Should you use COGS for a repair service that carries little inventory. Order parts for each job, carry small inventory. Been using supplies/materials?

I can provide how COGS works, @GR24.
 

The cost of goods sold (COGS) refers to the cost of producing an item or service sold by a company.

Once you set up your first inventory item, the program automatically adds two accounts to your Chart of Accounts.

They are the Inventory Asset (Other Current Asset) and Cost of Goods Sold.  Generally, COGS is affected only when you sell the items. This account isn’t meant for the items you use to create your products, such as raw materials.

You can run the Profit and Loss report to show the COGS. Here's how:

1. On the Profit and Loss report, click the amount next to the Cost of Goods Sold account.
2. Click the entry to open it.
3. Go to the Reports tab, then click Transaction Journal.

I recommend consulting your accountant for expert advice on how to deal with this type of situation.

You can also find an accountant by clicking on this link: Find an accountant.

For in-depth information, please refer to this article: Understand Inventory Assets and COGS tracking.

In regards to categorizing your purchases, you can select record as transfer to inventory if you transferring inventory items from one location to another. Then, you can categorize it as inventory if you want to group or organize your inventory item to easily track which product is popular or best selling. Refer to this resource for more insights: Group your products and services into different categories.

In addition, I've included this material to learn about adjusting inventory for future reference: Adjust inventory quantity on hand in QuickBooks Online.

Should you have any other concerns regarding inventory purchases or COGS, let me know and I'll help out again. Have a great day.

@GR24 

The bottom line is that the IRS cares that the method you use accurately reflects your income.  If inventory is an income-producing factor then, technically, yes, the tax code says you should carry inventory as an asset and only expense it to COGS when sold.  However, the primary reason for this is to prevent companies from buying a bunch of inventory in December and expensing it immediately, thereby reducing their taxable income for the entire year.  In your case, if you're carrying miscellaneous supplies on your truck/in the shop, the value of the supplies is generally flat throughout the year, and the amount is immaterial relative to the overall business income, I would keep using supplies/materials as you have been.  Just my $.02      

I sell construction labor services to general contractors, I don't sell any products. Should I use the COGS category when I purchase supplies and material that I use to complete the job I was hired to do? Or do I continue to use the "Supplies and materials" category? Can you help me with this?

Hello,

Just wanted to touch base on this question. Did you ever figure it out?

I am in a similar situation.

Anything information would help thank you.