USA COGS Questions

Mar 30, 2018
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United States
Hello everyone,

I'm trying to finish getting my accounting set up and have some questions regarding COGS.

1. I'm in the professional services consulting business. I'm an engineer and I make plans for buildings. I'm wondering if I should even have a COGS? I was thinking about using it to split up time employees spend making plans vs working on administrative tasks. Is COGS something I should have in my business? Why or why not? Is COGS something I shouldn't have in my business? Why or why not?

2. If I do end up having COGS (and please answer for my own knowledge/curiosity even if the answer to #1 above is a no) do I need an expense account under payroll expenses for COGS? For example, I have a Payroll Expenses account and a number of sub-accounts for IRS Medicare, IRS Social Security, CA Disability, etc. Should I have one for COGS as well? Or should COGS wage expenses go under a completely separate (non-payroll) expense account?

Thanks in advance for your reply and time.



VIP Member
May 12, 2011
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United States
COGS is for a business which sells things (goods) whereas you sell services. It is not for you.

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