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Friday, October 15, 2010

"Giving Good Invoice"

Does Your Contractor Know How?

In a very popular post last year titled "Contractor Etiquette," I discussed the qualities that distinguish good contractors from not-so-good contractors.

In a nutshell: the former do quality work, at a fair price, when they say they'll do it.

And clean up afterwards.

Above and beyond that, the very best contractors excel at communication, not just with their client, but -- in the case of bigger, noisier jobs lasting months -- the neighbors as well (also commented on in my earlier post).

Other Qualities

To all the foregoing, I would add one more item:

Great contractors use their invoice(s) to clearly document their work.

That's especially important in the context of a home sale, where the last hurdle to finishing off the Inspection Contingency (and therefore finalizing the deal) often is the owner agreeing to fix something.

Handing the Buyer a clear, complete invoice marked "Paid" is the best way to discharge such obligations.

Ideally, that invoice also is on professional letterhead, with the contractor's business address and even license number.

Bonus points: the contractor provides both a hard copy, and an electronic version (for distributing easily to multiple parties); and references any permits that were pulled, if that applies.

Calculating Seller Taxes

Even when the contractor isn't performing work required by the Purchase Agreement, clear and complete documentation is still very important -- sometimes years after the fact -- for bigger jobs like a home addition.

Then, the former owner will need that information to establish their basis in the home, which factors into whether (and how much) they'll owe in capital gains taxes as a result of the sale (married sellers can exclude up to $500k from capital gains taxes; singles, up to $250k).

P.S.: last requirement, at least for work not done in the context of a home sale: the contractor provides their invoice on a timely basis -- not months later, when the job details (and quoted price(s)) have dimmed.

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