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How to Track Materials and Sales Tax per Job

Materials are where job costs quietly go wrong: one receipt covers three jobs, the tax sits at the bottom, and the shop's drill bits end up on whichever job was open. Here's a routine that keeps each job's number honest.

5 min read

Labor is easy to put on a job: the crew was on that site, for those hours. Materials are harder. One trip to the supply house picks up lumber for one job, fittings for another and a few things for the truck, and it all comes back as one receipt with one line of tax at the bottom. If that receipt goes to one job, or into a shoebox, every job's cost is a little wrong.

1. File each line to the job it was for

The receipt isn't the unit; the line is. Lumber and joist hangers were for the deck, the PVC fittings were for the bathroom. Write the job next to each line the day you buy it, while you still remember. A receipt with three jobs on it becomes three costs, one per job.

2. Put the sales tax in the job cost

If you pay sales tax when you buy materials, that tax is part of what the materials cost you. Leave it out and each job looks more profitable than it was, and over a year of supply runs the gap adds up. The fair way to split it is in proportion: each job carries the share of the tax that its taxed lines make up of the subtotal.

A worked example. A receipt from the supply house: lumber and joist hangers for the Henderson deck, $488.40 after a $10.00 instant saving; a drill bit set for the shop, $49.99; PVC fittings for the Alvarez bath, $37.61. Subtotal $576.00, sales tax $40.32, total $616.32.

  1. Henderson deck: $488.40 of $576.00, so $34.19 of the tax. Job cost $522.59.
  2. Shop (General / Overhead): $49.99 of $576.00, so $3.50 of the tax. Cost $53.49.
  3. Alvarez bath: $37.61 of $576.00, so $2.63 of the tax. Job cost $40.24.
  4. Check: $34.19 + $3.50 + $2.63 = $40.32, and $522.59 + $53.49 + $40.24 = $616.32. The shares must add up to the receipt, to the cent.

3. A discount belongs to its item

Instant savings, coupons and volume discounts print as their own negative lines. Take each one off the item it's for before you split the tax, not off the whole receipt. In the example, the $10.00 saving was on the joist hangers, so it lowers the Henderson deck's cost and nobody else's.

4. Shop stock isn't a job cost

Drill bits, blades, a box of screws for the truck: not every line is for a job. Give those lines one home, an overhead or shop account, instead of parking them on whatever job was open. Your job costs stay true, and you can see what the shop itself costs you each month.

5. A routine that holds up

  • Record the receipt the same day, before it fades or goes through the wash.
  • Mark the job for each line, and send shop stock to overhead.
  • Check that what you recorded adds up to the receipt's total, tax included.
  • Keep the paper receipt, or your own photo of it, if you may need the original later.
  • Once a month, compare each open job's materials cost with what you estimated.

Bill-The-Job does the split for you: photograph the receipt, pick the job for each line, and every job gets its share of the sales tax, to the cent.

See how receipts work

This is general information, not tax advice. Whether you pay sales tax on materials, and how you pass it on to a client, depends on your state and how you contract. Ask your accountant.

FAQ

Frequently asked questions

If you paid it when you bought the materials, yes: it's part of what they cost you. Leaving it out makes every job look more profitable than it was. Rules differ by state and contract, so check with your accountant how it applies to you.

In proportion to each job's taxed lines. Divide the job's lines by the receipt's subtotal and multiply by the tax, rounding to the cent, then check that the shares add up to the tax on the receipt.

In an overhead or shop account, not on a job. That keeps job costs accurate and shows what the shop costs you.

Bill-The-Job can. Photograph the receipt, pick the job for each line, and it files each job its share of the tax. AI reads the receipt and can make mistakes, so check what was recorded.