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Material Inventory Expense Vs Material Inventory Asset. Which to use...

HoustonHouston Member Posts: 18

Hi all, it's the newbie here. Just started with Wave about a week ago and I've been reading soom about the Title Discussion I've listed above and I'm still a tad puzzled about which is for me. I've started my own electrical company and usually just bill labor on one line and materials on the other on my invoice. Putting my material as an Inventory asset seems ok, but how do I deduct it once a bill has been paid. Can I split a bill for labor and then materials to be deducted from one invoice? Or would it be easier to just have my inventory under expenses?
Hope I've explained this well enough LOL! Also, please no fancy term explanations... I need this dumbed down for me as simply as you can...
Thanks for any input into this matter.
Houston

edited March 31, 2021 in Accounting Technical Support

Comments

  • HoustonHouston Member Posts: 18

    Hi all, it's the newbie here. Just started with Wave about a week ago and I've been reading soom about the Title Discussion I've listed above and I'm still a tad puzzled about which is for me. I've started my own electrical company and usually just bill labor on one line and materials on the other on my invoice. Putting my material as an Inventory asset seems ok, but how do I deduct it once a bill has been paid. Can I split a bill for labor and then materials to be deducted from one invoice? Or would it be easier to just have my inventory under expenses?
    Hope I've explained this well enough LOL! Also, please no fancy term explanations... I need this dumbed down for me as simply as you can...
    Thanks for any input into this matter.
    Houston

  • MikegMikeg Member Posts: 995 ✭✭✭

    @Houston,
    Do you mean electrician? Normally, they do not carry inventory but rather supplies. Outlets, switches etc. Inventory are items that you either make or purchase for resale.

  • HoustonHouston Member Posts: 18

    Thank Goodness someone responded! LOL
    I appreciate it Mike! Thanks for answering. And yes I'm an Electrician.

    Sorry I meant (Material/Supplies) not Inventory in the original post. So after reading in the Wave Tutorial, it can still be put under Assets or Expenses. But I'm really trying to keep it simple. My bills are typically Labor and Material, that's all.
    A friend of mine had told me earlier today it should go as an Expense to make it simple.

  • MikegMikeg Member Posts: 995 ✭✭✭

    @Houston,
    Sure no problem on the response. I service one electrician. All supplies are categorized as an expense. Since you would most likely meet the small business exception (IRS) for having to capitalize supplies (asset).
    Looking for a CPA?

  • HoustonHouston Member Posts: 18

    Thanks for the input! And yes, I have your info now for your services.
    Enjoy you day and be safe!
    Houston

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