How to Move Payroll Costs to Cost of Goods Sold (COGS)
In this episode, Nick Baldo discusses the nuances of payroll expenses and cost of goods sold in real estate investing. He explains how to use QuickBooks for payroll, analyze a Profit and Loss statement, and calculate total gross pay. The impact of transactions on cost of goods sold and expenses is also explored. Finally, he introduces the Builder Book Academy course.
Key Points
- Nick Baldo demonstrates how to accurately allocate payroll expenses between office staff expenses and cost of goods sold for field employees to determine true gross profit in a construction business.
- He provides a step-by-step guide on using QuickBooks to adjust entries from the wages expense account to the internal labor cost of goods sold account, ensuring that the company's key performance indicators are based on precise financial data.
- The process of reallocating wages does not affect the net income but is crucial for business owners and financial controllers to understand and track their cost of goods sold and gross profit margins accurately.
By default, QBO will categorize all your payroll costs as Expenses. But what about the labor that we sell to our customers? We should be accounting for that as Cost of Goods Sold. Check out my super quick trick to move a portion of monthly payroll costs from Expenses to COGS
Check out our end-to-end QB courses: Real Estate Accounting Bootcamp http://bit.ly/reabcourse and Builder Books Academy http://bit.ly/builder-books use Code YOUTUBE50 for $50 off!
Chapters
| 0:00 | |
| 1:11 | |
| 2:42 | |
| 3:58 | |
| 5:44 | |
| 7:00 |
Transcript
Loading transcript...