Bookkeeping for contractors, trades, and small businesses in Utah.

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How do I track subcontractors in QuickBooks?

Start by setting up each subcontractor as a vendor in QuickBooks. Go to Expenses, then Vendors, and add a new vendor for each sub you work with. Enter their legal business name exactly as it appears on their W-9, their address, and their tax identification number. Check the box that marks them as a 1099 contractor. If you skip this step, QuickBooks won’t track their payments for 1099 reporting and you’ll be scrambling in January.

Collect W-9s before you pay anyone. This is non-negotiable. Once you’ve paid a sub and they’ve moved on to another job, getting their tax info becomes a hassle. Make the W-9 part of your onboarding process before any work starts. Keep these on file because you’ll need them if the IRS ever asks.

The real value of tracking subcontractors properly shows up in construction job costing. When you enter a bill from a sub, assign it to the specific project or job. In QuickBooks Online, use the Projects feature. In Desktop, use Jobs under the customer name or Classes. Every invoice from every sub should hit a specific job, not a general subcontractor expense account.

This discipline lets you see exactly what subs cost you on each project. If you estimated $15,000 for drywall on a job and the actual sub invoices total $18,500, you know immediately. Without job-level tracking, that $3,500 overrun gets buried in your overall expenses and you never learn from it. Worse, you keep bidding drywall too low on future jobs.

Pay subcontractors through QuickBooks rather than writing checks outside the system. When you record payments in QuickBooks, the software automatically tracks cumulative amounts paid to each vendor. At year end, run the 1099 report to see who crossed the $600 threshold and needs a form. QuickBooks can generate and e-file the 1099s directly if you have the right subscription level.

Be consistent with expense accounts. Use a dedicated account like Subcontractor Expense or break it down further by trade if you want that level of detail. Some contractors prefer a single account with the job assignment doing the heavy lifting. Others want to see electrical subs separate from plumbing subs at the account level. Either approach works as long as you stick with it.

If you’re working as a contractor bookkeeper American Fork area and managing multiple subs across several active projects, review your subcontractor costs weekly. Waiting until the job is done means you find out about budget problems after there’s nothing you can do. Weekly reviews let you adjust on future phases or at least understand your true position before the project closes out.

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More Questions

How do I prepare for tax season as a small business?

The best preparation happens year-round with accurate monthly bookkeeping. Before filing, gather income documents and 1099s, organize expense records, verify categories, and meet with your tax preparer early.

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What bookkeeping does a painting contractor need?

Painting contractors need job costing to track profitability by project, labor tracking by job, materials expense tracking, and subcontractor payment records for 1099s. Monthly reconciliation and accounts receivable management round out the essentials.

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Which accounting method is best for my small business?

Cash basis works for simple service businesses with quick payment cycles. Accrual basis is better for contractors and project-based businesses because it shows true profitability by matching income and expenses to actual work completed.

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What is job costing and why does it matter?

Job costing tracks expenses by individual project instead of lumping everything together. It matters because knowing your overall profit doesn't tell you which jobs made money and which ones lost it.

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What should I track for accurate job costing?

Track labor hours and burden, materials coded to jobs, subcontractor invoices, equipment usage, and allocated overhead. The key is capturing costs at the job level when they happen, not guessing at month-end.

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How do I manage finances for a flooring business?

Managing a flooring business financially requires job costing to track profitability by project and flooring type. Material costs, labor productivity, and cash flow management around deposits are all essential to understand.

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Utah bookkeeping firm for contractors, trades, and small businesses. We provide bookkeeping, construction job costing, payroll, and QuickBooks support. Locally owned in American Fork, serving Provo to Salt Lake City and the entire Wasatch Front.

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