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Can a company advance equipment for a independent contractor and recoup the funds during payment?

Saginaw, MI |

The contractor I'm hiring for my company doesn't have the necessary equipment to do the company job, so I was thinking about my company advancing the equipment for the contractor to complete the job, and recouping the advance threw their payment.

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Attorney answers 1

Posted

This could be possible, just make sure of all of the legal issues are covered, title, insurance, security interest in the assets, contract for services and that the contractor which you are effectively financing has a business plan which will allow their success and the ability to pay for the equipment as well as the rest of its bills.
Either do it right or this plan is a sure disaster.
I commonly tell proposed guarantors and amateur lenders that if the proposed creditor cannot get the funds from the pros (the banks and finance companies) EXTREME caution is necessary.

To the PROSPECTIVE client, please call myself or another attorney for you choice with more detaiils and an appointment. My PRELIMINARY answer to your question(s) is for general purposes and based upon what little information you have conveyed. It is based on such limited information that the general answer should never be relied as a reason for your action or inaction. My response does NOT establish an attorney-client relationship and such may only be established by mutual agreement, and the signing of a written retainer agreement, which will generally require payment for our services, as this is what we do for a living and, just like you, we must get paid for our work.. .

Asker

Posted

My contract will state all of this, about how and what percentage of the pay will be recoupable for the equipment.

John F. Brennan

John F. Brennan

Posted

Now you. Are running into a tax issue, you are not to foregone pay for the equipment but pay and then net the payment for the equipment payment, or rental. The amount of the payment should not be a percentage but a set sum to pay off the equipment or it's rent over the,period of the contract.

Asker

Posted

Mr. Brennan I was referring to the contractor paying for the equipment upfront, before doing the project. Will the contractor be able to keep the equipment once the project is completed?

John F. Brennan

John F. Brennan

Posted

If he pays for it up front, purchases it, then it is his. If he rents it, the terms of the rental or lease apply.