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DelkhushK
April 9, 2021
Question

How do I record payments made to a subcontractor?

  • April 9, 2021
  • 1 reply
  • 0 views

My employer takes his share of commission for the job and pays the remaining figure to the subcontractor. The GST is paid by my employer and the subcontractor each by their share of the amount.

 

For example: Total cost of the project inclusive of GST is $570. The subcontractor is paid 75% = $427.50 + $21.38 = $448.88. I am wondering how this must be recorded in Quickbooks. 

 

There are also times where the subcontractor may collect the payment directly from the customer and pay my employer back the 25% share. How must that be recorded too?

1 reply

L
LauraAB
April 9, 2021

Hi there DelkhushK,

 

Thanks for taking a moment to explain the situation for what you're looking to enter into QuickBooks. I see you've chosen QuickBooks Desktop and QuickBooks Online for your post. While I'm not sure which you're using because of that, I can still give you some direction for working with this kind of information in QuickBooks in general.

 

QuickBooks Desktop and QuickBooks Online both handle subcontractor transactions in the same way: through vendors/suppliers, which give you the option to track for T4As or T5018s as needed. I recommend reviewing the following two articles if you haven't done so already.

Knowing that subcontractors are set up in this way, that means you can record payments to them as expenses, bills, or cheques as needed. When it comes to receiving money from the subcontractor, that would need to be shown as money into the program, which can be done via transactions like sales receipts, invoices, and even deposits.

 

If you're going to use sales transactions, the program will want you to set up the subcontractor as a customer as well. To do this, you'll need to alter the name slightly in the books since the same name can only be used once. For QuickBooks Online, you can use the Display name as field on a customer profile to note the difference, such as by putting the subcontractor's name and then "customer profile" in brackets or something of that nature. This is for organizational purposes in the program so it knows where to allocate transactions to keep things organized. For QuickBooks Desktop, you can use the Customer name field at the top of the customer profile.

 

To determine if what I've described is the best method for your books or if there's some other way you should be recording these transactions, I recommend consulting an accountant. Accountants have the training to know how these kinds of transactions should be hitting your books, so they'll be able to guide you on the right course.

 

For QuickBooks Online, the My Accountant tab is useful for connecting with an accountant as you can invite an accountant to be a user on your account there or you have access to the Find a pro to help button to research our accountant list. For QuickBooks Desktop, the process is a bit different. Accountants use something called an Accountant's Copy of the company file to work with you. If you're in need of an accountant, here's where you can access that same list I just mentioned: Find an Accountant

 

This should help you get back on track. I hope you enjoy your weekend.

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