question on working with GC's

[tonyou812]

I am working on a bath reno and the customer wants some other stuff done in her house. But the GC told me to give him the estimate for this work and he will give it to them. This kind of ticks me off cause im sure he is going to pad it for himself. And thus inflating the bill which could turn off the customer for future work. My wife tells me he got me the job so I should let him. But my point is the work has nothing to do with the bath, so why involve the GC? Im pretty new to contracting on my own so Im not really sure what is SOP and what isnt. thanks-

[iwire]

Do you want to keep working for the GC?

[jaylectricity]

A good GC is valuable. If he can get you more work and funnel all of your invoices through him, you will benefit. I have a guy who does all the talking for me. I tell him what I want and he gets the customer to agree to it. This guy even paid me for my work and later got stiffed by a homeowner on the final payment. They stopped payment on the check. He never asked me to assume responsibility, he just took the hit and was done with it.

If that check was written to me I would have been furious and pretty well screwed.

[ivsenroute]

Tough call because he (GC) is the one who got the job and hired you. You can always ask the customer to call you once the bathroom job is done or just follow the GC's request to keep a good relationship.

Yeah it sucks and it has happened to me and cost me a job because of the GC's inflated price but it happens.

Then again if you only get one job a year from the guy then who really cares.

[Dennis Alwon]

I am working on a bath reno and the customer wants some other stuff done in her house. But the GC told me to give him the estimate for this work and he will give it to them. This kind of ticks me off cause im sure he is going to pad it for himself. And thus inflating the bill which could turn off the customer for future work. My wife tells me he got me the job so I should let him. But my point is the work has nothing to do with the bath, so why involve the GC? Im pretty new to contracting on my own so Im not really sure what is SOP and what isnt. thanks-

Tony don't bite the hand that feeds you. If she calls you after the job is done that's one thing but as long as the GC is there you are obligated to (IMO) let him get his share.

I do agree when the ho gets the price it will be inflated but hopefully the ho will realize he is marking it up.

[ike5547]

I often funnel invoices through the GC even if he's unaware that I was contacted separately by one of his clients. I believe it pays off in the long run.

[tonyou812]

thanks people, he does give me a lot of high end work so I guess its cool I just wasnt sure how the game was played.

[ceb58]

thanks people, he does give me a lot of high end work so I guess its cool I just wasnt sure how the game was played.

The game can be played both ways. I have had customers call me for regular stuff. In talking with them they are looking at renovating or adding on and who would I recommend. If it is small remodel and they want detailed work I have a contractor who dose work like that. If it's a addition I have another one I recommend. Either way I win. If they get the job they kick me something for finding the job pulse I get the elect. part.

[cadpoint]

You need three real good clients and about five to seven floaters... :roll:

[brian john]

I do work for numerous ECs, if two years after the fact a customer calls me I will contact the EC just to let him know what's going on, just to see how he'd like to handle this. 99.9% of the time they tell me to handle it.

Good working relationships are hard to come by, I protect these.

[mdshunk]

If the GC hired you, go through him. A GC can potentially give you far more work than any single customer ever will.

If the customer hired you, you have no special obligation to go through the GC. In this case, he's not even technically the GC if you're hired by the customer. He's probably just the prime or "carpenter on the job".

[goldstar]

I am working on a bath reno and the customer wants some other stuff done in her house. But the GC told me to give him the estimate for this work and he will give it to them.But my point is the work has nothing to do with the bath, so why involve the GC?Technically it's the GC's customer and not yours. I'd take your wife's advice. This kind of ticks me off cause im sure he is going to pad it for himself.Welcome to America !!! And thus inflating the bill which could turn off the customer for future work.If he's going to double your price and submit it then yes, I agree, you'll probably lose the job. But, if he's looking for 10%-20%, maybe not.

Try doing this - Talk to the CG and ask what mark-up he intends to put on your price. For argument's sake, let's say your price is $900.00 and his mark-up is 10%. Make up a proposal to the GC for this project showing your price at $1,000.00 ($900.00 divided by 0.90). He can then take your proposal directly to the customer and if they agree he's still the GC, you get the work and everyone's happy. The GC then bills the customer for $1,000.00 and he gets paid. You then bill the GC for $1,000.00 less 10% contractor or courtesy discount ($100.00) and you get paid $900.00 from the GC.

The down side to this is that there can be a large time lapse between when you actually bill the job and when you get paid. You also have to trust that the GC will pay you. One other thing - While this GC may toss you a lot of work, you'll never get rich working for a GC.

