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Level 1

Tracking deposits and separating labor from materials for QuickBooks Self-Employed

Sometimes I have to purchase material for a job. Then At the end of the job they pay for it all with one check. When I deposit it into my bank account it pops up as income. When only 80% is . How do I separate it from income 

 

using quick books selfempoyed 

2 Comments
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Level 15

Tracking deposits and separating labor from materials for QuickBooks Self-Employed

It is income

what you spend is an expense
what you receive is income

 

on the P&L income is reduced by expense to get net profit

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Anonymous
Not applicable

Tracking deposits and separating labor from materials for QuickBooks Self-Employed

 Hey @Jaz,

 

Thanks for reaching out to the community. In your case with QuickBooks Self Employed, I'd make sure to keep an itemized record of each item you're claiming as a materials expense and hold onto the associated physical receipts.

 

Split up the business income (don't lump it all into one payment) so you know what was labour income and what was material costs for the job. You should track all of it, but the income needs to be separated so you know how much went to materials in relation to the total income from the job. 

 

This way at the end of the year you can easily identify where the money went.

 

split.PNG

 

 

I'd also go the extra mile to write yourself a note for which items are material expenses for quick reference.

itemize.PNG

 

In reference to what @Rustler is talking about to (income - expenses = revenue), check out the accounting concept Cost of Goods Sold. This may help clarify what those material expenses represent to your business. 

 

Hope this helps!

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