CIS guide in QuickBooks

CIS (The Construction Industry Scheme) is a scheme set up by HM Revenue and Customs (HMRC) to collect tax from people working in the construction industry. Businesses using the scheme need to deduct money from subcontractors' payments, which then go to HMRC as part of their tax and National Insurance obligations.

Contractors are responsible for calculating and deducting the payments owed to HMRC on behalf of a subcontractor. When you turn on CIS in QuickBooks, we use the information you give us to calculate the CIS withheld.

Before you can turn on and use CIS in QuickBooks Online, make sure you sign up for the scheme on the HMRC website.

Not sure where to begin? Here's a quick checklist with links to our help articles to get you started.

Step 1. Turn on CIS

This will allow QuickBooks to calculate your CIS deductions, track CIS withheld or suffered, and create reports for HMRC. Here's how to turn on CIS in QuickBooks.

Step 2. Add a contractor or subcontractor

Learn how to add contractors and subcontractors, as well as make changes to their employee details.

Step 3. Create CIS transactions

Make sure to record payments you make to contractors and subcontractors, as well as the payments you receive from them.

Step 4. Submit a CIS return to HMRC

Next, it's time to submit a CIS return to tell HMRC about any payments that you've made to your contractors or subcontractors.

Step 5. Record CIS payments made to HMRC

Remember to record any payments you make to HMRC after you submit a return. This will show in your reports that you've paid taxes owed to HMRC and allows you to match and categorise transactions in QuickBooks so that your books balance at the end of the year.

Step 6. Run CIS reports

Time to run your reports. There are three reports available for CIS in QuickBooks: CIS Contractor Monthly Statement (300), CIS Payment and Deduction statement and the CIS Suffered Summary. Here's how you can access and run CIS reports in QuickBooks.

Step 7. Record deductions suffered

This is a breakdown of CIS deductions paid to HMRC. Follow these steps to record deductions suffered in your QuickBooks.

Step 8. Unfile CIS return

If you need to, here's how you can unfile a CIS return.

In QuickBooks Sole Trader, Construction Industry Scheme (CIS) is tailored specifically for Subcontractors. We’ll outline the essential steps to configure CIS in QuickBooks Sole Trader.

1. Turn on CIS

When you enable CIS, QuickBooks Sole Trader will automatically calculate your CIS deductions and keep track of CIS withheld or suffered. CIS enabled accounts will also be added to your chart of accounts. 

2. Establish a base deduction

Next, establish ‌the base deduction rate that will apply to the subcontractor’s transactions. This rate is crucial for accurate financial tracking and compliance.

3. Identify contractor among customer

Keep a record of which customers are contractors. This identification helps in managing transactions and compliance more efficiently.

4. Automate invoice deductions

In invoices, the amount deducted will be automatically calculated based on your settings. However, you can still make changes to this amount if needed.

5. Run deduction reports

QuickBooks Sole Trader offers one report for CIS: the CIS Suffered Summary. This report provides detailed information about the tax deducted or withheld. It's an essential tool for tax preparation.