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english_august
Level 2

Created Employees Instead Of Contractors By Mistake

In Quickbooks Online, I created my contractors as employees by mistake. They have already been entering their time in the system for several weeks now. I am now trying to convert those employees to contractor status in the system but am not able to.

I tried the steps here: https://quickbooks.intuit.com/learn-support/en-us/set-up-contractors/change-employee-to-contractor-o... but that doesn't work because when I try to make an employee inactive I get the following error message:

 

QuickBooks Error.png

 

 

 

 

11 Comments 11
SteveChase
Community Champion

Created Employees Instead Of Contractors By Mistake

I recommend that you create a new vendor. Modify the employee name so that you know it's not a vendor. Then open up each transaction for the vendor and switch the payee drop down to the proper vendor. Unfortunately there's no batch option to switch all the names at once. When you are done you could navigate to the Vendors lists and select your vendor contractor. From there you will see a list of all the transaction to ensure you have them all listed properly. This will be important if you are using 1099-NEC filing next January to ensure they all get coded to the correct vendor.
english_august
Level 2

Created Employees Instead Of Contractors By Mistake

Also, how do I now add time for vendors? The system allows me to add time only for employees and not for vendor!

 

Rasa-LilaM
QuickBooks Team

Created Employees Instead Of Contractors By Mistake

Thanks for adding more details about your concern, english_august.


In QBO, you can create a time sheet for the vendors. However, automatic transferring of time sheet data to bills is currently unavailable. You’ll have to manually enter a check or bill to pay the suppliers.


Let me share the following articles for more insights into the Time Tracking feature. From there, you’ll find the complete steps on how to add or edit timesheets, approve time data, etc.

 

 

If you have any clarifications or other concerns, click the Reply button and post a comment. I’m more than happy to answer them for you.

english_august
Level 2

Created Employees Instead Of Contractors By Mistake

Thank you for your response. It is not clear to me if the functionality to have vendors enter timesheet is available to me in QuickBooks Plus. Do I need to add on Payroll or Time functionality?

 

Why is this so convoluted and hard? All I want to do as a small business is to allow a handful of contractors to be able to enter their time and then based on their contract rate and billing rate, populate my invoices to customers and expenses automatically. I am spending more time figuring out QuickBooks functionality than actually running my business.

 

SarahannC
Moderator

Created Employees Instead Of Contractors By Mistake

Hello there, english_august. 

 

I can see the importance of using QuickBooks functionality that helps you run your business smoothly and easier.

 

If the contractors are not part of payroll, it's okay to not have a payroll subscription. You can add them as Time tracking only user in your QuickBooks Online (QBO) account. This way, they'll be able to access timesheets. Take a look at these steps on how to do it:

 

  1. Sign in to your QuickBooks Online company.
  2. Go to the Gear icon and select Manage Users.
  3. Click the Add user button and tick on the Time tracking only.
  4. Enter the vendor's name on the search box.
  5. Click on the Next button.
  6. Enter the details needed for your vendor's access.
  7. Hit Save.

 

On the other hand, if these contractors are part of payroll, I'd still recommend following the suggestion shared by my colleague Rasa-LilaM above. You can check this article for additional insights: Turn on and set up time tracking in QuickBooks Online.

 

Please let us know if you have other concerns. Stay safe always. 

english_august
Level 2

Created Employees Instead Of Contractors By Mistake

Hi There - I don't think the solution that you outlined below will work for me. My vendors are also flagged as 1099 and it seems like vendors with 1099 tracking turned on cannot be added as time tracking users?

 

QBO-TimeTracking Users.png

 

LollyNino_C
QuickBooks Team

Created Employees Instead Of Contractors By Mistake

Welcome back to this thread, @english_august

 

I'm here to provide insights about the error message that you're getting "Vendors with 1099 tracking turned on can’t be added as time tracking users at this time."

 

You can add your vendors as Time tracking only users as long as they haven't reached the 1099 threshold ($600 in a calendar year). Otherwise, you won't be able to add them as Time tracking only users. Hence, you'll need to enter the timesheets on their behalf. 

 

As for the email, you'll need to use an alternative email or have the current one edited at accounts.intuit.com. Then, send a new invite to the desired email. This way, you'll be able to add a new time tracking the user.

 

On the other hand, if these contractors are part of payroll, I'd still recommend following the suggestion shared by my colleague Rasa-Lila above. You can check this article for additional insights: Turn on and set up time tracking in QuickBooks Online.

 

Also, you can always visit our Help articles page for reference. There, you can read some of the helpful articles that will guide you in your future tasks.

 

I appreciate your patience with this. The Community Team is always here to ensure your success with QuickBooks. Take care always.

english_august
Level 2

Created Employees Instead Of Contractors By Mistake

$600 / calendar year limit on that feature means that I cannot really add my vendors as Time tracking only users since all of my vendors will end up getting paid more than that amount/year. So that option is a no-go for me from that perspective. I don't understand the reasoning behind that limit. And if I do have to enter time sheets on their behalf, how do I do it because those vendors don't show up as a selectable option from Time > Add time pop up box (only time tracking employees show up).

 

So, is there another option for me to let my vendors directly add their time? When you say that - "On the other hand, if these contractors are part of payroll" what do you mean? Do I need to upgrade to Payroll to use this option?

 

MaryLandT
Moderator

Created Employees Instead Of Contractors By Mistake

I can provide additional information about your contractors in QuickBooks Online (QBO), english_august.

 

You're unable to enter time sheets on their behalf through QuickBooks Time since vendors with 1099 tracking can't be added for time tracking.

 

In QuickBooks Online, you can use the single time activity or weekly timesheet, and enter their hourly rate. If you need to enter multiple hourly rates, that's the time you need to sign up for the Payroll service.

 

Also, I'm adding this link to clarify things out: What's the difference between employees and independent contractors?

 

If you have more questions about tracking vendors' time using QuickBooks Time, I suggest contacting them using this link: Contact QuickBooks Time support.

 

Keep me posted if you need additional information about this by commenting below. I'll be right here to help you.

english_august
Level 2

Created Employees Instead Of Contractors By Mistake

Thank you for your patience with my questions.

I am not able to enter time sheets for my vendors even manually because vendors are not available to be selected from my time sheets menu. I see only employees there. What gives?

 

More broadly speaking, I find it incredibly frustrating that my workflow is not an outlier workflow and is pretty common for small business tech consulting companies. How have Intuit's product managers not made an attempt to make this better?

 

ReymondO
Moderator

Created Employees Instead Of Contractors By Mistake

Thanks for getting back to this thread, @english_august.

 

At the moment, vendors with 1099 tracking turned on can’t be added as time tracking users in QuickBooks. This is why you can't select them in the timesheets menu. 

 

However, you can set up a new vendor and modify its name so that you can add them as a time tracking user.

 

I can see how this option would be helpful for you and your business. Therefore, let me take note of this as a suggestion to improve your QuickBooks experience.

 

Also, our developers based the adding of features by the number of requests they received from customers like you. If you haven't sent any feedback yet, here's how you can submit it:

 

  1. Select the Gear icon at the top and click Feedback.
  2. Enter your comments or product suggestions, then select Next to submit feedback.

feedback.PNG

This request will go straight to our Product Development team where they can review it for future updates.

You can visit our Firm of the Future site. This is where we share recent happenings and future developments, such as updates to newly added features.


Please let me know if you need clarification about this, or there's anything else I can do for you. I'll be standing by for your response. 

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