Cost of goods sold (expense) counting towards revenue

Hello there, Cking13.

QuickBooks Online (QBO) treats COGS (Cost of Goods Sold) differently from regular expenses to give you a clearer picture of your business's profitability. COGS reflects the direct cost of producing or purchasing the goods you sell which includes the cost of materials, parts, and labor directly involved in making the product.

Also, COGS gets subtracted from your sales to show your gross profit, not added to your revenue. Even though COGS appears in your sales figures in QBO, it ultimately gets subtracted to determine your gross profit.

On the other hand, could you please indicate the part in the COGS that reflects revenue? Adding a screenshot would be helpful for clarity and accuracy in resolving your concern.

I'll add these articles to learn more about how the cost of goods sold works in QuickBooks Online: 

• How do Inventory Assets and COGS work in QBO?
• Cost of goods sold: How to calculate and record COGS

I'm just a post away if you have any more questions about tracking entries in QuickBooks. I'm here to help. Have a great day!

You can see my supplies and materials are counting towards revenue, but I build that into the prices I’m charging customers. Maybe I am entering them incorrectly?

Allow me to chime in on this thread, Cking13.

I'm having difficulty opening the screenshot you provided in the Community. Please try uploading another image and give more details about your inventory to help us understand your concern better.

We appreciate your cooperation. Once you have uploaded a new screenshot and provided the additional inventory details, we can address your concern more effectively. Thank you for being so patient, and we look forward to assisting you further.

@Cking13I think you are reading the report incorrectly.

Per your screenshot, your total income is $130,752.07.

Your COGS are $47,248.77.

$130,752.07 (Income) less $47,248.77 (COGS) equals $83,503.30 (Gross Profit).

After that, your advertising and other expenses get subtracted from your Gross Profit to arrive at Net Profit.

That may still screw you on the revenue limit; I'm not familiar with the bylaws for contractor licenses. The bookkeeping is correct, though. If you sell goods, that's sales. You just get to write off your cost in the goods sold (COGS) so that you don't pay income taxes on that amount later.