Help the people you genuinely want to help. Do not let guilt or pressure drag you into working for free or for peanuts, because a discount on your rate is not a small favor, it is the whole profit line, and the informal job for someone you know is the one most likely to end in a strained relationship over money nobody wrote down. You are running a business, not a charity. Here is what a favor really costs, why the law does not care that it is your cousin, and the rules experienced tradespeople decide in advance so they never have to argue about it at a barbecue.
What a favor actually costs you
Look at the rate stack from How to price your work so you actually make money: a $33-an-hour employee wage becomes a $94-an-hour billing rate once the employer's share, the days you cannot bill, overhead and 15 percent profit are added. Now knock 15 percent off that rate for a friend. That is $14 an hour, which is the entire profit line. Knock a third off and you are paying to work: the first $80 of every hour is spoken for by costs that do not care who the customer is.
That is the arithmetic that never gets done at the kitchen table. A "small" discount on the rate is a large cut in what the business keeps, because the costs sit underneath the rate whoever is paying. And the day you spend on a discounted job for a friend is a day you did not bill a full-rate customer, so the favor costs the discount plus the job you did not do.
The worst version, and the common one: you drop full-rate, low-hassle customers to squeeze in a discounted, high-stress job for someone you know, and lose on both sides.
The law does not care that it is your cousin
Everything that applies to a stranger applies to your brother-in-law, because the law looks at whether you did the work in the course of your trade, not at who was on the other side of it.
- The implied warranty. In most states the law implies a warranty that your work was done in a good and workmanlike manner, whether or not you wrote one, and the two liability clocks run the same for a friend as for anyone. If the shower leaks in three years, a friend can sue exactly as a customer can. Construction warranties explained.
- The written-contract rules. For residential work many states require a written contract once the job is over a small dollar amount, and leaving it out can void the deal or kill your lien rights. If you sign at their kitchen table for $25 or more, the federal three-business-day right to cancel applies and you must give the notice. The contract that protects you and Can a customer cancel the contract after signing?
- The license threshold. A job for a friend that crosses your state's licensing threshold is licensed-level work whoever the customer is, and working unlicensed where a license was required can strip your right to be paid, kill your lien rights and, in California, let the customer claw back every dollar. Do I need a contractor's license? and What happens if you work without a contractor's license?
- Your lien rights. They depend on the paperwork, and in many states on a preliminary notice sent early in the job. An informal job for a friend usually has neither, so if it goes wrong you have no leverage but the friendship. The preliminary notice: the paperwork that keeps your lien rights alive.
- The tax. Every dollar you take in for work is taxable income, cash included, whether or not anyone sends you a 1099. There is no friends-and-family exception and no minimum. Construction is one of the industries the IRS watches hardest for exactly this, and an honest mistake costs 20 percent of the underpayment while a deliberate one costs 75 percent before anyone mentions a courtroom. Do I have to report cash payments to the IRS?
- Genuinely free work is not free of risk either. If you did it in your professional capacity and it fails, the duty of care is still yours, and materials you bought and gave away are a gift, not a business expense, so do not run them through the books as one. Ask your CPA before you assume otherwise.
The line in one sentence: if the job is big enough that a stranger would sign a contract, your friend should too.
The problems that always come up
- Blurry expectations. Because it is "informal", nobody writes down what is included, what is not, or how changes are handled. That is how you end up adding work without pay, or them expecting a showroom finish on a favor budget.
- The awkward money conversation. They expected a big discount. You were counting on a proper rate. Nobody wants to be the one to say it, so it gets said badly, later, when the invoice arrives.
- Jobs that drag. Because it is your friend's place it gets pushed to evenings and weekends, always bumped for "real" customers. They get frustrated it is taking so long. You are exhausted fitting it around paid work. Everyone resents everyone.
- The fallout when it goes wrong. A callback on a paid job is a Tuesday. A callback on your sister's kitchen is Thanksgiving.
- The free estimate that was really a design. Two hours of measuring and a full material list for a "quick look", handed to whichever contractor quotes cheapest. Should I charge for estimates? applies to friends too.
How experienced trades handle it
The people who stay sane have simple rules decided in advance, so no individual request is a negotiation.
"Materials at cost, labor at full rate." You pass on your trade price for materials and charge your normal labor rate. It stops you working for nothing and still feels like a favor, because it is one.
"I don't do friends' rates. I do friends' service." Same price as any customer, but you prioritize them in the calendar where you can and throw in a small extra: replace a fixture, fix a latch, hang the mirror.
"One favor, then you're a customer." Maybe you help a close friend or immediate family once as a genuine favor. After that, a normal quote and normal terms.
Decide who counts. Parents, siblings, one or two close friends: maybe. Someone from high school you have not spoken to in five years, and friends of friends: customers, at full rate or not at all.
