I'm trying to figure out how to change some invoices so that Cost of Goods (Services) Sold shows up properly in my financial reports. Here's my example. We are a service company and we often invoice for services that other subcontractors provide, and we mark up. So I have a subcontractor who provides a service to my client for $1,000 and we mark that up to $1,500. There is a $1,500 line item on my invoice to my client. I think in my financial report, I want that to show up as $1,500 in Service Revenue with $1,000 showing up as "Cost of Goods Sold", leaving me a Gross Profit of $500. Assuming this is correct, how do I do this. I only have one $1500 line item on my invoice but I need to enter the appropriate split somewhere between the $1000 and the $500.
Make a Service Item and checkmark the left side box. Link the Expense account on the left as COGS. Link the Revenue account on the right as Income.
Set the Cost, if you always pay the same cost.
Set the Price, if you always charge the same price.
List the Item on the Items tab of the payment to the Subcontractor. Job track the customer name as Billable, since you charge them from this cost you just incurred. Example:
Subcontractor for Landscaping just graded 3 properties, so I list the Landscaper Sub service item 3 times, allocating amount per Customer:Job.
When I am ready to Invoice the customers, I use Add Time & Costs and select this Direct Charge to them.
And now you can run Job Profit reporting and Item profit reporting. The P&L is left plain and simple. The Item allows you to include the use of Quantity, too, such as number of hours or square feet of roofing or painting or yards or gravel. This is how you manage Est vs Actuals, as well, for both cost and price needs = Two Sided items. Service, Noninventory, and even Other Charge Type items provide for Two Sided. Job Tracking makes this work. Billable or not, is the status to match your contract with that client, such as I bid a project at a fixed rate, but want to job track all Timesheet entries and all costs as Not Billable, to see them as direct costs for that project.