If we have a subcontractor and they incurred damage on a customer job site and we as a company wanted to recoup the costs we paid directly to the customer through deductions of the subcontractor's labor costs how best would it be to accomplish recording this in QuickBooks?
We pay the 1099 subcontractor through checks cut from QuickBooks.
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Yes, exactly. That's even better. Having an 'Installer Damage' line item will look cleaner to both the installer and the customer.
Good day, @bstepp. I'd be glad to help you record this transaction in QuickBooks Desktop (QBDT).
Once you're about to write checks to your sub-contractors, you can add a deducted amount (payment to your customer) to another line item and use an Accounts Receivable (A/R) account. This will increase your A/R balance and deposit it to your bank. After that, you can create another check and use the deposited amount to pay your customer.
Here's how to create a check:
Once done, deposit the funds to your bank using the Record Deposits / Make Deposits feature. After that, create another check to pay your customer. You can add another category item to track the labor deduction and use it when writing checks.
If you need help setting up a category, I'd suggest getting in touch with your accountant. They can also provide you with guidance on the best way to record these transactions in QuickBooks.
If you have any more questions or concerns, please don't hesitate to comment below. Have a good rest of your day!
I think it makes the most sense to write a check to the contractor and include a line item for the amount withheld as a negative amount. Assign the same category to that line item that you assigned to the payment you made to the customer. That will reduce both the payment to the sub and reduce the expense that was recorded when you paid the customer.
Thanks for replying! So if I created a line item in QB called "Installer Damage" and linked it say a COG-Flooring:Flooring - Labor" account and added that line item to the subcontractor's pay for the amount of the damage, I could then afterwards cut a check to the customer in the "Write Checks" feature and then using the Items tab select the "Installer Damage" line item for the same amount?
Thanks for replying! So if I created a "Installer Damage" line item in QB and linked it to the "COG-Flooring:Flooring - Labor" account and added that deduction to the subcontractor's pay for the cost of the damage I could then afterwards use the "Write Checks" feature in QB and select the customer and use the Items tab and select that same "Installer Damage" line item for the amount deduction?
Thanks! I was having more in mind with doing a process similar to my response to Rainflurry and what he mentioned. Can you think of anything that would be off regarding approaching it that way?
Yes, exactly. That's even better. Having an 'Installer Damage' line item will look cleaner to both the installer and the customer.
Good, that makes sense to me too. Thank you Rainflurry!!
Hello, Rainflurry.
I appreciate you for always sharing your knowledge about QuickBooks. This will definitely help other users as well in the future. Please keep on posting here in the Community.
Stay safe and have a great rest of the day.
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