Track an Owner or Partner's Time
In a small contracting or construction firm, much of the owner's or partner's time may be spent on the actual job in the form of estimating, supervising, and performing project work. However, if the organization is set up as a sole proprietorship or partnership, the owner does not collect wages like other employees, and consequently, no costs get allocated to the job, which significantly understates the job costs.
The owner or partner in your company should keep track of the time they put into each job and enter an employee paycheque to allocate the expense to the appropriate jobs. Because an owner or partner does not actually get a paycheque, you will need to complete the following steps.
To record an owner's or partner's time as a project expense:
- Create an employee record with the following adjustments:
- On the Taxes tab, enter the province tax table and deselect the option to deduct EI (this will depend on your business structure - discuss with your accountant which deductions you can deselect).
- On the Income tab,enter a reasonable hourly income rate for the owner/partner's time. You may also want to deselect the Retain Vacation option.
- If you want to track the owner’s time separately from other employees, use a different income account, or link the income to a separate expense account (on the Income tab).
- If you use Time Slips:
- Create one or more service activity records for the services the owner or partner provides to ensure you can generate reports on time spent on specific projects.
- Enter the time spent on specific activities in the time slips window.
- Record the owner's or partner's time as a project expense, as you would for any other employee (allocate hours on a time slip or allocate the expense when issuing a paycheque).
- If there are no actual payroll expenses for the owner or partner, you can post their paycheque with the allocations, then adjust the paycheque amount to zero, and repost without allocating. This will ensure project allocations remain intact, without affecting your payroll expense accounts.
- When you are ready to bill a customer for the owner's or partner's time spent on a project, create an invoice and include the number of hours for the billing period (pulled from time slips, if you use them). You can allocate the hours or amount to the project at the same time, if you have not done so already.