Schedule C Income and COGS Handling in Quicken

The correct way of recording your sales & monies received from your customers is to post it 100% to Income. This will match the 1099-Misc that you receive from your customers.

The proper entries to COGS should be when you sell inventory or you want to record your direct costs for providing your service. You should not be posting to COGS on your customer invoices. If you need to track labor from materials then use multiple Income accounts or use the Tag/Classes feature in Q.

Laura -- Thank you for pointing me in the right direction. Using some of your suggestions and trying some test cases, here's what I think will work for me ... When I purchase materials for use on a client's project I'll continue to assign these to the COGS class. But when I put them on an invoice (which I do using the Expenses box), I'll override the COGS category that Quicken automatically fills in and replace it with Income. Then everything should come out OK -- Income will match the 1099's and COGS will be correct. I think that using the pre-defined Quicken COGS class rather than multiple income accounts will be a less confusing approach. And one that is more likely to tranfer to Turbo Tax correctly (though I haven't used TT for some years). Thanks again.

You are welcome.

May I also suggest that if your business is fairly big that you might consider upgrading to Quickbooks Pro. I use both QB and Q H&B and Quickbooks works a lot better than Quicken for dealing with a business. I will allow you to assign purchasing costs to flow directly to a customer invoice.

Yes, I have QB Pro and have started fooling around with it. But the conversion from Quicken -- both data and mental -- are significant, at least for me.