[cadpoint]

....
Try doing this - Talk to the CG and ask what mark-up he intends to put on your price. For argument's sake, let's say your price is $900.00 and his mark-up is 10%. Make up a proposal to the GC for this project showing your price at $1,000.00 ($900.00 divided by 0.90). He can then take your proposal directly to the customer and if they agree he's still the GC, you get the work and everyone's happy. The GC then bills the customer for $1,000.00 and he gets paid. You then bill the GC for $1,000.00 less 10% contractor or courtesy discount ($100.00) and you get paid $900.00 from the GC. ...
If you do this, your paying the GC's taxes, it frankly is not how business is done in general(MO). Theres no tax relief for the EC bill's he's down for $1000.00, there's no paper trail to the GC as to being "PAID". And I never composed that type bill back in the day.

In the same breath theres no presentation of the EC's exact bill from the GC to the Client, the GC's letter head is covering the proposal, he gets the business write off, IE, debt to EC.

[goldstar]

If you do this, your paying the GC's taxes,I'm trying to follow you here. Please explain.it frankly is not how business is done in general(MO).You are certainly entitled to your opinion but quite frankly it is done every day. Theres no tax relief for the EC bill's he's down for $1000.00,How did we get onto tax relief ? A GC gets material prices and prices from his subs, bids and gets the job, does the job and gets paid (hopefully) more than what his costs of materials and subs work, has to show the profit and pay taxes on it. there's no paper trail to the GC as to being "PAID".Granted. As I mentioned there has to be some trust in that the GC will pay you. Does your supply house ask whether your customers have paid you or do they trust that you will pay your monthly bill ? In the same breath theres no presentation of the EC's exact bill from the GC to the Client,There wouldn't be in this scenario. The GC is your customer and not the end user or homeowner the GC's letter head is covering the proposal, he gets the business write off, IE, debt to EC.There's no write-off. Your price to the GC is a cost of sale. Basic acounting dictates : Gross sales - Cost of goods sold (and sub's work in this case) = Gross profit. Gross profit - Expenses = Net income.

We all have to pay taxes on net income (unless we're dishonest or work for cash).

[iwire]

I'm trying to follow you here. Please explain.

You will be taxed on a $1000.00 job that you only charged $900 for. You end up paying the GCs taxes on the $100.

Not saying this is a deal breaker only that I see what Cadpoint is saying.

[goldstar]

You will be taxed on a $1000.00 job that you only charged $900 for. You end up paying the GCs taxes on the $100.

Not saying this is a deal breaker only that I see what Cadpoint is saying.I guess I'm not understanding how you'd be showing the $1k proposal price on your books as income instead of the $900.00 you'd actually be getting for the job. Don't we all do this everyday ? You bid on a job, mark-up your material, add your labor and a profit margin for your company and pay taxes on the net income. What did I miss ?

[cadpoint]

If you do this, your paying the GC's taxes,
I'm trying to follow you here. Please explain.

I never presented a bill as a sub contractor that covered the GC's Cut. (including any business terms of accouting you might won't to include)
I was an expense to any project, and I know that was covered by the cost of the job, and I then went into my own
Gross profit - Expenses = Net income

it frankly is not how business is done in general(MO).
You are certainly entitled to your opinion but quite frankly it is done every day.

What Type of Billing would you call this please include the exact accounting term that will cover this. EC billing for a GC, WE wish but truely it ain't going to happen. This is my point, its a bid asked by the GC of the EC.


Theres no tax relief for the EC bill's he's down for $1000.00,

How did we get onto tax relief ? A GC gets material prices and prices from his subs, bids and gets the job, does the job and gets paid (hopefully) more than what his costs of materials and subs work, has to show the profit and pay taxes on it.

My arguement is, "IF" The EC will be billing 1000.00 theres 1K on the Books, How do you show 90.00 or any amount of payment in accounting terms on this, A smart GC is the Biller, he doesn't show his subs numbers is my point here. The EC can't use
Gross profit - Expenses = Net income. Till they recieve their money.
Depending on the State where one resides there could also be various taxes involved. Let me put it another, maybe I've said it already no Sub is going to bill for a Prime or GC, or better yet anyone that brought you in
where a Prime - sub relationship is under stood, this will not happen.


there's no paper trail to the GC as to being "PAID".
Granted. As I mentioned there has to be some trust in that the GC will pay you. Does your supply house ask whether your customers have paid you or do they trust that you will pay your monthly bill ?

MO, it has nothing to do with trust its accounting, and money exchanging hands. the Supply house, other expense and bills that will occur is in(or should be) the total price of the bid, what the EC will do is "an estimate" the GC wanted.
The EC business cost and expenses are not of the concern of the GC's
(in the Big Picture) it should be covered in there Bid, A theme that is raved around here...

In the same breath theres no presentation of the EC's exact bill from the GC to the Client,
There wouldn't be in this scenario. The GC is your customer and not the end user or homeowner
Wow, we agree on something!

the GC's letter head is covering the proposal, he gets the business write off, IE, debt to EC.
There's no write-off. Your price to the GC is a cost of sale. Basic acounting dictates : Gross sales - Cost of goods sold (and sub's work in this case) = Gross profit. Gross profit - Expenses = Net income.

