1. It is unethical. It indicates that you are willing to sell your integrity and honesty for the privelege of working on a project. You don't pay sales tax - it doesn't come out of your pocket, you simply collect it for the governement. So there is little incentive for you to rip off the government. You may feel pressured in order to win the bid, but consider whether you want to work for someone with such ethics. Interestingly, I've had teachers, police officers, Christian clergy and devout Muslims, among others all ask me over the years to 'work for cash', hoping to save 5 - 12% in sales tax. Either you are honest, or your not, simple as that.
2. It is illegal. Do you want audits, fines, assessments, bank accounts frozen, customers contacted by CRA, interest charges, jail time, legal fees, a criminal record? All these are possible consequences of fraud.
3. You never know if it is a test - to see if you are an honest person. Clients are trying to determine if they can trust you with thier most valuable possessions and working around their precious family. Trust is the only thing you are selling. People assume you are a proficient painter...what they want to know is if they can trust you. Trust and honesty go hand in hand. Best to have a solid policy and stick to it firmly and respectfully. You may even be talking to CRA/IRS auditor...
4. It is not in the homeowner's best interest. Working off the books exposes them to significant risk - is there a warranty on a job that never happened on paper? What if a worker gets hurt on the project?
5. Keeping your business up to date and operating smoothly is challenging enough. Trying to out- smart the government adds a lot of unnecessary complexity to your life - energy that could be spent on growing your business. Serve your custoemrs. Pay your taxes. Grow your business. Sleep well at night.
6. Playing the 'work for cash' game makes you look like an amatuer. It signals that you are either desperate, dishonest or a push over. Keep your professional image in tact by operating like other real businesses do.
So this raises the question about how to respond when asked if you work for cash...
There are a few options I use:
I appreciate a good deal as much as anyone, and I want to work with you. However, we have very good reasons for operating our business above board. Lets see how we can make your project come in on budget (offer some cost saving options like waiting longer, chosing less colours, using a less expensive paint, breaking up the scope of the project, having the client do some of the prep work, etc...)
You are not the first person to ask, but we have determined that working under the table is not in our clients, or our business' best interests. We strive for professionalism in all we do and it leads to successful projects. Is cost a primary factor in choosing a Contractor?
if I determine that cost is the issue, i try to find a better solution to that problem. If the issue is that the prospect must feel like he is winning a good deal in order to commit, then I try to address that issue by focusing on and adjsuting value. If the issue is someone trying to dictate how I run my business or is clearly lacking in ethics than I take that as a serious red flag.
You dont want to come accross as judgemental or preachy. Having some firm policies based on good standards will help you to respond professionally and close a winning deal for both parties while keeping the government out of your hair.
If you appreciate the free content on MicroContractor Blog, please share with a link and click the article sponsor's ad: