Paying Contractor in Cash?

[Timothy Peck]

Hello.  I am doing some excavation work and the contractor has requested to be paid in cash (two payments totaling $7300).  It is a small town and I know him so although there is some concern that I will be left with an incomplete job and out the cash, my bigger concern is being able to prove the expense if audited.

He mentioned that he has a contract for me (and him) to sign and I will of course request and invoice but should I also cover myself by creating additional paperwork to be signed?  If so, what would that be?

Any advice would be greatly appreciated.