Hey Nick, how do you approach recording a transaction where I paid a contractor a sum that included material and labor. For example, I paid a contractor a total of $2,000, of which $500 was material and $1500 was labor. What would be the best way to record this?
Hey! Sorry for the delay! If this is a level of detail you want to capture, I would have a cost code for each: Material/ Labor. Personally, I have up to 3 levels of cost code (product/ service) for a given category: Labor Material Subcontractor For all subcontractor expenses, I bundle the entire expenses as "Subcontractor". I don't find much value in separating out the subs costs. I use "Labor" just for my internal resources tracking time. We discuss this and much more in our end to end course: Real Estate Accounting Bootcamp: www.incomedigs.com/reab
Hey! Quick question for you. In another video, you suggested having a chart of accounts with one of the accounts being "3. Rehab costs." In this video, you have the products and services charging to the "Construction Materials" account. I there a way to link construction materials underneath 3. Rehab Costs?
Hi there! This is a super helpful video, thanks for sharing! I work for a general contractor who is switching over to QuickBooks from basically pen and paper. We use cost codes extensively, but each code isn't specific to either a subcontractor, materials, or labor. (For example, our code for Framing includes expenses for framing materials, framing labor, and framing subcontractors). Do you have any suggestions for how to set up our codes in QB? We are finding that not having this distinction in QB will mess up our end-of-year tax reporting, but having too many categories will make estimating and job budgets messy and difficult. Any thoughts you have would be greatly appreciated.
Hi Hanna...thanks for watching! Ahhh yes!! It would be so great if we could indicate "cost type" on each transaction. That would allow us to keep the Products and Services relatively generic "e.g. Framing" while indicating "Subcontractor" as the type. My business is similar. I decided that it was indeed worthwhile to separate out a few specific subcontractor/ labor cost codes. At first, I thought this would be way too messy (exactly what you are thinking!). But after some analysis....I realized that not every single cost code needed this distinction. Only the cost categories for which I need a sub require a "-Subcontractor" category. Even more, my internal employees do not work on every single cost code (e.g. we do not do roofing in house). Therefore, I have no need for a Roofing - Labor account. In the end, yes...you end up with quite a few accounts. But I think indicating, within the cost code, the differentiation between labor, material and subs is the way to go.
Hi! Thanks for watching! I have not had personal experience with CSI codes...but it would work the exact same way. You would list each cost code as a Product & Service. Should be very similar to the video above.
Hi! Thanks for watching! You can split out each of these expenses by "job'. Each line will have a specified customer->Project. You can also use Class to accomplish the same. We discuss in great detail in our end to end course: Real Estate Accounting Bootcamp www.incomedigs.com/reab3
If you're using this for a property you are flipping (takes a couple of months to rehab + sell) are you doing a journal entry say every month or so to take this out of your P&L and into your balance sheet? If so, have you done a video showing this?
Hi Oscar...its really up to you. Personally, Yes...I like to do this every month or so. That helps my books to be more "realistic". If I leave flip expenses on my P&L, it will show a negative Net Income until I sell...distorting my P&L/ Balance sheet. Its really a personal choice...but every month seems about right to me. In this video I show how to transfer from the P&L to the balance sheet: th-cam.com/video/LYxIFyO3x70/w-d-xo.html
I'm trying to set up my products and service for the house we are flipping. I am curious why you are putting the type as "service" and the income account as "billable income?" Is it because eventually, we will sell the house? I hope you haven't already explained this in the video and I missed it. :)
Hi! Thanks for watching. To be honest, the Type does not matter much. I find that "service" seems to be most applicable for expense accounts. If we think about products/ services from the perspective of what we might eventually "sell"...I think service makes the most sense. Even if what we are buying is materials, the act of selling this to a customer would come in the form of us packaging it up and delivering it (usually via installation) to the customer. The Income Account - Typically anything that I buy...and potentially then sell...I will mark as "billable income". This is just a good general category to capture any/ all expenses that will eventually be "billed" to the customer.
Check out my End-to-End Quickbooks Training. www.incomedigs.com/reab ($50 off w/ code TH-cam50)
Hey Nick, how do you approach recording a transaction where I paid a contractor a sum that included material and labor. For example, I paid a contractor a total of $2,000, of which $500 was material and $1500 was labor. What would be the best way to record this?
