Advertise here    

QuickBooks Forums      

Go Back   QuickBooks Forums > QuickBooks Software Support > QuickBooks Online Forum

Reply
 
Thread Tools Rate Thread Display Modes
  #1  
Old 05-12-2017, 12:33 PM
JohnnyBeGood JohnnyBeGood is offline
Registered User
 
Join Date: May 2017
Posts: 5
Quickbooks Online - how to track subcontractors time

Hi,

Right now I have self employed version and after doing my research it looks like I have to upgrade to QB Online. I now have subcontractors that do work for me because I can't keep up with the work load.
When I contacted support they said subcontractors cannot use mobile phones to enter time only computer. Can someone please conform this, I'm finding it hard to believe and I can't find any screenshots how this looks like?

Thanks!
Reply With Quote
  #2  
Old 05-13-2017, 05:13 AM
Rustler Rustler is offline
Registered User
 
Join Date: Feb 2008
Location: Texas - The Republic
Posts: 2,365
I can not answer your question, sorry

But a sub contractor is in business for himself, he has expenses and income, and he needs to invoice you his client. That invoice is part of the audit trail to support his being an independent contractor.

Look at the attachment, in an audit one key thing is the appearance of your controlling his work, note appearance is the issue.
Attached Files
File Type: pdf IC-or-empoy.pdf (31.6 KB, 5 views)
Reply With Quote
  #3  
Old 05-14-2017, 08:30 PM
JohnnyBeGood JohnnyBeGood is offline
Registered User
 
Join Date: May 2017
Posts: 5
Quote:
Originally Posted by Rustler View Post
I can not answer your question, sorry

But a sub contractor is in business for himself, he has expenses and income, and he needs to invoice you his client. That invoice is part of the audit trail to support his being an independent contractor.

Look at the attachment, in an audit one key thing is the appearance of your controlling his work, note appearance is the issue.
Thank you. That helps!
Reply With Quote
  #4  
Old 05-15-2017, 02:23 PM
Froid Froid is offline
Registered User
 
Join Date: Feb 2017
Location: Southern California
Posts: 116
Not knowing Johnny's business makes it difficult to give much advice. He may want the timecard labor data to build product or job costs. And maybe constructs his BOMs in this manner.

Important here to make a distinction between subcontractors and independent contractors. If you pay subs thru an agency arrangement (as in, the agency handles all the payroll taxes and gov't compliance), then the independent contractor issue never enters the equation. On the other hand, if you pay them directly from your A/P as a 1099-able recipient, the criteria Rustler alludes to will become important. Businesses can get into heaps of tax trouble if they fail to properly handle.
Reply With Quote
  #5  
Old 05-15-2017, 04:10 PM
JohnnyBeGood JohnnyBeGood is offline
Registered User
 
Join Date: May 2017
Posts: 5
Quote:
Originally Posted by Froid View Post
Not knowing Johnny's business makes it difficult to give much advice. He may want the timecard labor data to build product or job costs. And maybe constructs his BOMs in this manner.

Important here to make a distinction between subcontractors and independent contractors. If you pay subs thru an agency arrangement (as in, the agency handles all the payroll taxes and gov't compliance), then the independent contractor issue never enters the equation. On the other hand, if you pay them directly from your A/P as a 1099-able recipient, the criteria Rustler alludes to will become important. Businesses can get into heaps of tax trouble if they fail to properly handle.
Thanks for the reply!

Its a cleaning business.

I was researching difference between subcontractor vs. independent contractor and came across this website.
http://www.justanswer.com/tax/3tnoi-...ifference.html
This exactly what describes people who work for me now:

Basically, an independent contractor and contract labor are the same thing. An independent contractor or contract laborer is someone who works for themselves, or they are basically self-employed. They perform their services for a variety of people and set their own fees and schedules, rather than working for a set salary and a set amount of hours as would be the case with an employee. An example of an independent contractor would be someone who performs HVAC repairs for homeowners or businesses. The person who hires an independent contractor or contract laborer does not withhold any taxes from the fees paid for their services, and the contractor is responsible for paying those on his own throughout the year.

