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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4670
Experience:  35 years tax experience, including four years at a Big 4 firm.
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I have a question about my company taxes, we use QuickBooks

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Hi, I have a question about my company taxes, we use QuickBooks Online, I have a lot of subcontractors in my Construction company, so I pay them weekly, half in check and half in cash, per example, 200 in check and 200 in cash, weekly, in total is 400 weekly , it’s around 1,600 monthly and 19,200 yearly, but.. what’s is the best way to keep those records of payment in the best way... ?I will appreciate your help.

Hi from Just Answer. I'm PDtax, and can assist.

The cash payments are deductible, but it's your source of cash that is likely going to be the issue. And you know your subs aren't likely going to want the cash paid to them as part of their 1099.

If you use QuickBooks to record these payments, it's as if they got a check from you.

That's why most contractors who pay in cash don't record these payments in their accounting records they send to the tax preparer.

Most would keep a separate record of the cash paid, even going so far as to have the sub initial something to acknowledge receipt of there cash paid.

On your end, the cash paid is deductible, but the cash deposit side typically had to be added to your draw account or income in QB. Which creates a record in the software you won't want.

Owner draw records are audit targets. Single deposits to your draw can be explained, but regular deposits with corresponding payments out to subs is an IRS auditor's dream.

Thanks for asking at just answer. Positive feedback is appreciated. I'm PDtax.

Customer: replied 25 days ago.
Thanks for you answer, i have the last question...What would be your recommendation for me and my S. Corp, Only owner.Is better if I use QuickBooks for myself company or is better with a professional accounting if I keep doing it the following way ...The companies that hire my company, pay me with checks, they give me at the end of the year a 1099, per year I use about 100 temporary sub-workers, who at the end of the year have to give each one a 1099, and each week I pay them an average of US $ 500.00 in checks, of the same account that I receive payment of the companies that hire me, but additional I pay them $ 250, and each of them sign me a document that received that cash for my record keeping and add those 250 weekly also to 1099 of them, I withdraw that cash from the same bank account for that purpose, it's because they need that cash for their work expenses.

Then you can use QB and record those can payments as expense reimbursements if you do not include the cash in their 1099s. If you include the amounts in their 1099s then there is no issue.

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Customer: replied 25 days ago.
Thanks so much