Hey! Sorry for the delay! If this is a level of detail you want to capture, I would have a cost code for each: Material/ Labor. Personally, I have up to 3 levels of cost code (product/ service) for a given category:
Labor
Material
Subcontractor
For all subcontractor expenses, I bundle the entire expenses as "Subcontractor". I don't find much value in separating out the subs costs. I use "Labor" just for my internal resources tracking time.
We discuss this and much more in our end to end course: Real Estate Accounting Bootcamp: www.incomedigs.com/reab
does it have to go to billable expense income??
No! You could set it up to go to whichever income account you choose!
how do i assign a cost code to materials purchased?. for example i spent 150 on home depot. i dont see that option
Hi! You would need to turn on the items table. You can do this in Settings, expenses, "Show items table on expenses"
Hey! Quick question for you. In another video, you suggested having a chart of accounts with one of the accounts being "3. Rehab costs." In this video, you have the products and services charging to the "Construction Materials" account. I there a way to link construction materials underneath 3. Rehab Costs?
Or do I need to change the expense account for all of the products and services to be "3. Rehab costs" ?
Sorry - one more question!! The "batch action" option is not coming up for me! Do you know if they removed that feature??
Hi there! This is a super helpful video, thanks for sharing! I work for a general contractor who is switching over to QuickBooks from basically pen and paper. We use cost codes extensively, but each code isn't specific to either a subcontractor, materials, or labor. (For example, our code for Framing includes expenses for framing materials, framing labor, and framing subcontractors). Do you have any suggestions for how to set up our codes in QB? We are finding that not having this distinction in QB will mess up our end-of-year tax reporting, but having too many categories will make estimating and job budgets messy and difficult. Any thoughts you have would be greatly appreciated.
Hi Hanna...thanks for watching!
Ahhh yes!! It would be so great if we could indicate "cost type" on each transaction. That would allow us to keep the Products and Services relatively generic "e.g. Framing" while indicating "Subcontractor" as the type.
My business is similar. I decided that it was indeed worthwhile to separate out a few specific subcontractor/ labor cost codes. At first, I thought this would be way too messy (exactly what you are thinking!). But after some analysis....I realized that not every single cost code needed this distinction. Only the cost categories for which I need a sub require a "-Subcontractor" category. Even more, my internal employees do not work on every single cost code (e.g. we do not do roofing in house). Therefore, I have no need for a Roofing - Labor account.
In the end, yes...you end up with quite a few accounts. But I think indicating, within the cost code, the differentiation between labor, material and subs is the way to go.
Curious if you've had experience with CSI Commercial cost side Divisions, and applying these as QB 'Products and Services'?
Hi! Thanks for watching! I have not had personal experience with CSI codes...but it would work the exact same way. You would list each cost code as a Product & Service. Should be very similar to the video above.
How do you categorize materials used over multiple jobs? (For example, tubes of caulk, rolls of tape, foam sprays, etc.)
Hi! Thanks for watching! You can split out each of these expenses by "job'. Each line will have a specified customer->Project. You can also use Class to accomplish the same. We discuss in great detail in our end to end course: Real Estate Accounting Bootcamp www.incomedigs.com/reab3
If you're using this for a property you are flipping (takes a couple of months to rehab + sell) are you doing a journal entry say every month or so to take this out of your P&L and into your balance sheet? If so, have you done a video showing this?
Hi Oscar...its really up to you. Personally, Yes...I like to do this every month or so. That helps my books to be more "realistic". If I leave flip expenses on my P&L, it will show a negative Net Income until I sell...distorting my P&L/ Balance sheet. Its really a personal choice...but every month seems about right to me.
In this video I show how to transfer from the P&L to the balance sheet: th-cam.com/video/LYxIFyO3x70/w-d-xo.html
@@Incomedigs thank you!
I'm trying to set up my products and service for the house we are flipping. I am curious why you are putting the type as "service" and the income account as "billable income?" Is it because eventually, we will sell the house? I hope you haven't already explained this in the video and I missed it. :)
Hi! Thanks for watching. To be honest, the Type does not matter much. I find that "service" seems to be most applicable for expense accounts. If we think about products/ services from the perspective of what we might eventually "sell"...I think service makes the most sense. Even if what we are buying is materials, the act of selling this to a customer would come in the form of us packaging it up and delivering it (usually via installation) to the customer.
The Income Account - Typically anything that I buy...and potentially then sell...I will mark as "billable income". This is just a good general category to capture any/ all expenses that will eventually be "billed" to the customer.
hello, i really want to buy the excel sheet of estimate, please. could you?
Yes! Its available to download here: www.incomedigs.com/rehab-estimator
@@Incomedigs thank you! thank you!