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SparksCo
Level 1

What is considered COGS in an asphalt paving company?

Hello, we recently had our in-house bookkeeper leave and discovered that she left our books in quite a mess.  We're working through getting everything cleaned up, but it seems that she classified the same types of entries in many different ways, and we want to make sure and clean it up correctly.  So to get to my question... in the asphalt paving industry, what is considered COGs, and what should be put in a different category?  We typically have the below items on each job:

1. Asphalt (purchased from the manufacturer)

2. Trucking (to get the asphalt from the asphalt plant to the job site)

3. Rental Equipment that is used on the job

4. Subcontractors, which can include laborers that do work outside of our normal scope (i.e grading, excavating, operating machinery that is rented)

5. W2 employees that do the bulk of the labor (non-specialized) on the job.

 

Any help anyone can provide would be greatly appreciated!

1 Comment 1
Rustler
Level 15

What is considered COGS in an asphalt paving company?

COGS, when you file taxes, relates solely to the cost of items of inventory that you sold.  I doubt you hold asphalt as inventory, but if you do that cost of what was used would post to COGS

 

in create an account, chart of accounts, is a COGS type account called Cost of Sales (COS), use that for all costs of a job that are not inventory

 

W-2 salary is already an expense, I see no reason to move a portion of it to COS, they would be paid regardless of the project

 

1099 payments to contractors, is COS.  I would create a COS sub account titled appropriately and use that.  The reason I say a sub account is that when you file income taxes, payments to contractors have to be reported in a block called Non Employee Compensation and having the sub account makes that easy to do.

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