The rules, so you do not get taken
- Decide who counts as family before anyone asks. Then the answer is a rule, not a judgment on the person.
- Materials at cost, labor at full rate. "I'll look after you on materials, but my labor has to be at my normal rate or I end up working for free."
- Always write something down, even for family. A one-page quote or a text: what you are doing, what you are not, and what they are paying. "Because it's you, I'm doing this for $X instead of $Y, and here's what that includes." That kills most of the "but I thought you were also doing" arguments. The Contract Must-Haves Checklist and the What Is NOT Included: Exclusions List work exactly the same for a friend.
- Take the deposit and use change orders. Treat their job exactly like any other: a deposit where your state allows it, a signed change order for extras. The jobs for people you know are the ones most likely to go informal and end in a strained relationship over money nobody wrote down. Your first jobs and your first 90 days on your own says the same thing for a reason.
- No line-jumping over paying customers. "I'll fit you in around existing bookings; I can't bump paying customers." If they push on that, it is a red flag.
- You can say no. "I'm tight on time and need to focus on full-rate work right now, and I don't want to start something I can't give my full attention to." You are not being greedy by protecting the thing that pays your mortgage.
The Friends and Family Rates: What to Say template is the wording for each of those, so you are not composing it under pressure in a group chat.
Lines worth remembering
- If a friend genuinely values you, they will offer to pay properly without being asked.
- Discount your price if you must; never your standards. If they want it cheap and perfect, that is not a favor, that is taking advantage.
- One favor per person. After that, they go in the customer pile.
- If a stranger would sign a contract for this job, so should your friend.
- If your stomach drops when the "quick favor" message arrives, that is the answer.
Where to go next in this section
- Your first quote: how not to undersell yourself on day one (15.9), the rate the favor is measured against.
- When things go wrong on your first jobs (15.14), because the informal job is the one that gets there.
- The money reality: what you will actually take home (15.6), the reason a discount is bigger than it looks.
- Building a reputation from zero (15.13), where the first friends-and-family jobs fit, done properly.
- The trades nobody talks about (15.16), the next group in this section.
Common questions
Should I give friends and family a discount on my work?
Decide the rule in advance rather than job by job. The most common one that works is materials at your cost and labor at your full rate, which is a real favor without working for nothing, or "friends' service" at the normal price with priority in the calendar and a small extra thrown in. Whatever you pick, remember a discount comes off the profit line, because the costs underneath your rate do not care who the customer is.
Do I need a contract for work I do for family?
If the job is big enough that a stranger would sign a contract, yes. Many states require a written contract for residential work above a small dollar amount, the implied warranty and the liability clocks run the same for a relative, your lien rights depend on the paperwork, and the license threshold applies whoever the customer is. At minimum, send a one-page quote or a text that says what you are doing, what you are not, and what they are paying.
Do I have to report cash from jobs for friends?
Yes. Every dollar you take in for work is taxable income whether it came from a friend, in cash, or with no 1099. There is no friends-and-family exception and no minimum. Construction is one of the industries the IRS watches hardest for unreported cash, and the difference between an honest mistake and a deliberate one is a 20 percent penalty against a 75 percent one, so report it and deduct the materials like any other job.
Can I be sued by a friend over work I did for free?
Yes, if you did it in your professional capacity and it fails. The implied warranty of workmanlike quality and the duty of care attach to the work, not to the invoice, and a friend can sue exactly as a customer can. Free work also does not make the materials a business expense; what you bought and gave away is a gift. If it is more than a small favor, put it in writing and price it, even at a discount.
How do I say no to a friend who wants free work?
Give the reason as a rule about your business, not a judgment about them: "I'm tight on time and need to focus on full-rate work right now, and I don't want to start something I can't give my full attention to." Offer what you can instead, a recommendation, an hour of advice, materials at your cost with labor at your rate. If your stomach dropped when the message arrived, that was the answer, and a friend who values you will hear it.
The honest bit
- There are no "average loss to friends' rates" figures in this guide. The arithmetic on the rate stack is the point, and it is worse than any survey.
- Written-contract rules, deposit caps, license thresholds and lien notice requirements are all set by your state. Check Working in Your State.
- The tax penalties (20 percent accuracy-related, 75 percent civil fraud) and the $25 in-home cancellation threshold are 2026 federal figures. Verify at irs.gov and ftc.gov.
- This is general guidance, not legal, tax or relationship advice.
Know someone who needs this?
Keep reading
Templates you might need
Was this guide useful?
Didn't find what you were looking for?
Spotted something wrong or out of date? Email us at hello@kilnguides.co.uk.
In crisis? 988 Suicide & Crisis Lifeline 988 ·