So my question needs to be changed from
"how to track subcontractors time" into "how to track independent contractor time"
Reply With Quote
  #6  
Old 05-20-2017, 06:31 AM
Rustler Rustler is offline
Registered User
 
Join Date: Feb 2008
Location: Texas - The Republic
Posts: 2,365
Quote:
Originally Posted by JohnnyBeGood View Post
So my question needs to be changed from
"how to track subcontractors time" into "how to track independent contractor time"
And that goes back to what I said to start with. You might want to track it informally to insure you are not being overcharged (do that outside of QB), but the contractor is responsible for tracking and invoicing you his client.
Reply With Quote
  #7  
Old 05-22-2017, 10:38 AM
uniz uniz is offline
Registered User
 
Join Date: Oct 2013
Posts: 143
Quote:
Originally Posted by JohnnyBeGood View Post
Thanks for the reply!

Its a cleaning business.

I was researching difference between subcontractor vs. independent contractor and came across this website.
http://www.justanswer.com/tax/3tnoi-...ifference.html
This exactly what describes people who work for me now:

Basically, an independent contractor and contract labor are the same thing. An independent contractor or contract laborer is someone who works for themselves, or they are basically self-employed. They perform their services for a variety of people and set their own fees and schedules, rather than working for a set salary and a set amount of hours as would be the case with an employee. An example of an independent contractor would be someone who performs HVAC repairs for homeowners or businesses. The person who hires an independent contractor or contract laborer does not withhold any taxes from the fees paid for their services, and the contractor is responsible for paying those on his own throughout the year.

So my question needs to be changed from
"how to track subcontractors time" into "how to track independent contractor time"
still don't see the difference between subcontractor and independent contractor as far as accounting standpoint.
Reply With Quote
  #8  
Old 05-22-2017, 11:18 AM
BooksInVA BooksInVA is offline
Registered User
 
Join Date: Jan 2017
Posts: 56
I don't think there is a difference between subcontractor and independent contractor. The usual discussion is about independent contractors vs employees (WAY too many small business people treat workers like ICs when they should be employees).
Reply With Quote
  #9  
Old 05-22-2017, 11:54 AM
Froid Froid is offline
Registered User
 
Join Date: Feb 2017
Location: Southern California
Posts: 116
Interesting topic

At my office facility - with our 120+ workforce - we use a cleaning service. They come in after hours to perform their usual routine. We essentially "sub-out" this work, rather than use an employee to clean the 10,000 sq ft place. Basically we use a sub-contractor.

If we brought somebody in to handle office work, we might use an agency to supply that person. Another example of a sub-contractor - with payroll taxes, worker's comp, insurance, and whatever benefits paid by the agency. The line gets blurred when you bring somebody in from "off the street," who will do those same tasks. Blurred because the independent contractor relationship becomes problematic, once you provide guidance, policy, procedures, rules, etc. for that person to follow; as opposed to us throwing that person in a cubicle to work on a project and we just say "go for it."

My recollection is that the IRS views this as paying under-the-table, in an effort to skirt taxes. My advice is to tread carefully on this, because the IRS can force you to pay social security taxes AND that person's withholding income taxes. Plus penalties. It sounds odd to me that a cleaning outfit would utilize independent contractors for this unskilled labor.
Reply With Quote
  #10  
Old 05-22-2017, 12:07 PM
BooksInVA BooksInVA is offline
Registered User
 
Join Date: Jan 2017
Posts: 56
Those are good examples.

I still think there isn't much of a real issue of subcontractor vs independent contractor, it is more semantics. Both are legitimate non-employees who should not be on payroll and will usually get a 1099 (if applicable).

The real issue here, which you eluded to, is IC vs employee. The IRS is relatively clear about what an IC is. Unless someone has real, genuine evidence showing a worker is an IC, they should probably be an employee. (They are an actual company, not just an individual, they work for others too, not just you, they set their hours, how they do things, use their own supplies, etc.)

Given this is a brand new small business barely growing to the point of their first workers, this is a real concern and easy trap (especially when they hear from others who got away with it that this is how it's done).
Reply With Quote
  #11  
Old 05-23-2017, 12:13 AM
JohnnyBeGood JohnnyBeGood is offline
Registered User
 
Join Date: May 2017
Posts: 5
Quote:
Originally Posted by BooksInVA View Post
Those are good examples.

I still think there isn't much of a real issue of subcontractor vs independent contractor, it is more semantics. Both are legitimate non-employees who should not be on payroll and will usually get a 1099 (if applicable).

