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Tracking Subcontractor Rates in QuickBooks

How to Track Subcontractor Rates in QuickBooks

A reader explained that he had many subcontractors, and each contractor has an hourly rate. He wanted to know how to track the rates easily, and would really like the correct rate to come up automatically when he's writing checks in QuickBooks.

If you need the correct rate to appear automatically, you have to use QuickBooks Items instead of posting the check to an expense account. Set up a Service Item for each contractor. Actually, it's best to create a Service Item named Subcontractors and make each subcontractor's rate a subitem (e.g. Smith, Jones, etc), so they appear contiguously in the drop-down list when you write a check. Otherwise, you have to search for each name alphabetically in your Items list. Make sure the item is linked to the expense account you use for 1099 reporting (usually "Subcontractors" or "Outside Services").

Another method is to rename the contractor to include the rate, such as Smith-50 if subcontractor Smith charges you $50.00/hour. Remember that vendor names don't have to be the Payee name, because QuickBooks lets you specify the Payee name in the vendor record (use the Print On Check As field on the Address Info tab). While this doesn't automatically enter the rate in the line item, it puts the data in front of you and you can easily fill out the check using the Accounts tab instead of moving to the Items tab. This is useful if you sometimes pay the subcontractor for hours (reported on the 1099) and also reimburse the contractor for materials (which is posted to the appropriate expense using the Accounts tab).

 

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