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Paycheck Mistakenly Issued to Subcontractor in QuickBooks

How to Correct an Erroneously Issued QuickBooks Paycheck

A reader wrote to ask for help. A new subcontractor was inadvertently set up as an employee in QuickBooks, and a paycheck was issued. The subcontractor cashed the check and then called to say that the amount was too low (because of the withholding). The reader wanted to know how to fix the situation.

This requires a few steps. First, you must create the subcontractor as a QuickBooks vendor, but the name already exists as an employee. Edit the employee record so the employee name is different (e.g. add the letter X to the beginning of the name), and make the employee inactive. Now you can create the subcontractor as a vendor (and set up the vendor record for 1099 reporting, if applicable).

Void the paycheck in QuickBooks, which also removes the liabilities attached to the paycheck. Then create a check to the vendor for the same amount (since the check was cashed). Finally, create another check for the additional money you owe the vendor.

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