Should subcontractor expense be classified as cost of goods sold or expense?
Should subcontractor expense be classified as cost of goods sold or expense?
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5 Replies
02/11/12 3:46pm PST
Your going to set them up under vendors just like you would a material supplier, so they are set up as an expense.
02/11/12 5:50pm PST
I disagree, Contractors who do NOT maintain inventory should use the COGS type accounts for ALL Job Costs. So, Yes, create a COGS account for all Subcontracted costs. By the way, COGS account are a type of Expense account.
Will
02/12/12 6:02am PST
@ wms3,
I have consulted with CPA's regarding this issue and the consensus is 50/50 as to whether it is an expense or COGS, depending on how you want the financials to be viewed. As you stated, either way it is an expense.
03/30/12 10:03am PDT
Hi - I'm using QB for a small, service based S-corp. My question is this: if COGS (which I use for all my subcontractors) is an expense, why doesn't it "add" up with the other expenses when I run a P&L? This is especially problematic when I export to excel. Ideas? thoughts? Thanks much. Linda
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03/30/12 2:01pm PDT
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Linda, COGS is just a "specific" expense account and reports higher on the P&L. It is used for Direct Expense.
Anything you are posting should show where you are putting it.
If you don't see subs as any sort of expense on job reports or P&L, then we need to know more about how you use QB for job tracking and how you pay subs.
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