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Pay the IRS Now or Pay Them Everything Later: Why New Handymen Who Skip Taxes Lose Their Business

You just made $3,500 this week. All cash. No credit card fees, no paper trail, just pure profit sitting in your pocket. The temptation is overwhelming: why give a chunk of this to the government? You’re just getting started. You’ll “figure out taxes later” when the business is more established.

That thinking—shared by thousands of new handymen every year—is the fastest path to financial disaster.

The New Handyman Tax Fantasy

Here’s the story new handymen tell themselves:

“I’m barely making enough to survive. I’ll worry about taxes when I’m really profitable.”

“Everyone in this business works under the table. It’s just how it’s done.”

“The IRS doesn’t care about small guys like me.”

“I’m an independent contractor. Taxes are optional, right?”

Every single one of these statements is dangerously wrong. And the handymen who believe them don’t just face tax bills—they face penalties, interest, liens, garnished wages, and sometimes criminal charges that destroy everything they’ve built.

Why the IRS ALWAYS Finds You

New handymen think they’re invisible to the IRS because they’re working cash jobs for homeowners. But here’s what you don’t realize:

Your Clients Are Reporting You: Homeowners who pay you often claim those expenses for tax deductions on rental properties, home offices, or medical necessity modifications. When they report paying “John Smith Handyman Services” $5,000, the IRS computer cross-references that against your tax return. If you reported zero income, red flags go up immediately.

Banks Report Cash Deposits: Depositing $500 here and $800 there might seem harmless, but banks report patterns of cash deposits to the IRS. When your reported income is $12,000 but you’re depositing $45,000 annually, the IRS gets notified automatically.

Suppliers Keep Records: That lumber yard where you have an account? They report business transactions. So does the hardware store where you buy supplies. The IRS can reconstruct your income based on your business expenses.

Disgruntled Clients Report You: One unhappy customer can destroy your whole operation. When disputes happen, angry clients often report businesses to the IRS out of spite. One complaint triggers an audit that uncovers years of unreported income.

The Financial Nightmare of Back Taxes

Let’s say you skip taxes for three years while building your handyman business. You make $50,000 annually but report nothing. You think you’re “saving” about $15,000 per year in taxes and getting ahead financially.

Then the IRS audit letter arrives.

Suddenly you owe:

  • Back taxes: $45,000 (three years of unpaid taxes)
  • Penalties: $13,500 (30% penalty for failure to file and pay)
  • Interest: $8,100 (compounding at 6-8% annually)
  • Total bill: $66,600

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