How a Handyman Should Categorize Materials, Tools and Mileage

What handyman books need to categorize

A handyman business is not one number. It is the jobs you ran, the materials you picked up, the tools you bought, the miles you drove, and the labor you charged. Each part needs its own line so your monthly income stays true.

When you categorize all of it, you can see which jobs made money and which ones spent more on materials or drive time than they brought in. When you do not, you get one big pile of hardware store runs and tool buys and no way to tell whether the faucet repair paid better than the door hang.

Most handyman work mixes materials, tools and mileage. A faucet you buy at the hardware store is a material. A drill you buy to do the job is a tool. The drive to the job is mileage. The labor is what you charge for the work. When the books hold the materials apart from the tools and the mileage on its own line, the business makes sense. You can read more about how we keep these lines tied on our bookkeeping page.

Here is what a clean job looks like.

When the materials, the tools and the mileage sit on their own lines, your per job profit is real. When they sit together, a big hardware run looks like a bad day and the labor earnings hide.

How materials show up apart from labor

The materials you pick up for a handyman job are a cost, even when you also charge for them. A faucet, a door hinge, a ceiling fan, a box of tile. The material is a cost. The parts charge on the invoice is income. The two are not the same.

The clean way is to book the materials cost to a parts cost line when you buy the faucet at the hardware store. Book the parts income to a parts income line when you bill the customer for it. The two sit apart on the profit and loss. You can see the markup on parts over a month. When the hardware store raises prices, your parts cost goes up and your parts income should follow. When the two move together, the margin stays true.

The messy way is to book the hardware bill to general supplies and the parts charge to general sales. Now the parts cost sits in overhead and the parts income sits in the sales pile. You can not tell if you are making money on parts or losing it. You can read more about how we track parts in our plumbing truck stock guide. The same idea works for a handyman who picks up parts for each job.

Here is how to keep materials clean.

• **Book materials cost to a parts cost line: ** not to general supplies.
• - **Book parts income to a parts income line: ** not to general sales.
• - **Tag each materials buy to the job when you can: ** so the cost sorts by job.
• - **Watch the parts markup: ** the parts income should track the parts cost.
• - **Match each hardware bill to the bank: ** so no cost floats untied.

When the materials cost and the parts income sit apart, your parts margin is real. When they sit together, the markup hides and the true profit is a guess.

How small tools show up as a cost

A small tool is something you buy and use up or wear out. A drill bit, a saw blade, a tape measure, a putty knife, a cheap drill. It costs money but it does not last long enough to go on the balance sheet.

The clean way is to book a small tool to a tools cost line the day you buy it. The tool shows on the profit and loss as a cost of the month. When you run the profit and loss, the tool cost is real and it does not inflate your balance sheet. You can see what you spend on small tools over a year and whether the jobs cover it.

The messy way is to book a small tool to general supplies with no line of its own. Now the tool cost hides in the overhead pile. You can not tell what you spend on tools from year to year or whether the jobs pay for them. The tool cost sits in one big blur.

Here is how to keep small tools clean.

• **Book small tools to a tools cost line: ** not to general supplies.
• - **Tag the tool to the job when you can: ** so the cost sorts by job.
• - **Watch tool cost as a share of revenue: ** a lot of tool buys and not enough jobs is a red flag.
• - **Match each tool buy to the bank: ** so no cost floats untied.
• - **Keep the line for tools apart from materials: ** so the two do not blur.

When the small tools sit on their own line, your tool cost is real. When they hide in general supplies, what you spend on tools is a guess.

How big tools show up as assets

A big tool is something you buy and keep for years. A miter saw, a table saw, a nail gun, a wet tile saw, a big drill. It costs a lot and it lasts. It goes on the balance sheet as a fixed asset, not on the profit and loss as a cost.

The clean way is to book the big tool as a fixed asset on the balance sheet and depreciate it over its useful life. The tool shows on the books at its value. The jobs that use it show on the profit and loss. You can see what the tool is still worth and how much it has earned. When you sell the tool or wear it out, you remove it from the asset account and record the sale or the loss. You can read more about how we track equipment assets in our concrete and masonry equipment guide. The same idea works for a handyman with big tools.

The messy way is to expense the big tool the day you buy it. Now the month you buy a miter saw looks like a terrible month. The next month, with no big buy, looks like a great month. The tool does not show on the balance sheet at all. You can not tell what your tools are worth or how much each one has earned.

Here is how to keep big tools clean.

• **Book big tools as a fixed asset: ** not as a tools cost.
• - **Depreciate the tool over its useful life: ** so the cost spreads out.
• - **Track each big tool by item or tag: ** so you can see what each one earned.
• - **Remove the tool when it leaves service: ** and record the sale or the loss.
• - **Watch the asset value against the job income: ** so you can see which tools pay for themselves.

