There\u2019s nothing wrong with using subcontractors when providing service for a customer \u2013 whether it\u2019s because you don\u2019t have all the skills, materials or simply lack the time. As I\u2019ve said before, be the reasons what they are, it\u2019s all about proper accounting treatment. For almost all the transactions out there there\u2019s an accounting treatment or even treatments.<\/p>\n
So when you\u2019re using subcontractors for your service, you must keep in mind two things: you\u2019re providing service for the customer and subcontractor\u2019s work is part of your service you\u2019re delivering.\u00a0<\/p>\n
When measuring your expenses, the invoices or work done by the subcontractor is your expense. As such, the service they provide, either it\u2019s some form of materials, goods or know-how, it\u2019s part of the product you\u2019re selling at the end of the day, part of what gets you your revenue at the end of the day.<\/p>\n
So when you\u2019re measuring your stage of completion or how much you\u2019ve prepared from the end-product, always consider subcontractor\u2019s work also as a part of what\u2019s already done and more so what still needs to be done. Subcontractor\u2019s work should be considered when measuring the revenue for the period (remember that stage of completion method means that revenue is recognized based on service delivered or product produced as a percentage from the complete version and not by any means with invoices; you\u2019re recognizing revenue based on how much of the service, goods or project you\u2019ve delivered or prepared and not based on how many invoices you\u2019ve submitted).<\/p>\n
Do think twice before recognizing subcontractor\u2019s invoices on prepaid future expenses accounts \u2013 have you actually received the service and are simply accounting it as a prepaid expense simply because you cannot send an invoice to your client? You\u2019re doing it all wrong then.<\/p>\n","protected":false},"excerpt":{"rendered":"
There\u2019s nothing wrong with using subcontractors when providing service for a customer \u2013 whether it\u2019s because you don\u2019t have all the skills, materials or simply lack the time. As I\u2019ve said before, be the reasons what they are, it\u2019s all about proper accounting treatment. For almost all the transactions out there there\u2019s an accounting treatment […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[],"class_list":["post-4970","post","type-post","status-publish","format-standard","hentry","category-1-11-revenue"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4970","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=4970"}],"version-history":[{"count":1,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4970\/revisions"}],"predecessor-version":[{"id":4971,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4970\/revisions\/4971"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=4970"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=4970"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=4970"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}