For example: are you categorizing fuel as a COS or just and expense? What about your supplies etc… I have not been using a COS much in my accounting and just making everything an expense but I am starting to want to differentiate between the actual costs of delivering the service and those that just come from running a business.
How do you do it? Thanks in advance for the replies.
Steve
So this isn’t a tax question more of a how do I view expenses and income
I would think it’s how detailed do,I want to be. The bigger you get I would think the greater detail you would want
Not really a tax question per se but wanting to see what others are considering “cost of services.” I understand that things like technician labor is a cost of service, and so is soap and squeegee rubber because they fluctuate with the number of jobs done but what about vehicle fuel or the costs of an iPhone for the employee etc… those are kinda gray to me.
Here the term is COGS( cost of goods sold) as a window cleaner there are not a great deal that fits into this category, fuel for your vehicle is not a COGS unless that fuel is for a pressure washer, or some other item that will be used to complete the job.
Anything that you replace often like rubbers soap, resin are all COGS items and labor cost
Vehicle ,phone are expenses.
Wouldn’t labor be a COGS item since the labor cost is directly tied to performing the service? I was told that any expenses that go up and down with the workload are COGS and fixed items like liability insurance or rent are expenses. I’m not arguing just trying to figure it out.
Yeah labor is a COGS I miss worded the sentence.
It may be different here, but vehicle expenses are not included in COGS, but anything that you require to complete the work is a cogs that isn’t a tool or capital item(over $1000)
Thanks, that helps a lot.
Expenses like Insurance, Vehicle Breakdown, etc are going to get paid no matter if you have sales or not.
COGS is zero if you sold nothing.
If Ford sells no cars this year, they would have zero COGS.
-that may be a bad example because they would still be paying labor to make/design them.
like the profile Steve
Trick photography…
I would consider the following COGS:
Everything else I would classify as OH
I would talk to an accountant, someone who has been trained to know the difference
do you include the payroll tax burden for each laborer into that @Chris?
on a related note, did you ever figure out a method for calculating actual cost/hour per employee? that would include wages and all associated matched taxes, work comp rate, benefits etc.
i would be curious to see how you calculated that all out.
Believe it or not I have a great CPA and even they have differing opinions as what COGS is because of the complexity of different businesses and service offerings. My CPA says the rule of thumb is whatever costs go up or down with sales is a COGS, so for example every time we do a job we use disposable shoe covers; thats a COGS but our monthly subscription to Quickbooks is not because we pay the same every month no matter what. That’s why I was wondering what others in this specific industry consider COGS.
The only way to pay for everything that it costs to operate my business is from the services rendered in the field. So for me I view everything as a cos… Everything it took to sell, schedule, equip, staff, transport, track a/r, and be available as a business open for business I view as a COS.
If you consider all that as COS then what do you consider as overhead?
My answer would be a two fold answer. One answer for when I am doing business planning and projections, everything is a COS. The second answer would be for tax time, (rent, marketing, all office expense)=OH,( fuel, labor, equiptment)=COS.
I have used quick books since 2009.
Truth be told, this is closer to my frame of mind…
Caleb asked about taxes, I would count it, because it’s the whole number that gets subtracted, not their net.
Operating Expenses are the fixed labor, marketing, rent, insurance, utilities, etc…
