How do I classify something as either cost of sales or an expense? I run a small face painting business, is the paint and costuming cost of sales? Or expenses?

Hi Mandy, 

This is a very good question as quite a few small business owners doing their own books also often get confused on the difference of the above accounts. 

I would suggest to consult with an accountant for a detailed explanation but generally, if we differentiate Cost vs Expense, Cost is an investment made towards assets purchased for future benefits in business, while expense is spent on ongoing business for revenue generation. 

Cost is a one-time payment in nature, while expense is a regular payment. 

The Cost of Sales measures the amount a business spends to produce or manufacture a good or service for sale to its customers or anything that has a direct impact on the manufacturing process while Expenses are not directly tied to the production of goods or services.

I hope that helps. Cheers!