What is the best way to handle subcontractors?


J

John Bailey

I have a developer that I subcontract for some projects. I bill him out at a
different rate than I pay him (which is common).

I thought the way to handle this was to set up a service item for his
services that included his hourly rate in the amount I "buy" the service for
and the amount that I sell his services for. I have the account set to a
contract labor expense account. When I invoice these items for the services,
the contract labor expense account is not modified. I thought it would
automatically be charged for the units of service sold. Currently I will
need to setup a purchase order or journal entries for the contracted service.

Is there a better way to do this?
 
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C

Chris Schatte

Hi John Bailey,
Have a look at this help file:
Time and Materials dialog box: options and information
 
J

John Bailey

Okay, maybe not. How does this work with quotes? I still quote the work
even when I am subcontracting it. When you convert the quote to an invoice
it displays the items by default and they have to be deleted to use the items
from the vendor bill.

There is no way to accept a quote without converting it to an invoice which
seems to be an issue with all time and material work. Is there a way around
this with subcontractors?
 
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J

John Bailey

Wouldn't the account you use for the item be a "Cost of Goods Sold" account?
I get an error saying that it is normally an expense account. Since this is
directly related to the items being sold (the contractor's time) I thought it
would be a cogs account.
 

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