Are you a Louisiana contractor? If so, you want to make sure you stay on the right side of the law when it comes to payments. If you use your income from clients the wrong way, you could face criminal charges.
Unfortunately, it’s not just unscrupulous contractors who have problems like this. People who are trying to follow the rules and get stuck in a disagreement with a supplier or subcontractor may face this charge too.
Discover what you need to know to avoid a misapplication of payment charge.
Setting Up Your Construction Project
When you get ready to do a project, large or small, you need to make sure your bases are covered. As a contractor, you will need to work with suppliers and laborers to get the work done.
Make sure you have very strong estimates from the subcontractors and suppliers. Get everything in writing, and be sure to build in a cushion in the price you charge in case something goes wrong.
Unfortunately, if you don’t set your project up and protect yourself in writing, you can end up with unethical workers or suppliers claiming you underpaid them.
Yes, it’s a lot of paperwork, but it’s vital to work on more than a handshake. Folks can sue for any reason, and you have to defend yourself. Having those documents makes it much easier.
Know Who You’re Working With
Contractors often get the rap as being “bad apples”, but in truth, anyone can be a scammer. Be sure you know who you’re working with, especially if you’re in an area of Louisiana that you’re less familiar with.
Generally, most contractors have go-to workers and suppliers. Be wary of anyone who shows up claiming they will do a job for far less than usual market rates.
Also, be sure you vet any new partners. How long have they been in business? Are they licensed and insured? Just like consumers need to do their homework, you need to do yours.
If you end up working with unethical partners, you can face responsibility for shoddy work, theft, or misapplication of payment accusations.
Budget Your Funds Carefully to Avoid Misapplication of Payment
A contractor can end up in trouble for more than just not paying subcontractors. You also run afoul of the law if you use the money for your project to pay other workers or suppliers that are not part of that project.
If something comes in under budget, it’s tempting to shift that cash to another project that over. However, moving money to unrelated projects is against the law.
Instead, be sure to manage project budgets carefully – and separately – so that you get everyone paid what’s due, on time.
Are you facing a charge of misapplication of payment in the state of Louisiana? I can help. Contact me for a consultation today.
