Chart of Accounts question for a small renovation company

You are correct that all you need at a minimum are accounts that appear on the tax forms applicable to your business. Certain versions of QB desktop do offer industry-specific startup COA but even then, look at what you are going to file.

Specifically for Schedule F you will need income accounts for Crop Insurance proceeds and other government programs. Do know this - that farm markets may or may not qualify as a "farm" business and some, especially if selling products not raised - or taxable - may need to separately file a Schedule C.

You can certainly add as many accounts as your subscription allows (250 in Plus) to , for your own satisfaction, break down income/expenses by more categories than necessary. If you wish to track the purchase of nails separate from drywall you can in COA but a better place for that is with Items. As far as specific jobs - leave them out of the COA and use projects or classes to track profitability on each.  At the end of the year, however, your profit or loss is a sum of all activity and ignores which deals generated profit.

Rental real estate (Schedule E even though you might never use it), though, demands a separate column per property and P or L must be reported by property (for most people)

Thank you for your reply.

And to address this first... yes, I am aware that it is very specific to be Schedule F.  My friends have do have an accountant and I, as a friend, just help them enter in transactions etc.  I am certainly using it as a learning experience though!

I am definitely using projects to track particular job costs, rather than COA.  So I got that.  

I am not totally familiar with Items, but I am sure that will make sense as I build out our accounts and products and services.

As far as adding the accounts, I am doing that, and making sub accounts if I want more definition about what the expense was.  

It is just irritating that we can't make the Detail type (which it the master category) match what it says on the Schedule C.

For Example, on the C it has Line 24 - Travel & Meals. Yet, I cannot have a Travel & Meals Detail Type, with travel and then meals as the sub category.  Instead there is only Travel and separately Promotional Meals and Entertainment Meals as Detail Type options.   Those are valuable breakdowns for sure, but should be sub categories, to detail types.  If all that make sense!  It's just a tad annoying!

Additional Question....

I am unclear whether things should be COGS or just expenses?

We do not make a specific "thing" that we sell.  We do not make the cabinets, or bathtubs, or sinks, etc.  

So it seems that all the materials needed to complete a renovation should just be material expenses.  And, If we (say) purchase the cabinets that we will install they would be classified and reimbursable expense (as the client will pay us back for them).

But I am not sure this is accurate, as maybe the new bathroom we make counts as a good sold, and all the expenses and labor should fall under COGS accounts?

Any clarification here would be very appreciated.

Hello there, @Cbyrd.

The Cost Of Goods Sold (COGS) is the accumulated total of all costs used to create a product or service, which has been sold. These costs fall into the general sub-categories of direct labor materials. In a service business, the COGS is considered to be the labor, payroll taxes, and benefits of those people who generate billable hours. In a retail or wholesale business, the COGS is likely to be merchandise that was bought from a manufacturer. The following are types of expenses that go into figuring the COGS:

• The cost of products or raw materials, including freight
• Storage
• Direct labor costs for workers who produce the products
• Factory overhead

An expense is a reduction in the value of an asset as it is used to generate revenue. If the underlying asset is to be used over a long period, the expense takes the form of depreciation and is charged over the useful life of the asset. If the expense is for an immediately consumed item, such as a salary, then it is usually charged to expense as incurred. Common expenses are:

• Cost of goods sold
• Rent expense
• Wages expense
• Utility expense

Under cash basis accounting, an expense is usually recorded only when a cash payment has been made to a vendor or an employee. Under the accrual basis of accounting, an expense is recorded as noted above, when there is a reduction in the value of an asset.

I recommend reaching out to your accountant for further assistance in how you should enter these transactions. If you have additional questions or concerns, I'm just right around the corner. Have a beautiful day.

I was wondering the same thing.  I need to know how to track the materials our company purchases for jobs we are doing. I have a system set up outside of quickbooks that I have been using. We just got Quickbooks and thought this would be a simpler way but actually can not find anything on how to do this. 

Hi there, @c3hr.

I'm here to help you track the materials that your company purchases for jobs that you are doing.

QuickBooks Online allows you to create items that can help you track the materials that you've purchased. There are our types of items you can setup.

These a re the following:

• Inventory: Products you sell and track quantities for. Inventory features are available for QuickBooks Online Plus and Advanced. Here's how to turn on and use inventory features.
• Non-inventory: Products or items you buy or sell, but don't need to track quantities. For example, nuts and bolts you use for installation jobs but don't sell directly.
• Services: Services you provide to customers.
• Bundle: Several products or services you sell together as a single item. For example, a gift basket.

The link attached will tell you more about setting up what you buy and sell in QuickBooks Online: Add product and service items to QuickBooks Online.

To record the purchased materials for the job, you can use the Projects feature in QBO. This allows you to track your project’s profitability. Know that Projects is only available in QuickBooks Online Plus, Advanced and Accountant.

To do this, you'll need to turn on this feature and create a project. This way, you can apply it to your transactions.

Here's how to turn it on:

1. Select Gear icon. Then select Company Settings.
2. Click the Advanced tab.
3. Find the Projects section and select Edit to expand it.
4. Turn on the Use project financial tracking toggle.
5. Select Save.

After that, let's create the project:

1. Click on Projects.
2. Select New Project.
3. In the Project Name field, enter the project name.
4. Select the project customer from the Customer dropdown.
5. Add any notes or details about the project in Notes.
6. Select Save.

For complete details about this process, please see this article: Set up and create projects in QuickBooks Online.

Lastly, I'd like to know if you're using a third-party application that you'd like to integrate with QBO to manage your materials. Any further details are much appreciated so I can narrow down this matter.

Should you need additional information with materials, don't hesitate to leave a comment below. I always have your back. Have a nice day!