended to offset the percieved anti-carp sentiments which I perceive as justification for no bonus. I do think the Christmas bonus was a nice gesture of appreciation on your part, especially if he has been doing an exemplary job, but I also don't feel you "owe" him anything else but an honest reason for coming to the end of the job.If you like his work, feel he has given you honest work for the wage and you would like him back when you get your act together, tell him. Stand back, take a hard look at your project, earn and set aside additional funds and then have it finished.
*Ouch. Went storming into that with my eyes wide shut, didn't I ?b : )
*Marquita,No, you don't OWE him a bonus when the project is over regardless of how it ends. If you made a deal with him up front for a percentage at the end, well, that's another story.Did you tell him you'd give him a bonus at the end of the job in so many words or less?If so, then maybe you do. However, if the job is out of money, then there is not much you or he can do about that.I wouldn't expect any bonus. I was paid for my services. That's all I ask for.The $200 Christmas bonus was nice. But I don't think you OWE him any more than payment for the hours worked.That's how I see it.Ed.
*Marquita,Your comment "He is a single guy; no wife or children to support and I feel like the cash money was a good deal for him." rubs me the wrong way.It sounds like you got the good deal. No payroll taxes, no workers comp, no strings attached. What did you give up in this deal? Nothing that I can see. The carpenter is still liable for taxes on his cash. Whether or not he pays them is a risk that has an assignable monetary value. Either one of you could turn the other in if this deal goes sour, but of course the carp would have to turn himself in. Anyone that offers to work for cash, and I know a few, runs the risk or being caught or having a dirtball customer use it against him. There is really no benefit to taking cash in this line of work except to the customer.The worst part is what it does to the legitimate guys out there. This kind of "deal" lowers the bar (pay scale) for every other legitimate homeowner and contractor out there.Personally, I would feel better if you did take a screwing on the deal.The christmas gift was a nice touch however.
*b You both went into this verbal agreement, hopefully with eyes open, and aware of all the legal ramnifications.If not then it could become a "Larger than life" learning. It is a risk you both have taken and so what? It does lower the bar as per Tommy B.'s comment and that is the worst of it. I sense something FISHY as well .... all that cash screams is cover-up on someone's part andb You owe him no more $.
*Cash, smash! What difference does that make?I got paid for a roof on a restaurant once with $13000 in folding money that made a big lump in my pocket. I waaalked straight to the bank and put it wherre it was safe, and recorded it in my books.M and her carpenter have the same rights every American citizen has to enter into contractural arrangements with one another without fear of interfereence if he is self employed and she understands the relationship. If he goes and fails to declare the income, that's another matter. If she's aware of it, then she could be participating in a scheme to defraud the rest of us taxpayers. But let's not jhudge base on appearances! Innocent until proven.....I thought Luka was asking about the flooring in a symbolic way since it is under the table geographicly.my instinct, based on what she says (one side only) is that her carp has probably already gotten his bonus hidden in the billing since he shut up his asking about it.
*Well, doesn't it depend on how long the man expected to work ? If you sign up with someone to work until May; then, if the job suddenly ends in February, I think you're due a separation payment, or, a couple of weeks of notice, unless the separation is "for cause".
*Dear Tommy B.,Perhaps I was wrong in saying he got a good deal , but I think your comment that I "should take a screwing on the deal" is a bit harsh. You have no idea what has transpired since this job began. I've been taken advantage of on a regular basis probably because I am a woman and have limited knowledge about construction and generaling a project. My ex husband is a carpenter and I worked with him for 4 years. I can read a tape, use a Skil saw, compound miter saw, hammer, pack lumber and do various other things expected of an apprentice. I roofed my house with slate myself. I am trying to finish the house, but I lack the skills of a carpenter with 25 years under his belt.I have the utmost respect for carpenters. It is a highly under-rated trade .The carpenter I hired agreed to the deal we made. If he doesn't pay his taxes, I am responsible for them. It's a risk, but I've found that most people like CASH.Thanks for your input.
*It took 8 years working for a contractor that I love and respect before they gave me a $200 Christmas bonus. You did fine. Relax.
*Dear Phill,When I hired my carpenter in July, he said the house would be done in December. I moved into the second story a week ago, but the downstairs has quite a bit of work left. I told him after Thanksgiving that I would have to let him go at the end of December. I gave him 4 weeks notice, in other words.Judging by the comments, it's a mixed bag in answer to my question.