Do me a favor, next time your asked to make an estimate, go ahead and ask the GC if you can bill for them!

Bumping the Keyboard...
Why is it your all of a sudden letting the GC Bill ? Weren't you arguing for the EC to Bill for the GC ? my whole arguement is I've never billed for any other vocation.

Your right the EC is an expense to the Job. I'm not an accountant nor practice it. But I will stand firm with my previous statement of that the GC's letter head will bill. Maybe I shouldn't have said the words, "write off", "True That"!

Frankly having re-read this several times, and what I posted againest, I've come to think, you like I, doing some selective, thinking and reading, as I know I tend to do, and you didn't take in my total presentation, even with the the misplaced or lacking accountant terms and functions, on my part, maybe I shouldn't have threaded.

[ceb58]

I agree with what Cadpoint is saying. Talk to the GC and find out what % he marks your bill up. I would not let it be over 10% that way you know what is being presented. If you were to do $10,000.00 worth of work for this GC in a years time he will 1099 you for $10,000.00 and you can take it from there with your deductions. Let the GC worry about his own profits and taxes. Just keep up with what you billed him and what you received to compare it to the 1099 at the end of the year. If you bill him for $11,000.00 ( 10,000.00 + 10%) he could 1099 you for the $11,000.00 and say he gave you a $1,000.00 in cash. No way to prove he didn't. He has you bills. That will leave you paying tax on his 10%

[wawireguy]

First off who told the GC about this. I would have immediately told them call me later and we can talk about this. Now that the GC is involved there isn't much you can do if you want to work for this guy again.. I'd just let him handle it. Probably not a lot of money anyways..

[wewirepgh]

I am working on a bath reno and the customer wants some other stuff done in her house. But the GC told me to give him the estimate for this work and he will give it to them. This kind of ticks me off cause im sure he is going to pad it for himself. And thus inflating the bill which could turn off the customer for future work. My wife tells me he got me the job so I should let him. But my point is the work has nothing to do with the bath, so why involve the GC? Im pretty new to contracting on my own so Im not really sure what is SOP and what isnt. thanks-


no one is loyal anymore just little green presidents in their pockets:smile:

[BLACK4TRUCK]

This time it is the GC who gets the estimate.. it is HIS customer. Better to let him make money of you here before he needs electrical work on his house "when you have time." Always good to not owe anyone for getting you work. Seems a THANK-YOU doesn't cut it anymore.

[bradleyelectric]

I agree with what Cadpoint is saying. Talk to the GC and find out what % he marks your bill up. I would not let it be over 10% that way you know what is being presented. If you were to do $10,000.00 worth of work for this GC in a years time he will 1099 you for $10,000.00 and you can take it from there with your deductions. Let the GC worry about his own profits and taxes. Just keep up with what you billed him and what you received to compare it to the 1099 at the end of the year. If you bill him for $11,000.00 ( 10,000.00 + 10%) he could 1099 you for the $11,000.00 and say he gave you a $1,000.00 in cash. No way to prove he didn't. He has you bills. That will leave you paying tax on his 10%

It's not up to me what someone marks my number up. Just because someone has a bill from me doesn't mean they paid it. If he doesn't have paperwork as in a canceled check, bank statement with a check to me, or a receipt it didn't happen.

[ceb58]

It's not up to me what someone marks my number up. Just because someone has a bill from me doesn't mean they paid it. If he doesn't have paperwork as in a canceled check, bank statement with a check to me, or a receipt it didn't happen.

OK, prove it. That's the mind set the IRS will take.
I had a CG 1099 me for more than what he actually had paid. It was up to me to prove the point. Luckily for me the GC's accountant was helpful and found they had picked up on a bill twice. They filled out the correct paper work and gave me a revised 1099. It was still APITA.
All I am saying is bill for what you have done and dont try to plug in the GC's cut. If the GC adds 10,15 or 20% let him worry about it.

