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What is the correct way to set up an Item as a General Contractor?

I am a Commercial General contractor.  I use subcontractors for all of the work/jobs I do. When setting up an Item for instance "Plumbing" I use Subcontractor Expense as my expense account and Construction Income for my Income account. Is there a need to set up sub accounts of both Subcontractor Expense and Construction Income for each item ie; Plumbing? Will that allow me to track each item better?

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Best answer 12-10-2018

Accepted Solutions
Established Community Backer ***

"When setting up an Item for instance "Plumbing" I use Su...

"When setting up an Item for instance "Plumbing" I use Subcontractor Expense as my expense account and Construction Income for my Income account."

That is your Service Item. This is "two Sided." This is Perfect :)

"Is there a need to set up sub accounts of both Subcontractor Expense and Construction Income for each item"

No; the point of using Items is to avoid micro-managing the accounting. Think "financial report vs Operations." You only use the level of detail for the Financial reporting as you need for your Tax forms. You use a level of Items and item Types to meet your Activity and Operational reporting, such as Estimates, Job Profit, payments to supplies for goods and services, etc.

Please see my attachments.

2 Comments
Established Community Backer ***

"When setting up an Item for instance "Plumbing" I use Su...

"When setting up an Item for instance "Plumbing" I use Subcontractor Expense as my expense account and Construction Income for my Income account."

That is your Service Item. This is "two Sided." This is Perfect :)

"Is there a need to set up sub accounts of both Subcontractor Expense and Construction Income for each item"

No; the point of using Items is to avoid micro-managing the accounting. Think "financial report vs Operations." You only use the level of detail for the Financial reporting as you need for your Tax forms. You use a level of Items and item Types to meet your Activity and Operational reporting, such as Estimates, Job Profit, payments to supplies for goods and services, etc.

Please see my attachments.

Frequent Explorer **

Re: "When setting up an Item for instance "Plumbing" I use Su...

If I use subcontractor, shouldn't the expense be assigned to COGS, not Expense?

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