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Subcontractors Part 3: Tracking Subcontractors' Time
Many contractors track their subcontractors' time themselves in QuickBooks Pro, Premier, and Enterprise editions to utilize job costing and get accurate reports. If instead of letting your subcontractors submit invoices you track their time yourself, you can gain greater control over your projects. You may discover that the benefits outweigh the costs in extra administrative work.
The 30,000-foot View
This third article in our four-part series on subcontractors explains how — and why — to track time for subcontractors. To track subcontractors' time you enter their hours into the weekly timesheet. Or optionally ask them to use the QuickBooks Timer program and send you the exported hours. To pay the subcontractor you automatically transfer the hours to a check or bill. To pass on charges to your customers, QuickBooks lets you transfer the same hours to an invoice.
Just follow these four steps:
Step 2 - Enter weekly timesheets
Step 3 - Pay subcontractors for their time
Step 4 - Charge customers for subcontractors' billable time
Note: This article explains how to track subcontractors' time yourself. Many contractors ask subcontractors to track their own time and expenses. The subcontractor then submits a complete invoice, a subject covered in Part 2.
An example: Johnson Brothers General Contracting
As an example, consider Jerry Johnson of Johnson Brothers General Contracting LLC. To anticipate costs, Jerry wants to keep close tabs on a house renovation project. So he decides to track his subcontractors' time with QuickBooks.
Each day his subcontractors tell Jerry how many hours they worked on the project. Jerry enters the information into QuickBooks using the Weekly Timesheet. Jerry can then run daily time-related reports to keep costs in check. When it's time to pay the subcontractors, Jerry simply transfers the hours to a check or bill.
Quick Tip: Setting up subcontractors
Need to prepare QuickBooks for subcontractors? Read, "Set Up Your Subcontractors in QuickBooks."
Step 1 - Should I Track Subcontractors' Time?
When does it make sense to track subcontractor's time? When you want to:
- Run accurate time-related reports: Many contractors want to account for all the time spent on a particular job, whether for an employee, a subcontractor, or an owner. They find comprehensive time keeping boosts the accuracy of time-related QuickBooks reports. Such reporting helps when, for example, you wish to predict how shifting work from subcontractors to employees will affect your business.
- Anticipate subcontractors' costs: By asking subcontractors to regularly submit their hours for a project you can anticipate a job's costs before you receive the subcontractors' bills.
- Pay subcontractors and charge customers from the same QuickBooks time data: QuickBooks easily lets you pay subcontractors from the time you entered. Then, when you invoice your customers, these billable hours also appear on the invoice.
Quick Tip: Turn On Time Tracking
Before tracking time you must first enable it in Preferences. From the Edit menu select Preferences > Time Tracking. Then select the Company Preferences tab and click Yes for the "Do You Track Time?" option.
Step 2 - Enter Weekly Timesheets
The QuickBooks weekly timesheet lets you enter subcontractors' time in weekly chunks. Use the weekly timesheet when you want to record work done on several days or on several jobs. It's especially efficient when you wish to track multiple subcontractors working on a variety of jobs.
- From the Customers menu select Enter Time > Use Weekly Timesheet.
- Change the weekly date range by selecting Previous or Next.
- Select (or <Add New>) the subcontractor from the Name list.
- Enter the relevant Customer:Job and Service Item.
- For each day of the week that work was performed, enter the number of hours worked in the appropriate date column. Or enter the range of hours worked, such as 8-5; QuickBooks will calculate the hours automatically.
- If you plan to bill the customer for the work, click the billable symbol. (See Figure 2 for what the symbols mean.)
- Continue on additional lines, if necessary, to record time spent on other jobs or other services.
- When done select Save & Close or Save & New to continue to another subcontractor.
Quick Tip: Supply Subcontractors the QuickBooks Timer
Rather than manually entering subcontractors' time in the weekly timesheet, try the QuickBooks Timer. The Timer, which runs separately from QuickBooks, installs on the subcontractor's computer from a CD-ROM you provide. Your subcontractors use the Timer to track their time as they work. You then transfer in the information into your QuickBooks company file. For strategies press F1, choose the Index tab on the Help window and type "timer." From the topics available, select "about."
Step 3 - Pay Subcontractors for Their Time
To pay a subcontractor for their time, transfer the hours you recorded on the weekly timesheet into a check or, for later payment, a bill.
To enter the check or bill:
- Do one of the following:
- Go to the Banking menu and click Write Checks to write a check directly to the subcontractor.
- Go to the Vendors menu and click Enter Bills to enter a bill from the subcontractor.
- In the top part of the form, fill in the name of the subcontractor and the date.
- QuickBooks will prompt you to transfer the subcontractor's hours to the check or bill.
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- In the Select Time Period window select the dates that include the hours you want to transfer.
- QuickBooks prefills the Start Date to one day after the end date of the last time payment for this subcontractor. This helps you avoid paying twice for the same time worked.
- If you added any time entries for the subcontractor during the selected period, QuickBooks automatically transfers them to the Items tab of the check or bill.
- Edit the check or bill as necessary.
- When done, save the check or bill.
Note: If you've entered a bill, use the Pay Bills command on the Vendors menu to pay the bill; do not use the Write Checks command. QuickBooks writes the check for you when you use the Pay Bills command.
Step 4 - Charge Customers for Subcontractors' Billable Time
Tracking subcontractors' billable time yourself makes it easy to pass the costs on to your customers. In QuickBooks it's a simple process. You can even add a markup. (Note: Be sure to mark each time entry as billable to the customer.)
Find out more: For more help press F1 while one the Choose Billable Time and Costs window.
Follow these steps:
- From the Customers menu select Create Invoices or Enter Sales Receipt.
- Select the Customer:Job.
- Click Time/Costs on the toolbar.
- Select the Time tab.
- In the Use column, click next to each time entry you want to charge. (Optional) Click Options to customize how information from timesheets is brought into QuickBooks invoices.
- (Optional) If you want the costs you select to appear as a single line item when you print the invoice or sales receipt, select the "Print selected time and costs as one invoice item" checkbox.
- Click OK to add the costs you selected to the invoice or sales receipt.
That's all there is to it. You now know how to track your subcontractors' time and pay them for their work. Equally important, you also know how to pass along subcontractors' billable time to your customers. Next up: Part 4 looks at how to use purchase orders with subcontractors.
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