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Level 1

Whats the difference in cost of goods sold versus regular expenses

I need to know where to put job materials. under the expenses (job materials category) or Cost of Goods sold (Supplies and Materials)
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Anonymous
Not applicable

Whats the difference in cost of goods sold versus regular expenses

if you are a painting contractor, for example, the paint might be COGS, but brushes, tape, drop mats, etc. are not being sold to the customer, so they are expenses.

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Level 1

Whats the difference in cost of goods sold versus regular expenses

So what your saying, like in my case I make candles.  So when I purchase the wax, and buy labels, and so these will be under the COGS supplie, shipping etc.  So anything that stays in my shop and doesn't go to the customer will be under regular expense.  If this is the case im going to have to go back and change a lot to the new category.
Thank You
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Level 1

Whats the difference in cost of goods sold versus regular expenses

That may not be so. My understanding is that some supplies are COGS - things that have a direct impact on the manufacturing process. In your case, I think the molds would be COGS, but the rags you use to clean up with would be a regular expense. I learned this through my state Sales & Use Tax office - if it's an expense you still have to pay tax on it. Only COGS items are non-taxable. They want to get their due, so they're up on the finer details!
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Level 15

Whats the difference in cost of goods sold versus regular expenses

molds are not sold
they can NOT be cost of goods sold by definition
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Level 1

Whats the difference in cost of goods sold versus regular expenses

COGS are things you inventory and resell so yes your wax, wicks are required to sell your product that is COGS. Anything you use to operate (make the candles, store them, sell them) that is under expense such as materials, shipping, etc.
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Level 1

Whats the difference in cost of goods sold versus regular expenses

Another point is its necessary to separate so you see your bottom line. Move one expense into COGS then run a Profit and loss statement. You will see the income then COGS then expenses. This helps you see how much it costs you to be in business and how much it costs you for your product itself. So if you had no orders for a month you would still see most those operating expenses are required regardless if no sales.
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Level 3

Whats the difference in cost of goods sold versus regular expenses

Assuming the molds would last more than a year, they would be a Fixed Asset and would be depreciated as such.

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