The real issue here, which you eluded to, is IC vs employee. The IRS is relatively clear about what an IC is. Unless someone has real, genuine evidence showing a worker is an IC, they should probably be an employee. (They are an actual company, not just an individual, they work for others too, not just you, they set their hours, how they do things, use their own supplies, etc.)

Given this is a brand new small business barely growing to the point of their first workers, this is a real concern and easy trap (especially when they hear from others who got away with it that this is how it's done).
This pretty much sums it up.

I just don't see how in IRS eyes this would be a problem especially with 1099?
I was hoping that QB can tie in hours that IC worked into an invoice and everything will be squared away or I'm missing something here?
Reply With Quote
  #12  
Old 05-23-2017, 09:43 AM
BooksInVA BooksInVA is offline
Registered User
 
Join Date: Jan 2017
Posts: 56
Invoice to your customer? Your IC should bill you. On that bill you can make the hours billable to your Customer:Job and then bill your customer with those billable hours (in addition to other charges). Is that what you are asking?
Reply With Quote
  #13  
Old 05-23-2017, 11:19 AM
Froid Froid is offline
Registered User
 
Join Date: Feb 2017
Location: Southern California
Posts: 116
Quote:
Originally Posted by JohnnyBeGood View Post
This pretty much sums it up.

I just don't see how in IRS eyes this would be a problem especially with 1099?
I was hoping that QB can tie in hours that IC worked into an invoice and everything will be squared away or I'm missing something here?
Well, this is a QuickBooks program forum, not a legal forum. Again, get some real HR legal advice from an expert.
Your arrangement will most likely work with most any number of IC's that work 8 hrs per week for you. But all bets are off with thirty IC's working 30+ hrs per week on your behalf. All sorts of tax and insurance compliance issues come into play, like State unemployment, the ACA, worker's comp, etc. And if they knock on your door three years into your IC (instead of employee) setup, it can get really messy.
Reply With Quote
  #14  
Old 05-23-2017, 11:33 AM
BooksInVA BooksInVA is offline
Registered User
 
Join Date: Jan 2017
Posts: 56
Not if these are legitimate ICs. You can have a bunch of ICs working for you a lot, that doesn't make them employees.

I always go back to the example of a general contractor building a house. He may have his own guys (employees), or he may pay other people and companies (ICs). If he tells a plumber to do it, and the plumber brings his tools at a time that works for him and doesn't need training, he is an IC. If the general contractor's guy walks over there with the general contractor's tools after being trained by the general contractor, he is an employee. I can build a house with all ICs and never touch it myself. I can provide them with so much work that they don't do other jobs anymore, but they are still ICs.

For this thread, the big question is still the same, whether these are legitimate ICs or employees. If they are working for competitors and/or themselves, already trained, have their own supplies, etc., then they are ICs. If this is an all-to-frequent case of small business owner simply calling their workers ICs, then there is a real problem that will probably come back to haunt them (usually about the time they owe too much to pay and the IRS takes their house because an LLC doesn't protect your personal assets from business tax debts).
Reply With Quote
  #15  
Old 05-23-2017, 11:48 AM
Froid Froid is offline
Registered User
 
Join Date: Feb 2017
Location: Southern California
Posts: 116
Quote:
Originally Posted by BooksInVA View Post
...................
I always go back to the example of a general contractor building a house. He may have his own guys (employees), or he may pay other people and companies (ICs). If he tells a plumber to do it, and the plumber brings his tools at a time that works for him and doesn't need training, he is an IC. If the general contractor's guy walks over there with the general contractor's tools after being trained by the general contractor, he is an employee. I can build a house with all ICs and never touch it myself. I can provide them with so much work that they don't do other jobs anymore, but they are still ICs.
............
I think it's far easier to make skilled tradesmen IC's than making janitorial help one. So that example does not work in this scenario. That same GC can get into trouble paying an unskilled "IC" - who performs gopher duties like hauling, cleanup, demolition, etc. - 40 hrs per week for several years, thinking he can issue an annual 1099 and be done with it. He may never get caught, but who wants to imperil their livelihood? I know I wouldn't do it.
Reply With Quote
Reply

Bookmarks
Bookmark and Share
Thread Tools
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT -5. The time now is 09:09 PM.


 

Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
All contents copyright (c) by AccountingUsers Inc.