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Posted by The Streets on March 22, 2008, 11:48 am
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>>>> I'm hoping that there is an easier/better way to do this .
>>>>
>>>> I use Quicken H&B 2007 for my Schedule C business. When I invoice
>>>> clients I use one line item and category for labor (Income) and another
>>>> for
>>>> materials (Cost of Goods Sold - COGS). When I receive a payment and
>>>> apply it against the invoice, Quicken applies the payment to these
>>>> categories.
>>>>
>>>> So far, so good.
>>>>
>>>> At tax time I need to report on the Schedule C all the monies I've
>>>> received -
>>>> both Income and COGS. This should be easy to do - just add the two
>>>> categories together. COGS will of course end up being subtracted back
>>>> out
>>>> under expenses so I end up only paying taxes on my Income, as I should.
>>>>
>>>> Now my problem . a few of my larger clients send me (and the IRS) a
>>>> 1099MISC which, of course, is for all the monies they've paid me (both
>>>> Income and COGS). So, for these clients I have to find all of their
>>>> COGS
>>>> charges and back these out of the COGS total so that they aren't
>>>> doubled
>>>> counted when I add together the Income and COGS amounts. This is a
>>>> real
>>>> pain in the neck!
>>>>
>>>> Am I over thinking this or over looking some straightforward way to do
>>>> this
>>>> in Quicken?
>>>
>>> The correct way of recording your sales & monies received from your
>>> customers is to post it 100% to Income. This will match the 1099-Misc
>>> that you receive from your customers.
>>>
>>> The proper entries to COGS should be when you sell inventory or you want
>>> to record your direct costs for providing your service. You should not
>>> be posting to COGS on your customer invoices. If you need to track labor
>>> from materials then use multiple Income accounts or use the Tag/Classes
>>> feature in Q.
>>
>> Laura -- Thank you for pointing me in the right direction.
>> Using some of your suggestions and trying some test cases, here's what I
>> think
>> will work for me ...
>> When I purchase materials for use on a client's project I'll continue to
>> assign
>> these to the COGS class. But when I put them on an invoice (which I do
>> using the Expenses box), I'll override the COGS category that Quicken
>> automatically fills in and replace it with Income.
>> Then everything should come out OK -- Income will match the 1099's and
>> COGS will be correct.
>> I think that using the pre-defined Quicken COGS class rather than
>> multiple
>> income accounts will be a less confusing approach. And one that is more
>> likely to tranfer to Turbo Tax correctly (though I haven't used TT for
>> some
>> years).
>> Thanks again.
>
> You are welcome.
>
> May I also suggest that if your business is fairly big that you might
> consider upgrading to Quickbooks Pro. I use both QB and Q H&B and
> Quickbooks works a lot better than Quicken for dealing with a business. I
> will allow you to assign purchasing costs to flow directly to a customer
> invoice.
Yes, I have QB Pro and have started fooling around with it. But the
conversion from Quicken -- both data and mental -- are significant,
at least for me.
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