*Marquita,Given your last post, you only owe for time worked. Certainly no bonus.But remember that all of the advice above is based on the info you provided. If you have not presented a balanced view of the facts, then the advice may not apply.Rich Beckman
*Marquita,I'm like Mr. piffin. If you pay me cash, it still goes to the bank and get recorded as income to be filed in April. (Well....with us it's March corporate taxes.) The guy you hired may be doing the right thing...maybe not. As the GC, it's not your responsiblility to withold taxes on a sub. He has a verbal contract with you and is not you full-time year round employee even though it's an hourly gig.If the house still needs more work, you may consider working out a "per item" deal if there is any money left to work with. Tell him you can pay X amount of dollars for a particular chore and see what he says. Or ask him for a price to complete and see what happens. If he's agreeable, then maybe he's not ripping you off. If he hems and haws about the idea, he may think you're messing with his gravy train.If the deal was through December, well.....December is over. He should be apologetic that he didn't finish like he told you he would. But then maybe you hit him with a bunch of extras that took him away from his intended target. Maybe not. Regardless, he didn't finish for whatever reason, and I'm sorry for that. But in no way do you owe him any kind of bonus.I'm glad to hear that you have at least SOME construction experience. Being the GC is a tough job.Best of luck,Ed.
*Marquita,i'm with ed. & piffen on this.. if someone asks if i want cash, i always tell them the same thing..it doesn't make any difference to me.. it all gets deposited and it all gets reported...funny how if someone thinks you'd cheat uncle , you might cheat them... .. i don't need any partners thinking they've got something on me...if a person will steal a nickel.. can he be trusted with your house and home ?.. i always think of it as a test....
*Dear Ed,Thank you for your encouraging words. I realize I did not give a lot of details about the job so it is hard for people to help me out.After 5 years of building; a divorce; an unmentionable amount of money; 1 contractor I hired at cost/plus; and a bunch of meth and pot addicts i've dealt with....I'm burnt out.I got the house through the drywall stage and painted when I hired the finish carpenter. At that point, I hoped I could complete the house for 70K. However, my finish carpenter went over with me the projected costs, hence the budget of 110K. He felt some things were'nt done right and needed fixing so he tore out stuff and reframed which meant more drywall and painting. I feel he did have my best interests at heart, but enough is enough. I'm not sure why it didn't get done except that there are always setbacks you don't forsee.Perhaps I will ask him about finishing it for a price, but for now, I need to regroup and come up with a workable goal.Regardless of everything, I wouldn't trade this learning lesson for anything. It has helped me learn about myself and others immensely. I have become more assertive and more patient and more understanding. I am very thankful.
*Hey gal you owe this guy nothing less and nothing more than what you agreed on. The guy isn't a bellman or hairdresser working for tips. He is a businessman working for an income from his skill and brains.Now the other side of the coin is that you probably are required to report to the IRS what you paid him. Check with your local EA for the straight skinny on this. He is a specialist in taxes and can give you the best info. Follow that because the penalties for not reporting are pretty huge. BUT, don't do anything until you get the straight scoop. Oh yes, why do I bring this up? Because from your post I get the idea you and this carp aren't on very good terms. I know of people who would turn you in to the IRS just for spite in a similar situation.
*Then it sounds like you've completed your part of the bargain, so why are you worried about it ?
*Dear Fred,What is the EA? I have been told I will have to send him a 1099, but I am going to make sure I have all the facts before I do anything.Actually, I'm not on bad terms with the carpenter. He is just extremely sarcastic and I hardly know if he is joking or serious about things he comments on. I learned to just keep my mouth shut or keep the conversation light. I feel like I am going "onward through the fog". Just trying to get the job done! Thanks for you advice.
*Dear Phill,Why am I worried about it? Because I hear talk about people getting bonuses and such. I would like to follow construction etiquette to the best of my ability.I think my problem is that I feel intimidated by this guy at times.
*> funny how if someone thinks you'd cheat uncle , you might cheat them...But Mike, if you cheat uncle, youb arecheating me.I'm decided that whenever someone pays me cash with that little wink, that will be the last time I work for them. It's not the cash, it's the wink.Rich Beckman
*"He is a single guy; no wife or children to support and I feel like the cash money was a good deal for him." His affairs outside out your agreement really shouldn't matter. You pay him what you both agree his work/time/expertise are worth. Lots of folks get taken advantage of because "he's a doctor, she's an heiress, look at those cars, can you believe the price of these fixtures..."I think the gesture of the bonus was very thoughtful, especially if it was not part of the original agreement. As for an "end of the job" bonus, maybe a bottle of wine, or a case of good beer. Not too expensive, but still shows you appreciate the work.
