Many service companies do not have any cost of goods sold at all. Also, it is always a best practice to touch base with the tax preparer, to make sure everyone is on the same page. Visit the SBA disaster loan website. How to Project Revenue for a Tech Start-Up. "I know it falls under same in QB. If you do NOT carry an inventory, use 0 for beginning and ending inventory amounts. He served as the North Dakota District Director from November 2013 through February 2017. In calculating receipts, SBA regulations advise that generally, receipts are considered “total income” or, in the case of a sole proprietorship, “gross income” plus “cost of goods sold” as these terms are used on tax returns. How to create projections for a Brewery / Restaurant with multiple locations. He gets 40% of gross profit. Your email address will not be published. The payroll taxes listed above are easy because they’re entered in the books as payroll expenses at … If you buy goods to sell, or if you make them yourself, you can deduct the cost of those goods that you sold. The cost of goods sold (COGS), also referred to as the cost of sales or cost of services, is how much it costs to produce your products or services. This information can usually be located on your income tax return. I interviewed some U.S. tax preparers and bookkeepers and put together an amalgamation of their responses. Labor Burden and Cost of Goods Sold. If you buy goods to sell, or if you make them yourself, you can deduct the cost of those goods that you sold. Update From the SBA Dated 04/14/2020: “To ensure that the greatest number of applicants can receive assistance during this challenging time, the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. Cost of goods sold represents the costs of making or purchasing inventory, and amounts are deducted in the year the inventory items are sold to customers. Cost of goods sold, rental properties and non-profit/agricultural income will generally stay blank. Some contractors make the mistake of not including commission and the sales performance incentive fund (SPIF) payments in cost of goods sold. Choose an Accounting Method You'll also need to pick an overall accounting approach that … One financial option to serve your struggling small business clients that seems particularly attractive to some is the Small Business Administration (SBA) Economic Injury Disaster Loan Emergency Advance (EIDL). If you are a bookkeeper assisting your clients with an EIDL application and you intend to put a figure in the COGS line, keep clear and concise backup documentation for the source of that figure. Returns and Cost of Goods Sold: Contractors may only need to fill this out if they sell a material or product. Her company, FitBooks Pro (formerly called Linick Consulting), specializes in remote bookkeeping services for professional services firms using QuickBooks Online. Although, I don’t think it’s really necessary to actually change the Chart of Accounts to match a loan application.”. It will ask for the date the business was established. Finding average annual receipts: Annual receipts are the “total income” plus the cost for goods sold. This article will go over the EIDL process so you can better advise the clients that need it most. COGS is not addressed in any detail in generally accepted accounting principles (GAAP), but COGS is defined as only the cost of inventory items sold during a given period. He doesn’t job cost either." Independent contractors can apply based on replacement of owner income, ... You will apply directly with the Small Business Administration (SBA). Cost of goods sold is also referred to as "cost of sales (COS)." This is the date you started doing freelance or independent contractor work. The EIDL application asks for gross revenues and costs of goods sold (COGS) “for the twelve months prior to the date of the disaster.” Nowhere does the application ask about expenses, only COGS. The loan has an interest rate of 3.75 percent and can be repaid for up to 30 years. Next, the form will ask you for your cost of goods sold. Returns applies to any time a customer returned a product. This … Mike Gallagher joined the U.S. Small Business Administration in 1984 as a Business Development Specialist. Cost of Goods Sold consists of the cost of purchasing the items, freight, manufacturing costs, modification costs, and packaging. List your gross revenues as your gross earnings last year. Nature of cost of goods sold for a contractor. 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