To track payments and expenses correctly, be sure to create separate service
items for subcontracted work vs. work performed by an owner (or partner).
Service items for subcontractors
When you use service items for subcontractors, QuickBooks records expenses
and income for the work in separate accounts. You can use such items on both
purchase forms and sales forms. You can also create reports that show the
profitability of subcontracted work to your business.
Note: If you send 1099-MISC forms to subcontractors, assign the cost
of the service item to an expense account that tracks payments to 1099
Service items for owners or partners
If you pay owners (or partners) for time worked, you need a service item
that records the cost of the work as a draw against equity, rather than an
To do this task
Go to the Lists menu and click Item List.
Click Item at the bottom of the list and click New.
Click the Type drop-down arrow and then click Service.
Important: You cannot change a service item to another item type.
Enter an item name or number.
What you enter here appears on the drop-down list of items when you are
filling out a sales form or purchase order. Enter a name or number that will
help you distinguish this item from all the others on the list.
If this item is a subitem of an existing service item, select the
Subitem of checkbox and specify the parent item's name. See
Select the This service is used in assemblies or is performed by a subcontractor or
Fill in the Purchase Information
Fill in the Sales Information
Click Custom Fields to fill in any custom
fields that apply to this item.
Tracking work performed by
Setting up to report
payments to 1099 vendors