Cost of Good Sold vs. Reimbursable Expenses vs. Expenses

SFeFixer

• Trying to clean up my mess of misunderstanding of COGS versus Reimbursed Expenses to better report on income & untangle filing taxes
• Responses appreciated in non-accounting vernacular where possible (no assumptions that I can follow accountant/invoicing software inner workings)
Let me use this example: You need shelter for your dog. Someone tells you I solve problems. I will project manage/build you a dog house.
Your invoice will include 4 line items:
1. Labor for the build - $100 ( This is an ITEM I have set in Products & Services up as "Craft"; I recognize this as income)
2. The lumber & materials - $100 (I do not mark up purchases for clients, in this case the materials (lumber, screws, roofing) purchased at Home Depot cost $100 - not part of this discussion as to why/why not no markup - purchases go on my credit card; This ITEM is set up under Product & Services as "Supplies"; my thinking was that this was more of a reimbursed expense rather than COGS; some projects have multiple line items notating purchases for the project, usually by individual receipt: Amazon, Lowe's, speciality shops, what-have-you)
3. Flight Cost from A Place to Your Place - $100 (Again, no markup, purchase from "airline" goes on my CC; ITEM lists as "Travel Expense" set up under Product & Services... which, again, I think of as a reimbursed expense; on other projects there could be several line items notating other Travel Expense such as baggage, taxi to & fro, any Ubers during the course of project....)
4. That day of travel I charge you for - $50 (ITEM is labeled Travel Day- set up under Product & Services; I recognize this an income for my time)
Now, invoice goes out, you pay me via a check, gets deposited, your invoice marked paid, and I pay those expenses on my CC or debit card (I often notate on the invoice which it was for my own use) as matter of course, I take a percentage of the "obvious" income amount (here to me, that's $150) and transfer that to a SE income tax savings account.....
Confession: I am horrible at/don't do reconciliations/Categories on a sustainable basis...
End of year reporting is confusing to me as those Sales under Product & Services don't usually match expenses or purchases so my income looks very inflated- COGS sold - or in my thinking, all those reimbursements, don't "zero out" by the Expenses. All those purchases for clients/projects on my credit card, as well as purchases made for Office Expenses or Supplies likely are not being classified correctly to offset the Sales Income with deductible expenses.
It's likely the longer this trying to articulate my messy way of invoicing, the more complicated this got to follow.
So, how to simplify my invoicing & accounting process here? Fortunately, it is usually only a few clients a month (very fancy doghouses) with a lot of travel here to there. Can someone really break this down in easy to understand example form of whether I am indeed COGS making purchases for clients & change the Product & Sales ITEMS to reflect a simpler way or should purchased items specific to the project/job be listed under ITEMS in some other way?

Ok, ready to take my lumps. (Working on 2018 and will steamroll into 2019)

ConnorM

Hey @SFeFixer! Thanks for reaching out with this great detail here around what your situation is. For my own clarity here, have you taken a look into this Help Center article here on your particular situation? I think that the workflow outlined here would really help you, and it's the best way to really manage reimbursable expenses on an invoice! If not, or I've missed something here, please let me know!