USA COGS Questions


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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.
 
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kirby

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COGS is for a business which sells things (goods) whereas you sell services. It is not for you.
 

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