The biggest do's and don'ts for contractor deposits

Alannah O'Neill
Nov 2, 2022

Hey contractors! We know there’s no way you would start a job without some sort of deposit or down payment– but do you ever wonder if your fee lines up with industry standards? Providing a deposit at the start of a job is a crucial step to make sure you’re protecting yourself.

We did some research to figure out the do’s and don’t for contractors and deposits. Read on and see if you agree.

When should you ask for the first deposit?

Most contractors we spoke to will accept deposits once the contract has been signed. That holds the time on the schedule and shows that everyone is serious and on the same page. Make sure you have your deposit before ordering materials.

What should the deposit be?

Deposits vary based on the size and scope of the project, but the general rule of thumb is the smaller the project, the bigger the down payment. For example, for a $16,000 bathroom renovation, many contractors would ask for 50% of the cost upfront. Meanwhile, for a $100,000 project, the down payment might be 10% or 20% with a few payments throughout the project and the final payment upon completion of the work.

Timelines matter

Make sure there isn’t a huge gap between accepting a down payment and ordering materials. During the pandemic, material costs tended to fluctuate a LOT so you don’t want to get caught in a bad position.

Check the laws in your State or Province

It’s a pain in the butt, but the law is different everywhere. For example, did you know that in California, the law states that you can only ask for a deposit 3 days before the start of the job for 10 % of the cost but no more than $1000? Make sure you bone up on the laws in your area so you don’t get met with an unpleasant surprise.