Tracking - Cost of Goods

We often talk about Cost of Goods Sold in a retail setting only, however Cost of Goods Sold - for our purposes - can include things like labor or surveying. The reason we include things like this in Cost of Goods sold is that these are expenses that you incur through a direct sale or contract. For example if you are a landscaping company, you may charge for for specialized installation labor; surveying; and permits. This are the result of the contract you have with your client and are directly generated from the contract or Sale. These costs are usually passed on to the customer and therefore should be listed as a Cost of Goods. Any ordinary expenses, like health care, utilities and payroll should be categorized as Total Expenses. Be careful though, some things like construction equipment may or may not be a Cost of Goods. If you normally rent your equipment only when you have a contract, that should be a Cost of Goods; however if you lease your equipment on a yearly basis that should be treated as Total Expenses.