Big friggin deal. The guy has a checking account in his name. It does not
mean he is avoiding taxes at all. There are tens of thousands of small
businesses that have a DBA and it is just simpler to have the check made to
How do you "deal with a business"? Every business I've ever dealt with was
comprised of individual people and that is who I dealt with. If you'd
rather deal with an answering machine or a desk, that is up to you. It is
the integrity of those people that make a business good or bad, not a piece
of stationery with a logo.
Everyone seems to think this guy is trying to avoid taxes but it might just
be that he registered his business name, or not, and doesn't have a
corresponding bank account. It's not uncommon for someone to call there
company something and then not have all of the bank accounts and stuff in a
separate name. It would have been easier to call his company "John Smith
Careful. If he is trying to avoid sales taxes, some areas put the onus on
the customer to ensure that they are paying the taxes and theoretically
could come to you to prove you paid the tax, however unlikely.
At least you HAVE an invoice, and the invoice has a request for the check to
be paid to his name, if anyone questions you, you can pull the invoice and
prove that you paid it to the name requested on the invoice.
Most problems occur when there is no invoice and no paper trail showing the
connection between the contractor and the person you paid. You can never
prove you paid the bill.
Unfortunately that love will go unrequited. The onus is always on the
contractor to collect he tax.
In NY we have Certificates of Capital Improvements, which, when
properly filled out and signed by both parties, absolves the
contractor from having to collect tax. There are definite requirement
about what constitutes a capital improvement, and does not require the
payment of tax, and repairs, which do.
Note to the OP: Call your contractor and ask if you paid tax on that
$800 of work. If not, please remit the tax you owe immediately.
In NYS, you would also not owe sales tax if it is a service, not a
product. If you buy roses for your yard, you pay sales tax on it. If
you hire a landscaper to plant them, but not to provide any physical
things, then it is a service and there is no sales tax. If you pay
the landscaper to provide the flowers AND plant them, then you owe
sales tax on both the flowers and the labor.
However, in either case if the "sale" is over some number (I think
$600) and you are paying an individual, you need to issue a 1099.
Rico might know more about this than I do, but there might also be
differences in insurance coverage for workers comp., disability,
liability, etc. etc.
Now how someone can pretend to know the law in all states and areas is
beyone me. Here in NJ, if you buy a piece of furniture in NC, you are
responsible for paying the tax, even though you bought it out of
state. And yes, they have gone after people.
On Jun 20, 8:32 pm, email@example.com wrote:
In NY, there's a line on your personal income tax return where you
enter the amount of the tax on all of your out-of-state purchases.
It's on the honor system for all items except autos. For those, you
need to pay the sales tax to register the car. If you bought the car
from an individual (or out of state), the County Clerk collects the
tax when you register it.
wite the check out to the company name ... don't say anything about it to
if he brings up the issue, then he will have to either tell you why or try
to BS his way around it.
If he owns the company, there is no reason that he can't deposit the check.
If he doesn't own the company, he should get his money from them, not you.
Your contract was with the company, not the owner of the company. They are
totally different entities.
Make the check out to the company. That way there can never be any argument
as to your payment. All he has to do is to endorse the company check over to
himself, or to "Cash", and cash it or deposit it in whatever bank a/c he
How do you know there was a contract with the company?
You are making as assumption. The OP mentioned the INVOICE had a company
name, not on a contract. It may have been a verbal agreement to that point.
Pay in cash, get a receipt.
Oh and all contractors are honorable, ethical and trustworthy. I write the
check to the company I contracted with. If in the initial
negotiation he asks me to pay him cash or make out a check to another entity
or him personally, at that point I want ironclad receipts for payment for
the job with the permit numbers or numbers written on the receipt.
"In God We Trust"
No one ever said all contractors are honest. But you think making the
check out after the job is done to the individual who did the work or
his company name is going to protect you somehow from the
contractor? The job is done and was apparently completed to his
satisfaction. You have the cancelled check as proof that payment
If in the initial negotiation he asks me to pay him cash or make out
a check to another entity
Oh, so you want a receipt before the job is even started. That makes
a lot of sense. And if you have any issues or doubts about permits,
that has zippo to do with how the check is made out and should be
dealt with seperately. And again, your cancelled check is proof that
payment was made. Plus you should get a signed receipt or the
agreement marked paid when you hand over the check. Geez, this ain;t
I have a cancelled check that says I paid someone something. If the name on
that check does not match the name on the permit (the one who pulled the
permit), there is no way I'm writing the check to another individual.
Several years ago I had some work done by a 'reputable' contractor. He asked
that I pay for the material up front, about $800. He also asked me to make
the check out to his supplier so that he didn't have to run to the bank,
deposit it and then write another check to his supplier. Foolish me I
complied. When he completed the job he asked me for a check or cash 'in
total'. I reminded him of the $800 check I wrote out to his supplier but he
had a severe memory lapse and insisted that I either give him a receipt
showing the payment to him or to pay up. I refused. He harassed me and
threatened a lien but after a call from my attorney he backed off never to
be heard of again.
As I said in a previous message:
"In God We Trust.
Cutting a check directly to a supplier is a major red flag. I
wouldn't do it without lots of verification, signed receipts from both
contractor and vendor, and a long history with the contractor. Glad
you didn't get hung up to dry on yours.
Which proves my point. You had the cancelled check made out to the
supplier. So, what's the big deal? You deducted the $800 from the
final payment. No different than if the guy showed up at the end of
the job and asked for an extra $800 on top of the contracted amount,
which he could have done too. Or if you had paid him the $800 as a
stage payment and he denied you did pay him. Who you made the
check out to made zippo difference. You have the proof in black and
white. In fact, I'd rather make it out to the supplier, because at
least you know it's going to the supplier for materials, instead of
the contractor using it for beer. Of course, you still don't know
it's for your materials, but it's at least a little better.
And getting all wrapped up in what name is on the permit, IMO, has
very little bearing on the payment. The issue is who did the work.
You could have one construction permit that covers mutiple
contractors, so that issue makes little sense.
To me it boils down to this. I hire ABC Corp to do a job. ABC Corp pulls
permits and does the work. I'm going to pay ABC Corp for the job they did. I
don't care what the contractor does or wants to do with the payment. It's
not my problem. I just want to know that somewhere down the line ABC Corp is
not being sold to someone else who looks in their books and finds I never
paid the corp. for work done and files a lien or that the contractor doesn't
try and pull anything shady on me. I'm sure if I paid him with a check with
someone else's name and address on it he wouldn't accept it.
It was never stated that the contractor in the case under discussion
was incorporated. Most small guys are not. As far as pulling
something shady, he can do that regardless of how you paid him. It's
just silly to think that he's gonna get anywhere saying you didn't pay
him when you have the cancelled check made out to him. You really
think he's going to go to court to try to claim that? Especially
when many folks here think his purpose for the check in his name was
to avoid taxes. BTW, I don't necessarily buy that either, because
having a trail of checks that you endorsed and cashed is a pretty
stupid way to try to avoid taxes. Not only is it easy to find, it's
very hard to explain as an oversight, or innocent omission, like some
questionable deduction would be. It's very obvious tax fraud
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