Business Ethics – Cash Under The Table?

How do you feel about cash sales?  If you were a self-proprietor, would you find it easy to “cheat” just a little (or a lot) and not report the cash collected from your customers?

I have strong personal feelings about doing that sort of thing. Not only is it not ethical, but there is no such thing as cheating just a little bit. It’s like saying, “I’m a little bit pregnant.” You’re pregnant, period. You’re cheating, period.

I had a conversation with a person the other day who asked me if we claim cash that Mr. A is paid.  I told them that we are a legitimate business and all money earned goes into the bank and is claimed on our income taxes.  I told the person not only was it unethical and unprofessional to not claim income, but I’d rather sleep soundly at night without having to worry about being audited.  The person asked me if I didn’t think the IRS had “bigger fish” to fry.

Well, guess what? Apparently the IRS randomly chooses people to audit, it doesn’t have anything to do with how big a fish you are.

Mrs. Accountability

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7 comments to Business Ethics – Cash Under The Table?

  • When it comes to taxes, it is never always black and white. Especially when you have a small business, it’s easy to just make mistakes. Is that cheating, I guess? Maybe? We had three 1099s that didn’t line up with our deposits. And we have an accountant and a bookkeeper!

    We don’t get paid in cash, but I can see how it might raise more ethical issues. I would probably find it very tempting to keep a few hundred, when our tax rate is 30% plus 8% self-employment penalty.


    Mrs. Accountability Reply:

    I think if you knowingly make a “mistake” then I think it’s cheating. I have to say that I was depressed for a few weeks after reading June Walker’s book, and coming to the realization that technically we should be holding back 30-40% of every bit of money Mr. A makes, to pay income and state, county, and city withholding taxes. We are still in the 15% tax bracket for our income taxes. But then there are jobs like the one Mr. A just completed where after expenses there is almost no tax liability. It was a bigger job, but took twice as long as expected due to the homeowner’s changing the plans several times, and unanticipated problems. It was also 75 miles from home. So by the time we calculated the mileage expense (currently $0.55/mile) and the money paid to the helper and for materials, Mr. A will have $100 to claim on this job, and only $30-$40 tax liability. Thanks for visiting and commenting!


  • I whole-heartedly agree that cheating is cheating. When working as a massage therapist I was always told by my co-workers to keep my cash tips a secret. I believe in honesty in reporting and later discovered that if I hadn’t reported my tips and business income, I wouldn’t have qualified for the auto loan I desperately needed. I think as the era of “liar loans” disappear, people are going to be seeing the benefits of reporting all the monies that come into their household, and so much is deductible these days, I think they would be surprised at how little they lose from it.

    As an FYI, I was actually threatened by a co-worker when they found out I reported my tips because they didn’t want to get audited. Not everyone likes honesty.


    Mrs. Accountability Reply:

    Mrs. MT: Sheesh, that would have scared me to be threatened for being honest!! It’s like driving the speed limit and having someone shake a fist at you as they zoom around your car, after they tailgated you for the last two miles trying to pressure you into driving faster. I’m glad your honesty paid off for you. Thanks for visiting and commenting!


  • I have to agree with you. Cheating is cheating. I can understand the temptation. But I’m too chicken of the repercussions. It keeps me nicely honest!

    When I worked at Red Robin in Anchorage (not as a waiter, just support staff who received partial tips), I found out that most of my coworkers weren’t accurately reporting tips. It floored me.

    But, as you pointed out, these things can bite you in the ass. A few years back, there was an IRS audit of waiters and waitresses and Seattle was apparently one of the biggest areas to be hit. Just not worth it.

    As for IRS audits, as one of my teachers explained to me, the IRS takes a couple of professions, such as food service, each year to zero in on. That’s in addition to random audits. So, yeah, you’re never safe. Eventually, your profession will probably come up for inspection. If the mistakes are honest, you’re still going to feel the ache of interest accrued; but at least you won’t be susceptible to prosecution. If the IRS knows you lied intentionally, you can face steep fines and jail time.


  • I’m neurotic about recording and reporting every stupid penny. Partly because…well, you know, we are a government of, by, and for the people. If the people can’t be bothered to support their government with honest contributions through their taxes, what kind of a government can we have? And partly because I really don’t want to have any untoward discussions with the authorities. 😉


    Mrs. Accountability Reply:

    I hear ya!! I like being able to sleep peacefully at night!


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