A QuickBooks for contractors tip about issuing joint checks to a subcontractor and a lower tier subcontractor or material supplier for payment for work completed on a construction project.
Quite frequently, in the construction industry, a contractor needs to issue a joint or two-party check to a subcontractor and a lower-tier subcontractor or material supplier for work completed and/or materials delivered to the construction project’s job site.
Unlike many high-end construction accounting packages, QuickBooks doesn’t have a way to handle this automatically — or easily.
This QuickBooks for contractors tip provides what we consider to be a best practice when a situation like this arises.
Problem:
Joe’s General Contracting, Inc. needs to issue a $10,000.00 joint check to Sam Subcontractor AND O’Fallon’s Gravel for sand, gravel, and crushed rock which was delivered to a jobsite. Sam Subcontractor is one of Joe’s regular subcontractors and is already in the QuickBooks Vendor List; O’Fallon’s Gravel is not a normal supplier and is not setup in the Vendor list. Sarah, Joe’s bookkeeper isn’t sure how she should handle a joint check.
Solution:
When Sarah is ready to write the joint or two-party check, she should follow these steps:
- Edit Sam Subcontractors Vendor record in QuickBooks and in the Print on Check as field, she should add AND O’Fallon Gravel. She should also edit the Billed From Address so that it to displays Sam Subcontractor AND O’Fallon Gravel. Clicking the OK button to save her changes.
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- From the Write Checks window, select Sam Subcontractor, enter the dollar amount. In the Memo field type in Joint Check issued to Sam Subcontractor AND O’Fallon Gravel and then job cost as usual.
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- Print just this check.
- Immediately go back to Sam Subcontractors Vendor record and delete all references to O’Fallon Gravel, click OK to save the changes.
- Customize the columns to display in the Vendor Center to include the memo field.
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Make sure that you also have the proper Lien Waive and Release forms.
We hope you found this QuickBooks tip to be useful — if so please take a moment to leave a comment, share it on your favorite social media site or click the +1 button below.
Top 10 Tuesday includes our favorite tips and news stories from around the web. This week there are some important articles for you to read and information to be aware of, split out into the following categories:
QuickBooks News & Tips
- accountingWEB – June 2011 QuickBooks Technical Support Questions & Answers
- QuickBooks in the Cloud – The Cloud Lets Us Centralize the Information, Distribute the Workload
- QuickBooks and Beyond – Integrating QuickBooks with ACT! and QBSalesData
Tax News
- IRS Live – The Examination Process for Employment Tax Returns (video – requires Windows Media Player)
Construction News
- Construction Advisor Today – Should Contractors Advocate for Approval of Subcontractors Submittals?
Business, Social Networking, Customers & Websites
- The Unified Tribe – Achieve a “Grade A” Twitter Rating Using Five Easy to Follow Rules
- TechRepublic – Web Master Quick Tip: Debugging and testing
- Entrepreneur – Chris Brogan on Social Media Traps
- About.com Small Business Information – 7 Tools for Creating a Custom Facebook Welcome Page
- BusinessBlogs – Ten Tips To Take Advantage of the New LinkedIn Company Pages
Well there you have it, these were our top 10 most interesting articles that we found on the web last week – do you have an article that you’d like to share?
Have a great week!
Current and future tax law changes will make the role of your construction company’s CPA more important – not less.
This weeks Freebie Friday is an article from the Construction Financial Management Association (CFMA) about what your construction company should look for in a CPA.
Download the article by clicking here.
I hope you enjoy this article - I did!
Have a great weekend 
Change Orders are a fact of life that a contractor must deal with on just about every construction project that they are involved with.
Construction contracts start with an original bid amount for specific cost codes, phases of work, or line items. However, most construction contracts change as work proceeds; resulting in both increases and decreases or positive and negative change orders – which affect the original bid amount.
There are many ways in which people will handle Change Orders when using QuickBooks, such as just going to the original Estimate and changing the dollar amounts of the affected items. This is a “quick and easy fix”; however, it doesn’t leave a good documentation trail for what occurred on the project and can cause a lot of confusion.
Handling change orders that increase the value of the contract can be accomplished by:
- Editing the original Estimate and ADDING lines to the bottom indicating the cost codes and dollar amounts that are causing the increase.
- Creating a Sub-Job of the Job called Change Order 1 (2, 3, 4, ect.) and creating an estimate at the Sub-Job level to track just the cost codes involved in the change order.
Dealing with Negative Change Orders that reduce the original bid amount, is a bit more difficult – because QuickBooks will not allow you to create a Negative Invoice.
When you receive a negative change order that is LESS than the remaining balance on the contract, it’s a fairly easy process.
- Go to your QuickBooks Estimate, add a Change Order Item with no dollar amount – this provides a clear separation of the Original Contract amount.
- Below that add the Item that represents the reduction to the contract, enter the value as a negative amount, complete with the MINUS sign.
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When you are ready to prepare your next progress invoice:
- Bill the negative amount at 100%.
- Reduce the corresponding line item in the original contract section.
- Bill for any other line items that you need to.
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Or simply generate a zero dollar invoice to record the reduction.
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This method allows for a good documentation trail that everyone involved can easily see.
A reader wrote to ask the following question:
I have a vendor (subcontractor) whose general liability insurance expired. In QuickBooks I was able to produce a check for them. How do I QuickBooks to notify me that their insurance has expired?
Answer:
Unlike some of the more costly construction specific software programs out there, QuickBooks wasn’t designed to prevent us from generating a check to a Vendor/Subcontractor whose General Liability or Worker’s Compensation insurance has expired.
The QuickBooks Premier (or Enterprise) Contractor edition does have a “section” in the Additional Info tab of the Vendor Record where you can enter an expiration date for both Worker’s Comp and General Liability insurance – and if you enter dates in these fields you will get a warning when using a vendor whose insurance has expired – however, it will not prevent you from writing the check, entering the bill, or creating a purchase order.
In other versions of QuickBooks Pro, Premier, or Enterprise; you can create “Custom Fields” to use in the Vendor record – but they will not produce even a warning.
There are several things that you can do – but none of them will automatically “warn” you before the Subcontractors insurance does expire OR prevent you from writing them a check after it has expired.
One thing that you can do is have your Vendors/Subcontractors request a Certificate of Insurance from their insurance company, listing you as a Certificate Holder. That way you receive a Certificate showing the policy period AND you would also be notified if the coverage was canceled or if it expired.
Even having access to this information directly from the Vendors insurance agent isn’t enough if you don’t have a policy and/or procedure in place for tracking this.
While QuickBooks won’t do anything automatically for you, it will provide you with tools (date tracking, report generation, letter creation, Reminders, and To Do Notes) to implement a good system for tracking this information.
Request our FREE eBook – “QuickBooks Tips & Techniques – Setting Up & Tracking Subcontractors Worker’s Comp Insurance”.
This FREE 13-page eBook will provide you with complete instructions for setting up and maintaining a system for tracking expiration dates of Subcontractors Worker’s Comp AND General Liability Insurance.