When the big tools sit on the balance sheet, your monthly profit is true. When they go straight to a cost, the month you buy looks bad and the month after looks great.

How mileage shows up per job

The drive to the job is a real cost. Gas, wear and time all add up. Mileage needs its own line so you can see what the drive really costs you per job.

The clean way is to track the miles to each job and book the mileage cost to a mileage cost line tagged to the job. The standard mileage rate times the miles gives you the cost. When you run the profit and loss by class, each job shows its own drive cost. You can see which jobs cost more in drive time and whether the labor covered it. You can read more about how we track mileage in our keeping a mileage log guide. The same idea works for a handyman who drives to each job.

The messy way is to book the gas to general fuel and never tie it to the job. Now you can not sort by job. You can not tell if the long drive to the far job ate the budget or if the close job was the one that paid best. The fuel sits in one pile and the per job story hides.

Here is how to keep mileage clean.

• **Track the miles to each job: ** so the drive cost is real.
• - **Book the mileage to a mileage cost line: ** tagged to the job.
• - **Watch mileage as a share of revenue per job: ** a job that costs more in drive than it earns needs a look.
• - **Match the fuel buys to the bank: ** so no cost floats untied.
• - **Keep the mileage line apart from fuel: ** so the two do not blur.

When the mileage ties to the job, your per job drive cost is real. When it sits in one pile, the job story is a guess.

How the month end close works

At month end, every job needs its lines added up. The labor, the materials, the tools, the mileage and any card fees all pull together into one job total. When the jobs roll up by class, you see each job side by side.

We start with the bank. We match each invoice to the deposit that cleared. We split the card fees from the net cash. We book the materials buys to the parts cost line tagged to each job. We book the small tools to the tools cost line. We book the big tools to the fixed asset account. We book the mileage to the mileage cost line tagged to each job. We tag every line to the job or the customer. We send you the profit and loss by class, a balance sheet, and a cash summary. Each job sits inside the report in its own column.

Here is a simple month end check.

• **Match each invoice to the bank: ** every deposit cleared.
• - **Split the card fees from the net cash: ** so the fee shows on its own.
• - **Book materials to the parts cost line: ** tagged to each job.
• - **Book small tools to the tools cost line: ** and big tools as assets.
• - **Book mileage to the mileage cost line: ** tagged to each job.
• - **Run the profit and loss by class: ** so each job shows in its own column.

When the close runs every month, the job story stays clear. When it skips a month, the jobs stack up and the next month is harder to close.

A situation we clean up

The tools and materials that all sat in one pile

A handyman runs twenty jobs a month. Every hardware store bill lands in general supplies. Every tool buy, small or big, is expensed the day it is bought. The gas for the truck lands in general fuel with no job tag. At month end, the owner can not tell what the parts margin is, what the tools cost, or which jobs ate the budget in drive time. The month they bought a miter saw looks like a terrible month even though the jobs were strong.

Here is how we handle it. We turn on class tracking in QuickBooks Online and set up one class for each job. We set up a parts cost line, a tools cost line, a mileage cost line, and a fixed asset account. We go back through the open month and move each hardware bill from general supplies to the parts cost line tagged to the job. We move the small tools to the tools cost line. We move the miter saw from a cost to the fixed asset account and start its depreciation. We book the gas to the mileage cost line tagged to each job. We match each invoice to the bank. When we are done, the owner can run the profit and loss by class and see each job in its own column, with the materials, the tools and the mileage on separate lines. We set up a rule so the next hardware bill carries the right class from the start.

Mistakes we fix

• Every hardware bill in general supplies instead of a parts cost line tagged to the job
• Every tool buy expensed the day it is bought with no split between small tools and big tools
• Big tools expensed instead of booked as fixed assets
• No class tracking turned on so no way to sort by job
• Gas in general fuel instead of a mileage cost line tagged to the job
• Parts income and parts cost in the same pile so the markup hides
• No match between the invoice and the bank deposit
• Card fees buried inside net sales instead of on their own line
• Mileage never tracked per job so the drive cost is a guess
• No profit and loss by class run at month end

Common questions

How do I categorize materials for a handyman job? Book the materials cost to a parts cost line and the parts income to a parts income line. Tag each buy to the job when you can. Match each hardware bill to the bank. The two lines sit apart so you can see the parts margin.

How do I tell a small tool from a big tool? A small tool is something you use up or wear out, so it goes to a tools cost line the day you buy it. A big tool is something you keep for years, so it goes on the balance sheet as a fixed asset and depreciates over time. The line is how long the tool lasts.

How do I track mileage per job? Track the miles to each job and book the mileage to a mileage cost line tagged to the job. Watch mileage as a share of revenue per job. A job that costs more in drive than it earns needs a closer look.

How do I keep materials, tools and mileage apart? Give each its own cost line and tag each buy to the job. Run the profit and loss by class so each job shows in its own column. When the three sit on separate lines, the job profit is real.