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fatemeh fardanesh
Level 1

The subcontractor who has taken payment in cash from a customer and kept it until I decrease the amount from his payment. how should I record this on Quickbooks online?

 
4 Comments 4
JasroV
QuickBooks Team

The subcontractor who has taken payment in cash from a customer and kept it until I decrease the amount from his payment. how should I record this on Quickbooks online?

I appreciate for sharing the details of your concern with us, @fatemeh fardanesh.

 

I'd be delighted to guide you on how to record your subcontractor payment in QuickBooks Online (QBO).

 

You'll want to record a vendor credit to take account of the cash payment from your customer to your subcontractor. This way, you'll be able to apply the credit to your bill and decrease the amount of your payment. Let me show you how.

 

  1. Go to the + New menu and select Vendor credit
  2. From the Vendor drop-down, select your subcontractor.
  3. Depending on how you record purchases with this vendor, enter the Category details or Item details.
  4. Enter the cash amount they've received from your customer from the AMOUNT column.
  5. Review the details and select Save and close.
  6. Then apply the credit to the bill to decrease his payments.

 

You can also refer to this article for the detailed process: Handle vendor credits and refunds in QuickBooks Online.

 

I'd also recommend working with your accountant for additional guidance in recording this. This way, we can ensure your accounts are well accounted for. 

 

I've also added this link that you can read for reference in seamlessly filing your contractors 1099: Create and file 1099s using QuickBooks Online.

 

In case you have any other follow-up questions about recording your contractors' payments, you can always tag me in your reply. I'll be more than happy to back you up anytime. Keep safe and have a great week ahead!

fatemeh fardanesh
Level 1

The subcontractor who has taken payment in cash from a customer and kept it until I decrease the amount from his payment. how should I record this on Quickbooks online?

But vendor credit doesn't let me to use account receivable. This money is subcontractors owe.

RoseJillB
QuickBooks Team

The subcontractor who has taken payment in cash from a customer and kept it until I decrease the amount from his payment. how should I record this on Quickbooks online?

Thanks for getting back to us, @fatemeh fardanesh. I’ll provide you with the step-by-step process about recording subcontractor payment in QuickBooks Online (QBO).

 

You’ll need to create a Journal Entry (JE) in QuickBooks Online to move the balance from Accounts Payable (AP) to Accounts Receivable (AR). But, before we do that, we have to set up a clearing account.

 

Here’s how you can set-up a clearing account:

 

  1. From the left navigation pane, select Accounting menu and click Chart of Accounts.
  2. On the Chart of Accounts tab, click the New button.
  3. Choose Bank for the Account Type. You can choose any detail type you want for your clearing account.
  4. Type in the Name for the clearing account.
  5. Click Save and Close.

 

 

By following the steps above, you’ll now be able to move money from one account to another.

 

Furthermore, after you place the amounts into the right accounts, you can then reconcile your account to ensure that every record is correct: Reconcile an account in QuickBooks Online.

 

Feel free to leave a comment if you need further assistance with subcontractors payments. I’m just one post away from assisting you. Have a great day!

fatemeh fardanesh
Level 1

The subcontractor who has taken payment in cash from a customer and kept it until I decrease the amount from his payment. how should I record this on Quickbooks online?

thank you for your response

Could you tell me what would be the journal entry with a clearing account?

our subcontractor payment is like below:

commission Exp. xxxxx

material Exp.       xxxxx

account receivable  tech               xxxxxx

account payable deposit tech         xxxxx

payroll payable                                    xxxxx

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