Sub-Consultant / Sub-Contractor Cost
Recording the cost of an external specialist engaged to support a client project.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Sub-Consultant Cost (Engagement COGS) | Expense (+) | 8,000.00 | - |
| Accounts Payable (Sub-Consultant) | Liability (+) | - | 8,000.00 |
💡 Accountant's Note
Sub-consultant fees are a direct project cost matched to the engagement revenue. If the firm passes the cost through to the client with a markup, the gross amount is billed as revenue and the sub-consultant fee is a COGS item. Withholding tax obligations apply in Jordan.
Practitioner & Systems Framework
💻 ERP Architecture
Each sub-consultant should be set up as a vendor in the ERP with their contract terms, deliverable milestones, and payment schedule. Sub-consultant costs are accrued as the sub-consultant performs their work — do not wait for the sub-consultant's invoice before accruing. At month-end, review active sub-consultant engagements and accrue the estimated cost of work completed but not yet invoiced. Match the sub-consultant cost accrual timing to the corresponding client revenue recognition — revenue earned from the sub's output should not be recognized before the sub's cost is accrued. In Jordan, withholding tax applies to payments to non-resident sub-consultants (typically 7–10% depending on tax treaty status); the payable to the sub-consultant should be net of the WHT.
⚠️ Audit Flags
(1) WHT compliance in Jordan — for sub-consultants who are non-Jordanian entities or individuals, the payer (the firm) has an obligation to withhold and remit income tax. Failure to withhold makes the firm jointly liable for the tax. (2) Principal vs. agent assessment — if the firm controls the sub-consultant's output before it is delivered to the client, the firm is the principal and should recognize the sub's cost as COGS and the client billing as gross revenue. If the firm is merely arranging the sub's services on behalf of the client, only the margin is revenue. (3) Sub-consultant invoice matching — accounts payable to sub-consultants should be matched against approved deliverable completion records, not just invoice receipt.
📄 Required Documentation
Sub-consultant contract, deliverable completion records, sub-consultant invoices, WHT calculation and remittance records, accrued cost schedule at period-end, and principal vs. agent analysis.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.