*I'm curious about the business relationship with this carpenter... Based on your comments, it seems that you have engaged an independent contractor for this work. I don't see any obligation on your part to withhold taxes, or pay UC/WC insurance, etc. Do I read correctly that you are building this house for yourself, and that you don't do this for a living? If this is the case, you are not obligated to file a 1099 for the money you paid the carp, as personal payments are not reported.If however, you do other types of construction work or have hired this guy to do work for you on other houses, which you were then paid for by the homeowner, the money you paid the carp is in the course of your trade or business, and if it's over $600, you must file a 1099.It's always a roll of the dice with the "man".... IMO it's not worth it if you get caught, as interest, penalties, and the fact they can throw you in jail, (read: the IRS can ruin your life) make it worth it to play by the rules. As a musician through college, I ran into all sorts of questionable financial arrangments, and found it best to pay my estimated taxes and keep my nose in my own business..Andy
*You mention that part of the problem is that he is sarcastic and that makes it uncomfortable for you to always know where he is coming from.I have been in that situation before, and when crossing genders it can be even more confusing. My experience is that guys are 'trained' from early on to deal with sarcasm on a regular basis, but that gals do not often utilize that method of relating. This is something that not all guys are sensitive to and may even spur them on to be more so without even realizing it. And it leaves you feeling kinda powerless, or something, in the situation.Advising you to be "more thick skinned" about it does not make it easier, or more clear for you, but it does still have some merit. Something that you could try, if you want to try and understand him better as a co-worker (which he is, as you have hired him) is to find a way to broach the topic with him, like next time he does it. You will not learn easily what he has spent a lifetime developing, and he should be more aware of when he is mis-communicating with it but if you want to try and point it out to him when it occurs you might find that he is not actually trying to put you off, or on the defensive at all but thinks that he is being friendly.Just a thought from one who has been there (on both sides of it).Idea one:Be sarcastic back - sometimes this is really confusing to the other person because they are not expecting it. That is part of the fun.Idea two:Just day "are you being sarcastic now?" With a grin it won't be quite as confrontational as it may seem.Idea three:Keep it in and keep your mouth shut. That way nothing changes and if you're fine with that, fine.
*I have been in the construction business for about fifteen years and I dont believe I have ever expected or received a tip or a bonus. A couple of times customers have given small gifts at the end of a job and it is taken as a gesture of thanks. I charge for the work I do and the only thanks I need is timely payment of my bill. It is nice when you know someone appreciates what you have done though. I guess what I am trying to say is that there is no required or expected tipping policy in the construction business that I am aware of, and I am glad for that.
*Marquita,I do not know the arrangement you had with this guy. Maybe you hired him by the hour, maybe you hired him T&M. Whatever you did, I'm betting that you hired this guy for an hourly wage because it was cheaper to do so. I sure hope you got some type of written contract with him, because this type of arrangement can come back and bite you. IF this guy decides to go to the local unemplyment office and file for unemployment, you are gonna find out about living nightmares. You will suddenly become an employer, and you will find out exactly what all an employer is legally responsible for. I would not wish this on my worst enemy. My brother in law spent about 4 months fighting this same scenario, and lost. He had a member of one his sub crews come and do some work on his house. The work lasted about 2 months. My BIL considered all of this as work done by a sub, and that the guy was an independent contractor. No contract in place, only verbal. He paid the guy at the end of every week (based on hours actually worked) and provided the materials himself. The guy went down to the unemployment office and filed for unemployment after the job was over, and listed my BIL as his employer. The doo doo hit the fan, and my brother in law got nailed for back workers comp insurance, SSI payments for the employee, and a lot of other strange stuff. The guy was not eligible for unemployment payments because my BIL had never made any. My BIL got sued for this by the employee, and wound up settling for a few hundred dollars. He also got in trouble with the state over it. He got lucky. It could have been worse. Maybe they were just trying to make an example out of him, I don't know. All I know is that having a person working at your house without any kind of written contract or agreement can get very bad if things go awry. Make sure that any work you have done in the future is done under a written contract, and that you have made sure that the person cannot be considered an hourly employee working for you. Don't pay him any bonus unless you feel he deserves it, based on his work and attitude. Just a thought...James DuHamel
*Marquita,I'm sorry if my comment sounded harsh. James and others have more eloquently stated my point.I admire your skills. If you truly do have the utmost respect for carpenters, the discussion of cash payments should not be part of contract negotiations. To me it is an insult. Much like, " I'll have plenty of beer around while your doing the work".These are things we expect anyway. Degenerates that we are. Get the picture.I've had a few ( one or two ) well meaning, pleasant customers offer to pay me in cash at some point. We all know what this means in most circumstances. What? Like we don't take cash? Come on all you naysayers out there. Like its easier to come up with a fat roll of hundreds? Yeah, a few might have it laying around, but seriously.It cheapens the deal. Would you ask a prostitute if she takes credit cards?I think I'm going to add a check only clause to my contracts, stating that under no circumstances will I take cash.
