I own a pet grooming business (service business) and am trying to calculate my cost of goods sold.

Can someone help?

More specifically - do what categories should I factor into my COGS?

For a pet grooming business you should only have the following costs of goods sold:

1. Grooming items that you have purchased for resale.

Other items such as grooming supplies would go under supplies.
Remember, cost of goods sold, is as literal as it sounds. It is the cost of the item you resold. I hope that helps.

Do you actually means cost of goods sold, literally, as teresa described it? Or are you trying to come up with something that would be like a "cost of sales"? Cost of sales is a "looser" term that I've seen used in different manners (including in place of the term cost of goods sold). Being an open term, it can be used as though you're 'selling' a service, as opposed to just goods.

What I mean is cost of sales versus administrative expenses. For instance, salaries of employees who do grooming, versus salary of a receptionist. Expensing of supplies would be shears and combs, etc. versus the paper used in the office or at the cash register.

Do you see what I mean? Is that what you're trying to do? Or literally cost of goods sold? I'm only asking causing I see people using these terms all kinds of different ways.

Hi I have a question, if I open a yoga business, should I do a single step income statement or mulitstep income statement since there is no cost of goods sold but only cost of services sold, but even with cost of services sold its only the salary so I'm kind of confused?

cottoncanndy, it would be extremely nice if you would start a new thread for your question instead of dragging up an old one. (We'd have 100-mile long threads if everyone did that.)

But a single-step versus multi-step is not at all related to whether you have a cost of goods sold account. If you think that, it's probably only because most textbooks tend to introduce the concept in a merchandising chapter.

Multi-step doesn't just mean separating out cost of goods sold and gross margin. It also means separating other types of expenses, and separating non-operating revenues and expenses, etc. Have a look at this:
Single-Step Income Statement | AccountingCoach.com (http://www.accountingcoach.com/online-accounting-course/04Xpg03.html#income-statement-single-step)
Notice how interest revenues and gains were included in the income section? They don't really belong there if you're following proper rules.

Then go here:
Multiple-Step Income Statement | AccountingCoach.com (http://www.accountingcoach.com/online-accounting-course/04Xpg04.html#income-statement-multiple-step)
Notice those revenues (along with a couple of expenses/losses) ended up in a separated section at the bottom. Notice the second paragraph where it says those are non-operating items being separated. It says it "also" shows gross profit, but "also" means in addition to other things.

If you will re-read what I wrote to the other person, a cost of services (cost of sales, whatever) can be used for service businesses. You can charge costs more directly related to the revenues from, uh, whatever it is you're doing. (Sorry, don't do yoga and not sure what people are paying for.) Like if you have salary of an employee working directly with customers, versus if you had the salary of a receptionist. Same sort of deal as I described to the other poster.

Do you have to do this? No. If you don't have to "follow the rules" then you can do your income statement any way you see fit. If you own your own business, it's up to you to decide what works best for you and how you would like to see that information presented. I bet I can think of more "cost of services," but if you don't think of them that way, that's up to you. I personally would have more issue with lumping something like a gain into your other revenues than about whether you separate out cost of services. But the only time you have to worry about strict rules is if a bank or some place wants audited statements, in which case you have to get a CPA anyway. (And don't worry about the IRS - if this is a sole proprietorship, you're following a Schedule C for that, and they won't get very picky, contrary to popular belief.)

Did I make that way more complicated than was necessary? :p

for a pet grooming business you should only have the following costs of goods sold:

1. Grooming items that you have purchased for resale.

Other items such as grooming supplies would go under supplies.
Remember, cost of goods sold, is as literal as it sounds. It is the cost of the item you resold. I hope that helps.

Correct!. Also, the only why you will be able to determine the cost of goods sold is by determining the goods sold first. To do this you must have initially counted the merchandise you bought the month before or the quarter before... Do inventory if what's on the shelves plus everything on your next purchases... after a month,two,three.. etc. count what's left and subtract it from your beginning inventory to determine what was sold in each category...