Hey guys, I have a simple question that I am sure you know the answer to.
I am a contractor, specializing in masonry/pavers.
I pay taxes using turbotax, and in the past all of the materials for a job I would just put under supplies.
Here's what I mean: Let's say I give a price to the customer for labor and materials inclusive and it's $1,000.
He gives me a check for $1000, and let's say I have to buy pavers or cement, sand, etc - and I give the mason supply yard a check for $500 from the same account the $1000 went into, leaving me with $500 for labor.
So basically, I am only making a profit on $500 labor and the $500 went for paying the actual cost of materials that I would then install at the customers house.
Since I had $1000 in revenue enter my account, how do I properly show that $500 of it went to pay for materials that had no gain for me, and only $500 is my profit?
Do I:
A.) Continue listing this under supplies, i.e the same place you'd put pens, paper costs, etc. Only issue here is that since materials are half of what I am getting paid or a large portion, it can add up.
B.) Use the inventory/Cost of goods purchased options? This seems to reduce the gross profits by the actual costs of materials. Note that I am not keeping any actual inventory, I buy from a mason supply yard and immediately install it.
Which way is better and the right way to do it to avoid issues?
I am a contractor, specializing in masonry/pavers.
I pay taxes using turbotax, and in the past all of the materials for a job I would just put under supplies.
Here's what I mean: Let's say I give a price to the customer for labor and materials inclusive and it's $1,000.
He gives me a check for $1000, and let's say I have to buy pavers or cement, sand, etc - and I give the mason supply yard a check for $500 from the same account the $1000 went into, leaving me with $500 for labor.
So basically, I am only making a profit on $500 labor and the $500 went for paying the actual cost of materials that I would then install at the customers house.
Since I had $1000 in revenue enter my account, how do I properly show that $500 of it went to pay for materials that had no gain for me, and only $500 is my profit?
Do I:
A.) Continue listing this under supplies, i.e the same place you'd put pens, paper costs, etc. Only issue here is that since materials are half of what I am getting paid or a large portion, it can add up.
B.) Use the inventory/Cost of goods purchased options? This seems to reduce the gross profits by the actual costs of materials. Note that I am not keeping any actual inventory, I buy from a mason supply yard and immediately install it.
Which way is better and the right way to do it to avoid issues?