Home-service business owners often misconfigure QuickBooks by keeping technician costs out of COGS. Phil Risher says wages, payroll taxes, benefits, and workers' comp should all go into COGS so you can price accurately and understand what your business actually costs to scale.
in the home service world, we're mainly selling labor and materials. So we're sending people out, we're sending technicians out to people's homes. They are selling their time, and then they're also selling the supplies and material that they're putting into the customer's home. Where I see a lot of home service business owners not even have this correct is if you go set up a new set of a chart of accounts in QuickBooks, it's not going to put any sort of labor in cost of goods sold. And the reason for that is historically in other businesses other than home service, the only thing we're selling are tangible things. So we want to make sure our labor is part of cost of goods sold. And what do I mean by labor all the people in the field, not the people in the office, not only their labor, but their payroll tax. If you're giving them a 401, if you're giving them health insurance, I also recommend putting workers' compensation up there because that is part of that cost of employing somebody out in the field in order to deliver what we're selling.
