Chart of Accounts

Hi, @vswebster, and welcome to QB Community! I hope you'll encourage your friend to join as well :-)

@201097, do you have any pointers here?

@vswebster, I do the books for our bakery and would be happy to share how ours are categorized for those type of expenses. 

ingredients for her bakery items: COGS-ingredients

packaging supplies for her bakery items: COGS-supplies

pop-up tent for farmers' market: Expense-Market expenses

laptop computer (under $2500): Expense-office expenses

rent for booth space at farmers' market: Expense-Booth Rent or Market expenses

This is how I would categorize these. It just helps to keep everything a little more organized. 

Hope this helps! 

Welcome @vswebster !

I agree basically with everything Jess said.

However, I would probably rename the COGS - supplies as COGS - Packaging.

It will be a good reminder that only packaging goes there, rather than all manner of kitchen/baking supplies.

I would also suggest breaking down the other items you listed just a bit more.  "business expense", has the potential to get very crowded very quickly.

The computer i would most likely put in a literal 'computer / internet' account... especially if she is using it onsite as a sort of POS system.

Since the tent is essentially a part of her location expenses, I agree with the market expenses suggestion.

It might help to think of the expense categories in basically 6 groups:

Cost of Goods Sold (including packaging)

Labor -- this means everything:  1099 labor, payroll taxes, reasonable salary for owners, workers comp insurance, uniforms, all that suff.

Occupancy - this involves anything related to where the shop is and keeping that physical plant running, utilities, rents, storage etc ...so for things like food trucks or tailgated pop-ups, it might include some things found under automobile as well (which is typically listed under Admin)

Operating - All the stuff related to making and selling your product that doesn't quite fit above... kitchen utensils, computer expense, repairs + maintenance, your telephone + website, etc.

Administrative - stuff that has to do with running a business *generally*... advertising & promotion, bank + cc service fees, office supplies, postage, insurance, business taxes, research, licenses + permits, etc.

Then, i like to put interest and finance charges, penalties, etc. in it's own "other expense" type category.  that way it is easy to see how the business is doing both with and without it... in other words, you might be just breaking even... but actually in the black if your sba loan was paid off.

In most circumstances, if you can keep your Labor + COGS + Occupancy below 75% you are doing well for the most part.  More ideal is 70%.  Since this is a mobile place, I would shoot for 70% assuming that the space rent on the farmer's market isn't crazy.

As an aside, since you are just setting up, you might want to think about doing reporting for her on a four week basis, rather than a monthly basis.  Unfortunately, it's kind of a pain in QB... that said, it is completely worth it to be comparing periods that have the same number of saturdays and sundays in them!

good luck... and feel free to reach out with questions!

*kristen