*Tommy,My current client does not have a checking account. She has lots of savings accounts, and keeps cash on hand for whatever she needs money for. When I finish a phase of the project, and submit my invoice, she goes to the bank, and gets the money. I go directly to the bank and deposit it, so no big deal. All the paperwork is still the same, and all the income is reported. This is just how she does business. I also have a couple of clients that have money market accounts. I offer a 5% discount for these people to pay me in cash. The reason for the cash is that my bank holds ALL checks written on money market accounts for 14 days. I cannot wait 14 days to get my money, so I worked out an equitable deal for the very few clients that have these accounts. When I go to my local lumberyard, I pay cash for my materials. The reason I do this is that they will not give a cash refund for returned materials if you paid for it with a check. They will write you a check for the refund, and send it out of their corporate office. It usually takes anywhere from 10 to 14 days for the refund. If you paid in cash, they refund in cash. Again, I cannot wait that long for my money (actually I WON'T wait that long). Since I do not want a charge account with them (commercial account), and because I choose to pay for my materials when I purchase them, this is the best arrangement for me. Sometimes, there is a legitimate reason to pay in cash and to accept cash payments. Just make sure that what YOU do is legitimate, and don't worry what everyone else thinks. WE are the determining factor on our morals, character, and honor. Just a thought...James DuHamel
*James,How did you arrive at the figure of 5% discount for cash?
*I put in a kitchen for a client and the bill came to $16,400 and she wrote me out a check for $17,000 (a $600 bonus) Two years later I did another job for her and the bill was $3600 and she cut a check to me for $4000. A month later she got locked in her sons room and she called me to get her out and she gave me $100. Needless to say she was the best client i ever had. Her family also moved away to another city and she called me to see if I could reccomends a contractor there and I just happened to know just one.. For this info she sent me a $100 dollar check and a jar of jamb. The contractor who is the son of a friend of mine came to visit his dad and he contacted me and took me to lunch and gave me $100 and told me the remodel job came to $110,000. So what is a bonus? Whatever your heart desires. If its nada then thats ok too..... Its the only client that has ever done that for me...
*You ask: "What is an EA?" An EA is an Enrolled Agent. This is a person who specializes in Tax Accounting. They can be a Public Accountant, a CPA etc. But the EA means they have been tested by the Feds and not only specialize in taxation but can represent you in Tax Court if it ever came to that.I like using an EA for anything concerning taxes because I know I have the best chance of getting the best info from them.
*JamesThat 5% discount for 2 weeks is the same as 130% annually. You would do much, much better to get your own line of credit. Even if you had to pay the rediculous amount of 24% those two weeks would only cost you 1/2 point instead of 5 points.
*Yeah Bill,That's the obvious point I was getting to. The only reason I see to give a 5% discount is to raise your price by 5% and hook them with a discount. 1 or 2% 10, net 30 is the industry standard if any discount is offered. The only other reason to give a discount is if your are feeling charitable. I recently did a budget type job for some real nice elderly folks, and gave them some nice addons at my cost, net of my actual labor. I felt they were deserving. She had some other prices and realized what a good price I was offering. A very rewarding experience for both parties. I don't do that very often.
*Bill,That would be true if EVERYBODY got a 5% discount, and I gave that discount all year long, on every job. I might give that discount once a year on a fairly small job, or it could even be twice a year. These few clients that I give this particular discount to do not make up much of my work load at all. I see them far and few between. My largest client base is senior citizens, and I give them a 10% discount. I figure they have earned that right, and I still make great money on their projects. They are the absolute BEST clients that I have. They are the ones who usually say "Fix it and bill me". No haggling, no hassles, and more repeat work than I can handle. To counter the discount, my pricing changed. I do not lose money on those jobs, I gain new clients at a large rate, and fast pace. Well worth the investment. You might call it part of my advertising budget. Tommy,How I originally came to this particluar amount was kind of a guesstimate type thing. The first client I ever had to deal with this matter on was working full time, and had to take off work to go to the bank and cash the check she had written me. The bank was about an hour round trip for her, and it took a lot of her time. I looked at the bill, and decided that the trouble she was going to go through was worth 5% of that particular bill. I think it amounted to about $50 at the time. After that, I started calculating the 5% as part of my overhead expense, and it became part of my expense for doing business. In other words, I now charge 5% more to every job, regardless of the circumstances of payment. That way, when I run into a customer with a money market account, and offer the 5% discount, I am covered. Remember too that I work alone, and my jobs are not all that large money wise. 5% doesn't add up to a whole lot in most cases, but it sure makes the client's eyes sparkle. They love discounts. James DuHamel
*Dear Tommy B.,I'm not sure what you mean by cash "cheapens the deal".Is that like when my carpenter complains that his buddy up the street is working for $5.00 less than he is so it makes it hard for him to get the wage he would like?
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I hired a finish carpenter(unlicensed) for an hourly wage of $25. He has been working for me for 6 months and I have been paying him cash. I gave him a $200 Christmas bonus. I am letting him go in 5 days because I am out of money to finish the job. Do I owe him a bonus? If so, how much? Why. Why not.