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We have recently began operating a small handyman business. Quite often we are required to purchase specific items to complete the required work. We then include these costs with our labour on the invoice to be paid by the customer. I would like to know how to record the purchase of these items as it is really not income but a reimbursement of the amount we have already paid to enable us complete the job. Thanks.
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If you are unsure about correct allocation I recommend you talk to your accountant to make sure you are entering data correctly.
But this may help with your confusion -
when you purchase an item it is a Cost of Sale ie it relates directly to the service you provide
when you invoice the customer you are selling that item so it is Income
if you sell it for the price you paid the two transactions cancel each other out, like a reimbursement
if you sell it for more than you paid you are making a profit, which is income
Hope this helps