How contractors can earn from their local network without paying fees

Most established contractors already sit on a network worth money: the electrician they always call, the plumber who owes them a favour, the painter who needs work in February. Usually that network runs on goodwill, and jobs get passed along for free or lost when the contractor is too busy. Formalising it, carefully, turns work you would have declined into income and gives customers a better referral than a web search.

What are the ways a contractor can earn from referrals?

Is it legal to pay or receive a referral fee in Ontario?

Between two businesses, generally yes, as long as it is honest and nobody is misled. The rules tighten in two places. First, consumer law: under Ontario's Consumer Protection Act, a business may not make false, misleading or deceptive representations to a consumer, so presenting a paid referral as an independent recommendation is risky. The simple fix is to tell the customer you receive a referral fee.

Second, real estate: a real estate agent in Ontario cannot take a referral fee from a renovator personally. Under the Trust in Real Estate Services Act, 2002, an agent may be paid only by their own brokerage, and the Real Estate Council of Ontario (RECO) treats referral fees from service providers, renovators included, as financial benefits the agent must disclose to their client. If a realtor asks you for a fee paid directly to them, say no.

Why should a referral program never cost you money to join?

Because a payment in exchange for the right to run a business under someone else's system changes what the arrangement is in law. In Ontario, the Arthur Wishart Act regulates arrangements where a business pays for the right to sell under another company's brand and methods, and it brings disclosure duties and serious remedies. A referral or partner program that pays you, and never charges you, stays a plain commercial deal.

There is a business reason too. A program that earns from your joining fee has less reason to send you work. One that earns only when jobs happen, and shares that with you, wins only when you do.

How do I set up a referral agreement with another trade?

1. Pick partners you would send your own family to. Your reputation rides on their work.
2. Agree the basics in writing: flat fee or percentage, which jobs count, when the fee is paid, and whether it is owed if the customer cancels or disputes the work.
3. Decide who owns the customer afterwards. If the other trade gets repeat work from that customer, is a fee owed again?
4. Agree how you share customer details. Pass on a name and phone number only with the customer's permission, and keep what you receive for that job only.
5. Check licences and insurance before the first referral: the other trade's Certificate of Qualification or contractor licence where the trade is regulated, and their liability insurance.
6. Record every referral and every payment, and review the arrangement after a few months.

Do I pay tax and HST on referral income?

Referral fees are business income, so a sole proprietor reports them with the rest of the business on Form T2125 and a corporation in its own return. If you are registered for GST/HST, a referral fee you charge is generally a taxable supply on which you charge 13% HST in Ontario, and it counts toward the $30,000 small-supplier threshold if you are not yet registered. Confirm with an accountant, because the answer can depend on how the arrangement is worded.

How does the Doyo Area Partner program fit in?

Doyo's Area Partner program is one example of a partner program that costs nothing to join: partners never pay Doyo. It is for contractors, renovators, trade businesses and community connectors in York Region. A partner holds a territory of postal areas, brings pros onto Doyo with their own invite link, looks after quality there and answers customer claims first, and earns a share of Doyo's net fee on jobs.

The current shares, as published on doyo.ca, are 50% of Doyo's net fee on jobs done in the territory by pros the partner brought, 10% on other jobs in the territory, and 20% on their pros' jobs elsewhere. Doyo sets prices, takes payment, verifies every pro and decides every refund, and partners never see customers' phone numbers or emails. It is not the only way to earn from a network, and it will suit some contractors and not others; the partners page has the terms and the open territories.

See Doyo's partner territoriesSee how