We are a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for us to earn fees by linking to Amazon.com and affiliated sites.
Having Unlicensed Plumbing Contractors Work In Your Home Can Be Super Fun
I Apologize In Advance – For the harshness of this article. It is one of those times when I tell it like it is from having seen bad things happen to good people. I trust this article will help someone, even just one contractor avoid severe financial harm because what you don’t know is what will hurt you the most.
This Article Will Focus On a little known trap a number of homeowners, developers, general contractors and flipper house contractors are using to get Plumbing And Mechanical Contractors and other Contractors to Provide Labor And Material FREE!
For The Record – Most homeowners, developers, general contractors and flipper house contractors are honest, reliable and have high moral and ethical standards. What I am going to cover in this article does not apply to them. In fact, most homeowners, developers and flipper house contractors are not even aware of this loophole.
How It Works Step-By-Step
Step #1 – The bad homeowner, developer, flipper house contractor, general contractor or flipper house contractor (henceforth known as “The Scammer”)
will search for unlicensed contractors at home centers, local newspapers, word of mouth and dozens of other ways.
Step #2 – The Scammer entices the unlicensed contractor to get excited about all the money they will make.
Step #3 – The Scammer gets the unlicensed contractor to start on the project as soon as possible.
Step #4 – The Scammer refuses to pay a deposit or give the unlicensed contractor any money for start-up costs to pay for labor and material.
Step #5 – When the unlicensed contractor asks for money the Scammer stalls them with excuses:
- “The bank has not released funds”
- “The bookkeeper writes all the checks and he/she is unavailable”
- “Don’t worry, you will get your money”
- “What’s the matter, you don’t trust me?”
Step #6 – When the unlicensed contractor runs out of cash and has borrowed, begged and gotten as much they can from all their friends, relatives, workers and pawned everything in sight they finally threaten to stop work and sue The Scammer unless they get some money.
Step #7 – The Scammer appears shocked and dismayed which is an act, and promises to come up with some money. The Scammer comes up a small amount of money and demands a receipt. It is just enough money to get the unlicensed contractor in a little deeper, not enough to bring them current.
Step #8 – When the unlicensed contractor finally stops work and threatens to take The Scammer to court The Scammer laughs out load and says “Go Ahead” knowing the unlicensed contractor will not likely collect a penny and in fact may have to repay every dime they received from The Scammer!
Step #9 – The Scammer simply hires another unlicensed contractor to complete the work and repeats the process.
Not All Situations Involve – Crooked behavior, sometimes the relationship between the homeowner and the contractor starts out right and after a while it turns ugly and the unlicensed contractor is punished severely. Download a PDF file from Susan E. Firtch and Michelle D. Jew about a case called Unlicensed contractors face harsh penalties. That was a harsh lesson one contractor learned the hard way. White v. Cridlebaugh,
The Biggest Source Of Contractor Misinformation – Is The Contractors Business Round Table. The little round table at the neighborhood
bar with a pitcher of beer and several contractors where stories are told about how much money can be saved by not being licensed, bonded, insured and hiring all employees as 1099 contractors. This is where contractors learn the true meaning of the phrase “Opinions From Experts Costs Money” and “Free Advice Is Not Free Because It Has Hidden Costs”
Contractors With Experience – With lawsuits involving a customer who refused to pay even with Iron-Clad contracts and signatures everywhere know that without a current license, bond and insurance their case usually gets thrown out of court faster than a mouse riding wild bronco at a rodeo. We are not attorneys and do not give legal advice so check with your attorney.
Other Drawbacks Of Not Being Licensed:
- Possible arrest, free ride in a police car and jail time where you could meet some remarkable people.
- Most states have a fraud hotline and encourage everyone to participate.
- Many contractors playing by the rules take pleasure in turning in unlicensed contractors to Labor and Industry officials because unlicensed contractors have an unfair price advantage in competitive bid situations.
- Most states have a Labor And Industries staff who read ads for construction work and when they find unlicensed contractors, they investigate
them. If found not in compliance it gets very expensive real quick. The fines alone could run into tens of thousands of dollars.
- Unlicensed contractors who have been caught by Labor And Industries once are easy targets as repeat offenders so they stay on the watch list for a very long time.
- Think about how much in new sales it takes with low profit unlicensed contractor to pay the previous fines while putting themselves at risk for new more costly repeat offender fines.
- It puts the unlicensed contractor in an accelerated downhill vicious cycle.
- In some cases, they cannot get building, mechanical or plumbing permits.
- Most lead generation services like stop giving leads.
- They get a reputation as a low-price leader.
- If they have employees and one of them gets hurt on job, it could bankrupt the contractor and in some cases make them criminally liable.
- More states are putting together sting operations to catch unlicensed contractors.
If You Or Anyone You Know:
- Wants help cheating the system DO NOT contact us, ever!
- Is an unlicensed contractor and wants to get legitimate; contact us because we can help!
This Is One More Example of how Fast Easy Accounting is helping construction company owners just like you put more money in the bank to operate and grow your construction company. Construction accounting is not rocket science; it is a lot harder than that and a lot more valuable to people like you and me so stop missing out! Call Sharie or email@example.com and schedule your no charge one-hour consultation
Profitable Contractors and Construction Company owners have known about the value of outsourced bookkeeping services and contractor coaching services like ours for a long time and now you know about it too!
QuickBooks Experts In Construction Bookkeeping Services. We serve contractors across the USA including Alaska and Hawaii. Thinking about outsourcing your contractor bookkeeping services? Click here to download a free guide to finding the right contractor bookkeeping service for your company.
About The Author:
Randal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington, www.FastEasyAccounting.Com He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Plumbing Contractor, General Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Contractor Accounting Specialist, Bill.Com Guru and Tsheets ProAdvisor. Check out our Contractor Success Map Podcast on iTunes and Follow Randal on Google+
I leave you with this heartfelt blessing – “Contracting is a tough business and you are a tough person so may you always play fair, do the right thing, even when nobody is watching and rest assured you will be compensated. You are a person of integrity who can never be cheated because you know better than to take shortcuts, you do not seek unreasonable return on investment and you trust your inner guide.”
Randal L. DeHart, PMP, QPA