Job Income vs Gross Sales

by Maureen
(Sacramento, CA)

Is there a way to exclude materials costs, or subcontractor expenses from your gross sales? I'm a roofing contractor and my Subcontractor expense is about 1/4 of my gross sales. I always obtain their certificate of insurances on every job. Why do I have to base my liability insurance on total Job Income? Any pointers on accounting to not reflect Subs, or the High Cost of materials??? Other than having the customer pay them directly?


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Hi Maureen!

I see your problem with the insurance. I'm guessing they use the total sale as a basis of the insurance because you're the contractor, and if something goes wrong they're going to be on the hook for the whole project? You may ask your insurance agent about that, and see if there's any way around it.

In Accounting, Gross Sales is always the entire amount received for a job. Then you subtract your Costs of Sales - subs, materials, etc. - to arrive at your Gross Margin - also called your Operating Profit.

I can't see any way around it, unless, like you say, you have your subs bill your customer separately, and you only bill for your part in the process. But I don't think that's done, is it?

Sorry I can't be of much help on this one.

Good luck though - and be careful up there!

Kathy

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