When you work as a contractor, you're constantly in danger of being stiffed by the clients you work for, whether it's a family who want you to build them a new horse barn in or a high end party planner looking for you to cater her next big soiree. As a result, most savvy contractors will refuse to work with you unless you put down a deposit as a show of good faith. Because there are contractors out there who are just as flaky as bad clients, you should be careful as well when giving the required deposit.

Before you hand over any money at all, you contractor should give you a schedule of what the job is expected to cost. Now, no contractor is psychic, so it's impossible to say exactly what the cost will be, but the estimate shouldn't be too obviously rounded up or down. Any competent, professional deck builder should be able to do this, and anyone who refuses to give an estimate before you pay your deposit should be investigated closely and checked out at the BBB.

Deposits vary in size because there is no hard and fast rule about them. They may charge half up front because they don't have enough capital to cover the cost of ingredients for the food up front while another bigger company may ask for only 10% of the job value or a hundred dollars or so as a sign that you are serious about hiring them. If the deposit seems to high to you, you can ask if they are able to work out a payment plan with you or if you can offer another kind of proof that you are serious.

It's important to find out whether or not your deposit is refundable or not. For short notice jobs and special deals, the deposit is likely nonrefundable, with some keeping the money to compensate them for their lost business if you back out. Other companies may have a set date before which you can get all or part of your deposit back if you want to cancel. Each company will have its own rules, so examine your contract with them carefully.

In a situation where a company is renting you equipment, deposits are also required as insurance against any potential damage you may cause while you are using it. Air conditioning companies will charge a deposit to rent their machines, as will rental car companies, kayak and canoe rental outfits, tool rental shops, bike renters, and landlords who are renting you apartments. In this case, you get your deposit back in full when the item is returned undamaged. If there is damage, all or part of the deposit may be forfeit.