I hope I can explain this so people can understand. i am not very literate and it takes me time to figure stuff out so any help or advice would be great.
I’m fairly new to operating a business in its entirety. I have a question in regard to invoicing and parts I use on jobs.
For the time being I’m not looking to upsell parts or profit from them. I purchase the parts and charge labor.
I would like to somehow show this on my invoice without the totals from parts being a part of my “income” because I don’t want to pay taxes on those parts because the total of the two (parts and labor) is at the bottom of the invoice.
In other words, I would like the invoice to total both the labor and the parts I bought but not have the parts I use on jobs part of my income.
These examples (below) is how I have c it in the past and a little how i do it now, it’s worked for me in the past buts the business has gotten too big for this method and accounting is complicated so I want to clean it up.
Example 1
invoice for labor MS WORD
separate invoice for parts.
give both to customers.
I keep receipts from parts supplier.
Example 2
invoice for labor MS WORD
forward supplier parts to customer and collect cash for their amounts.
Example 3.
Same invoice for labor and parts MS WORD
give a copy to customer.
print another copy and staple supplier receipt to copy and put in file cabinet.
it’s a mess I know… but you know… got to pay taxes so want to make it easier. Any help would be great! This might be a lot to ask, not sure.
and big thanks to the people that put this app together.
you are concerned about the tax treatment of parts and labor. If so, then you should be consulting with a local tax accountant and you should get a more accurate and insightful advice.
While you can certainly use word for your invoicing and then create in Manager–or the other way around, it’s better to rely on Manager’s invoicing since it is more efficient and enables easier tracking.
Please note that the tax treatment has nothing to do with invoice totals layout. For example, you can have parts each in a separate invoice line and apply your taxes to those and then have labor in a separate line and apply different taxes or no taxes at all. Manager will handle each situation and calculate your taxes correctly every time depending on your inputs.
You can refer to this guide on setting up your taxes:
@Ealfardan, I think you misunderstood the reference to taxes. @Jeff_Repair is concerned about paying income tax on invoiced parts. See my separate response below.
Note that you will be able to invoice both on the same invoice (the Guides describe how). Also note that billable expenses will not end up in your net profit and, therefore, you will not pay income tax on them. They will show on your profit and loss statement as income in the Billable expenses - invoiced account, but simultaneously offset as expenses in the Billable expenses - cost account.
The program also allows you to mark up parts if you want to at some point. That will result in taxable profit, shown by the difference between their invoiced price and their expensed cost.