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I'm using the service category "Materials" whenever I create an invoice for a customer. I don't markup my materials so they should zero-out at the end of each year. How do I assign my materials purchased for each customer (my cabinets, tile etc.) to COGS so that I'm not paying income tax on them? Right now the default service "Materials" is being considered revenue as far as I can tell.
yeah, they should be COGS. I use the app "receipt bank" so I take a picture on my phone of receipts or have them emailed to me and the automatically show up in quickbooks. They have an option to select the category (COGS, small tools, etc). either way, you will need to have a receipt of some sort and assign it during the input of your receipts.
I have some information about the service category. The COGS account is only affected when you sell inventory items. In your case, you can change the income account of your service category to COGS account. Let me walk you through how.
After editing the account, you'll see the COGS account as your income account in your transaction journal. For more information about editing account, check out this guide: Change the account for a product/service item.
If you need help with other contractor tasks, check out this link to go to our general topics with articles.
Keep me posted if you still have questions or concerns. I'm always here to help. Take care and have a great rest of the week.
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