[goldstar]

I never presented a bill as a sub contractor that covered the GC's Cut. (including any business terms of accouting you might won't to include)I'm trying to understand your point of view. Who would you be presenting the bill to ?
I was an expense to any project, and I know that was covered by the cost of the job,Just to clarify, your services are considered a cost of the sale (i.e. total price for a GC's particular job is $10K, materials and services for that job is $6K, gross profit is $4K). Your services are counted in the $6K cost of sales. Now the GC has expenses to run his business (i.e. office expenses, gas, electric, etc.). Once he pays those expenses he is left with net profit on which he pays taxes. If you're lumping expenses with cost of sales, the end # is the same and I guess we're in agreement.My arguement is, "IF" The EC will be billing 1000.00 theres 1K on the Books,The EC is not billing $1K, he's billing $900.00 How do you show 90.00 or any amount of payment in accounting terms on this,$900.00 gross income, or total labor and materials. There's no need to break out labor and materials on your P & L statement. A smart GC is the Biller, he doesn't show his subs numbers is my point here.OK. I'll buy that.The EC can't use
Gross profit - Expenses = Net income. Till they recieve their money.That is correct. You should be on a CASH basis for your accounting and not an ACCRUAL basis (i.e. you recognize your income when when you receive the check)
Let me put it another, maybe I've said it already no Sub is going to bill for a Prime or GC, or better yet anyone that brought you in
where a Prime - sub relationship is under stood, this will not happen.I think we're in agreement but I'm not sure why. Please understand that I'm not attacking you or your way of doing business. I'm just trying to get us both on the same page with respect to generally accepted business practices.

[goldstar]

If you were to do $10,000.00 worth of work for this GC in a years time he will 1099 you for $10,000.00 and you can take it from there with your deductions.The way I understand the issuing of 1099's (and please correct me if I'm wrong) is that if you are a sub-contract employee to another contractor (GC or EC) and you are only providing labor then you should be getting a 1099 for your services. However, if you are providing both labor and materials you shouldn't be getting a 1099. Is this correct ?

[ceb58]

The way I understand the issuing of 1099's (and please correct me if I'm wrong) is that if you are a sub-contract employee to another contractor (GC or EC) and you are only providing labor then you should be getting a 1099 for your services. However, if you are providing both labor and materials you shouldn't be getting a 1099. Is this correct ?

No, the contractor sends me a 1099 for the amount of money I have received from him during the year. This amount is what I have billed. It is then up to me to list the deductions material,labor and associated expenses with doing the jobs. This would then be my profit and what I would pay tax on. There is not such a thing as a sub contract employee. The way the IRS looks at it is if the "employer" tells some one how and when to preform the work, and directs their activity in doing the work that person is a bona fide employee. The employer then must pay tax, SS and other items. I am a sub contractor the GC dose not direct my work or tell me how to preform the task he has hired me for.

[petersonra]

The GC is your customer, not the HO.

[petersonra]

The way I understand the issuing of 1099's (and please correct me if I'm wrong) is that if you are a sub-contract employee to another contractor (GC or EC) and you are only providing labor then you should be getting a 1099 for your services. However, if you are providing both labor and materials you shouldn't be getting a 1099. Is this correct ?

Normally, corporations do not need a 1099 to do work, regardless of how payment is made.

is you business not incorporated?

[goldstar]

Normally, corporations do not need a 1099 to do work, regardless of how payment is made.

is you business not incorporated?I am an LLC (Limited Liability Company) I chose to go that route rather than Sub-Chapter S Corp.

The only time I've received a 1099's is when I've done electrical sub-contract work for another EC. Since I've been in my own business (1994) and billed out for labor and materials in a lump sum price I have never received a 1099 from a GC. I don't know if I'm doing something wrong or if the GC is doing something wrong but whatever I've billed for under my company name I've declared as revenue. COGS and expenses are deducted from that to determine my net income on which I pay taxes. It doesn't matter whether the GC sends me a 1099 or not, I've declared the income. If the GC gets audited he will have to show that I billed him for X amount of $$. On the other hand my records are up to date as far as what I've billed out and collected.

So, getting back to the OP, if I sent out an estimate for $1K but billed and received $900.00, my gross revenue is $900.00 and not $1K. If I sent out an invoice for $1K showing a contractor or courtesy discount of $100.00, essentially I've billed for $900.00. Anything wrong with that ? :-? Please say so.

[petersonra]

I am an LLC (Limited Liability Company) I chose to go that route rather than Sub-Chapter S Corp.

The only time I've received a 1099's is when I've done electrical sub-contract work for another EC. Since I've been in my own business (1994) and billed out for labor and materials in a lump sum price I have never received a 1099 from a GC. I don't know if I'm doing something wrong or if the GC is doing something wrong but whatever I've billed for under my company name I've declared as revenue. COGS and expenses are deducted from that to determine my net income on which I pay taxes. It doesn't matter whether the GC sends me a 1099 or not, I've declared the income. If the GC gets audited he will have to show that I billed him for X amount of $$. On the other hand my records are up to date as far as what I've billed out and collected.

So, getting back to the OP, if I sent out an estimate for $1K but billed and received $900.00, my gross revenue is $900.00 and not $1K. If I sent out an invoice for $1K showing a contractor or courtesy discount of $100.00, essentially I've billed for $900.00. Anything wrong with that ? :-? Please say so.
I think if you are an LLC no 1099s are required. Its still a corporate entity.