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Level 1

Job Materials and Expenses

Hello! Looking to do my Corporate Income Tax and I'm running into something I'm unfamiliar with.


To keep it simple, I'll make up some numbers here, my business is construction, general carpentry and contracting.


Lets say this:


Total amount of money collected from clients: $120,000

Total amount of money spent on materials for clients: $20,000

Gross Income without accounting for material reimbursement from clients: $100,000

Total payroll cost: $40,000


Should have profit at: $60,000



In my "profit and loss" report it is saying:


Gross profit: $100,000

Material Expense: -$20,000

Payroll Cost: $40,000

Total Income: $80,000




I have the material cost set up as an expense in my Products and Services. I just now set it as 'non-inventory' which hasn't corrected the issue for previous profit and loss reports.


Wondering why it is saying the material reimbursement I'm paid is not part of my gross profit, but it then deducts it from my payroll cost.


My understanding is that it wouldn't be a part of my gross profit or expenses. I pay out $1,000 in materials and HST for a job, and I collect that exact amount when I invoice, which directly pays off the materials and HST I've purchased.



Thanks for the help.

1 Comment 1
QuickBooks Team

Job Materials and Expenses

Hey there Appalachian2020,


Thanks for reaching out to us here. Making sure you're recording your transactions properly is an essential step for maintaining clean books. I would be happy to point you in the right direction.

To ensure accuracy in your books, I recommend reaching out to an accounting professional for expert advice on creating these types of transactions. They'll be able to guide you in choosing the correct transaction type as well as which accounts to affect so that your accounts can end up with the right balance. You can add your accountant to your books by going to the My Accountant tab of your QuickBooks account. You can also find an accountant that has experience using QuickBooks near you by clicking on the Find a pro to help option in that section.

If you have any other questions, feel free to reach out here.

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