These are just different income accounts they could be used however you wanted. I might classify labour as job income and then total invoice payments as sales? This really is up to you how you set up your chart of accounts, but feel free to customize it however you wish.
Hi Barsin. If I entered an invoice the way you are suggesting, would that not result in an error? For instance, if I put in the invoice total as sales of, say $1000 and the labour charge on that invoice as $200; entering the labour as Job Income and the invoice total as Sales would give me a total income of $1200, when in actual fact, I would have received $1000.
So I am still a bit confused with regards to the difference.
If you want the invoice total to be $1000.00 instead of $1200.00 then you will want to add one item line as $800.00 and a second one as $200.00 to account for labour charges. This will leave you with a $1000.00 invoice total before taxes. For more information on invoicing, feel free to check out this handy Help Center article: Invoice like a pro.
@HeidiwaHammer,
No, it is all revenue no matter what you call it. Some items would not be sales. Examples would be interest income, proceeds from sale of assets etc.
Thanks for that confirmation. Also- it would be helpful to use the two categories if operating in a state where labor isn't sales taxed, but sales of a product is.
Thank you for contributing your knowledge to the site!
And you might be getting an email from me as I slog thru filing my first 1065.
@HeidiwaHammer,
Your welcome.
For purposes of a tax return, that would not matter. Both categories would be presented as sales. However, they should be tracked separately due to sales tax implications.
mikeleavoy77
Member Posts: 2
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Hey there @mikeleavoy77
These are just different income accounts they could be used however you wanted. I might classify labour as job income and then total invoice payments as sales? This really is up to you how you set up your chart of accounts, but feel free to customize it however you wish.
Hi Barsin. If I entered an invoice the way you are suggesting, would that not result in an error? For instance, if I put in the invoice total as sales of, say $1000 and the labour charge on that invoice as $200; entering the labour as Job Income and the invoice total as Sales would give me a total income of $1200, when in actual fact, I would have received $1000.
So I am still a bit confused with regards to the difference.
Hey there @Ronfombe !
If you want the invoice total to be $1000.00 instead of $1200.00 then you will want to add one item line as $800.00 and a second one as $200.00 to account for labour charges. This will leave you with a $1000.00 invoice total before taxes. For more information on invoicing, feel free to check out this handy Help Center article: Invoice like a pro.
But is there any difference in the terms commonly understood by accountants? I feel like there's some secret knowledge I'm missing here.
@HeidiwaHammer,
No, it is all revenue no matter what you call it. Some items would not be sales. Examples would be interest income, proceeds from sale of assets etc.
Thanks for that confirmation. Also- it would be helpful to use the two categories if operating in a state where labor isn't sales taxed, but sales of a product is.
Thank you for contributing your knowledge to the site!
And you might be getting an email from me as I slog thru filing my first 1065.
@HeidiwaHammer,
Your welcome.
For purposes of a tax return, that would not matter. Both categories would be presented as sales. However, they should be tracked separately due to sales tax implications.