I don’t categorize anything as COGS, but I do separate out all expenses into their own categories, so each month’s profit and loss statement breaks down every expense category as a percentage of sales.
I would because the reasoning is you wouldnt have that expense if it was not for the job. If they didnt work that day there wouldnt be that expense.
UNLESS - you had them do some shop work or something.
Your a profit first fan I think he may touch on a similar concept or train of thought in there?
Nothing ever more sophisticated than a spreadsheet, unfortunately.I rely on them to much 
I only consider labor and supplies, however supplies is tricky to calculate. Let’s take a basic job, no hard water, etc:
Fresh stick of rubber - lasts 2-3 weeks depending on how busy we are (we don’t allow the guys to change their rubber every few days or just because they think the perfect glide is gone). Cost per stick - $2-$5? I guess y9u could say that job used up 10% of my rubber? So cost on high end would be $.50
Window cleaning soap - couple of buckets $.50 maybe?
Screen soap - couple of buckets $.40 maybe?
Booties - a penny lol
So really, I just factor labor. The rest is insignificant. I view fuel as an expense.
What your talking about is more like job costing. Your rubber, soap, booties, and other consumables would be a COGS even if you don’t break it out per job.
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think about it, cost of goods sold
if you were selling a boxed product, that complete box with product in it is the cost of the goods
what is the cost of service? (cost of goods sold)
how is a service packaged? if you pay a sub, that is a ‘packaged service’
so whatever a sub would be required to have for you, and expected to provide for himself
that includes a lot including insurance etc
it’s pretty much operations, that’s what it costs to provide the service
hope that helps
that’s one thing that’s actually not very clear in Profit First, and I’ve never been able to figure out the answer:
Mike recommends having a tax account and an operations account. when it comes to where to put the payroll tax money, it’s a little fuzzy.
-does he mean ONLY the owner’s pay tax and projected income tax on profit goes in the tax account?
-OR, that the above AND all staff payroll tax, unemployment tax etc go in the tax account (ie., every single bit of tax you’ll have to pay as both an owner and and business entity)?
-OR, or does the payroll tax etc associated with staff stay in the operations account since those particular taxes are considered an operating expense?
you’re a disciplined man, just put a postdated line item at the bottom of the checking account register (quickbooks or whatever) for the amount that needs to be in there
saves a lot of separate accounts hassle for sure and the net cash in bank shows up as the last line item after how ever many post dated line items you want to put
using a PEO service sure saves on all that mess too since its pay as you go every pay period, very very efficient
all the stuff about tax accounts etc can be helpful for those that see money and want to spend it, since so many get into trouble by doing their own payroll and not sending in the payroll taxes
owners pay on paycheck would be included in however one sets it up
distributions would go to personal taxes and ideally on the personal side those taxes are set aside within the personal framework
Put your whole payroll burden into a payroll account.
Payroll amount, withheld taxes, and employer taxes.
Run payroll out of this account. What’s left belongs to Uncle Sam. Having that number artificially inflating your operating account is not good.
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This year I intend to put 35% of every job into a payroll account and pay the employees payroll out of that. My pay comes out of a separate account called owner’s draw. I use WCRA payroll which is so super easy that I don’t actually have to do much but I want that separate payroll account for clarity. And since WCRA Payroll will auto deduct the payroll account, the taxes are all included in one transaction.
