UPDATED: Cash payment for vendors?

I mean, it's fine if you're cool with tax evasion. It sounds like they're trying to avoid reporting the income.

Yes and some add an additional discount for all cash with the contract signing. We did photographer that way

That's always a red flag to me. A legitimate cash discount could be 1-3% to cover the cc processing fees.

That seems awfully iffy...

Yeah, no. That's sketchy as hell. A cash discount can be legit if it's in lieu of credit card fees, or if it's based on paying in full before the bill would typically be due. But this sounds like tax fraud, and I would have no part in it.

This is your vendors trying to get out of paying taxes, and I think that's really shitty. We all know taxes are tough for small businesses, but it is not fair for them to get out of paying it when most other people do business the honest way.

I wouldn't give any vendor cash anyway, since there's no way for me to prove I paid it. If I write a check I can view the canceled check in online banking, or if I use a card I can see the card transaction on a statement as well. I'd stay away from this.

It means they're evading taxes. And while there are plenty of things I'd rather support than our current gov't, it's the law......ask me again after there are no food stamps, no NPR, and no medicare.

But I digess.

I wouldn't ever pay a vendor in cash; you need a paper trail if, god forbid, something goes wrong. And them giving you a discount for cash is pretty sketchy unless it's in lieu of them paying CC fees.

This is not a business practice I would be comfortable participating in. What other corners are they cutting?

Nope...thats super sketchy and probably illegal

Super sketch. Hell no.

I have no issue with paying in cash, as long as you get receipts. But they should still be charging tax.

Like everyone else stated, they're evading taxes. Also you should definitely have a paper trail for payments due to the signed contract and just in case things go south.

Collecting sales tax is the responsibility of the vendor, so from a legal perspective, I don't think you would be on the hook for tax evasion or anything. Obviously the moral/ethical perspective is a more personal matter.

If you do decide to pay in cash, make sure you have a contract and a written receipt for each cash payment.

Now hold on - Just because they are offering an incentive to pay in cash does not mean they are not reporting that income. In my state - a business (especially one who provides services rather than physical products) can pay the sales taxes on your purchases out of their profits. They still pay the sales tax -- it is considered a cost of doing business in that regard. This way - they are still paying the tax, they just aren't passing that tax onto you.

If you have evidence that a business is not reporting their income, make a call to the proper authorities.

In my state, there are no taxes charged on services.

@goskell--they could be paying the taxes out of their own pockets, but what would be their incentive for doing that? Out of the kindness of their hearts? Because they want bundles of cash to throw on a bed and roll around in? I can't think of any legitimate reason why the business would choose to take a 5-15% hit on the bottom line in return for a cash payment. I mean, cash is a pain to deal with. Checks or credit card payments are so much easier. Credit cards might cost the business a couple of percentage points, but nothing compared to the cost of the tax liability.

I wouldn't do it.

@StPaulGal - many businesses do this in order to remain competitive. Furniture stores come to mind "We'll pay your sales tax" - A reduced profit sale is better than no sale. I don't know why a wedding vendor would do this for a contracted agreement, but I wanted to point out that not ALL businesses who offer this are operating illegally.

I get receipts for all my cash payments, so dont think that paying cash is all bad but yeah, maybe they mean the processing fee and not the tax. They probably include the tax in the cost like some vendors i have talked to. If not, then yeah i wouldnt do it

A few of our vendors have offered us a percentage off for paying in cash, but not tax free. That seems a little sketchy to me.

Paying in full for a discount is one thing (taxes should still be charged on the discounted price), but getting a discount that is clearly identified as not paying taxes -- that's a no. I wouldn't trust this is a professional business following his/her state and/or federal rules and regulations.