Correct allocation for future expense


I’m a contractor and i’m not an accountant. through manager i learned a great deal to get me started. thats the intro.

The question: As a contractor in my pricing i have the following
Job direct cost (all materials and fabrications)
Labor cost (the cost of my labor time in each project)
Over head (every other business cost)

So each one of these items have a percentage in every revenue the business is generating. For Job direct cost and Labor cost i’m clear on how they should be entered in manager. For over head costs most of it are business license renewal, managers and employees not linked to projects salaries, office rent…etc. I know the exact amount in the revenue the business gained for each of the over head cost items i have. But how i should separate them from the rest of revenue to make sure they are not used in other expenses by mistake. Should i create an asset account for each one and allocate these cuts from cash or bank account to that asset account? and if that is correct when the transaction happen like it’s time to pay salary or office rent how i can move them from that asset account to expenses (for Salary i can use payslips i guess) but for office rent what should be the right thing to do.

These are really not questions about Manager. They are basic accounting questions, and you should discuss them with a qualified local accountant or spend time with one or more of the accounting instruction sites on the web.

The basic answer, however, is that overhead costs are simply included in your pricing structure. If materials cost X, you invoice them at X plus an overhead percentage. If labor costs Y per hour, you charge Y plus an overhead percentage. This is how you recover the overhead expenses. Manager is accounting software, not pricing software. Accounting generally records what has happened, not what will happen in the future. And it does not estimate prices that will be profitable.

I assume what you are really asking is how to segregate funds on hand so they will be available when it is time to pay for various expenses. There are many options, including multiple bank accounts and sinking funds. But most businesses do not find these necessary. Again, a discussion with your accountant would be productive.

Thank Tut. The last part is my answer. i’m aware of the entire pricing structure. because i designed it. But i wanted to know simple words. If from a $100 revenue which out of it i’ve got $20 office rent which are essentially expenses that didn’t take place yet.
1- should i create an asset account and allocate that 20 to it and credit it later when it’s time to pay rent
2- or create a liability account under liabilities and allocate the 20 to it.

My question are how they should be done in manager not how i should do them. In my head i know how but i’m not sure how to use manager to implement it.


Then you should describe what is in your head. Otherwise, what you have written about sounds like a lot of work moving imaginary money from your left pocket to your right pocket and back again for little or no benefit. In describing whatever concept you have, think about potential accounting benefits (if any) as opposed to enforcement of spending discipline. The latter is not the purpose of accounting records.