[asavino]

I have a small temporary employment agency. When setting up an income statement, should the federal and state unemployment company contributions be considered a cost of sale or and an expense?

[morgaine300]

Any payroll tax expenses are part of your payroll expenses. i.e. whenever you're charging any particular payroll is the same place you would charge the associated taxes that go with them. It's all part of the cost of payroll. i.e. if your charging the temps under cost of sales, then the taxes go the same place. But like if your secretary's salary is under admin expenses, then so are the taxes.

If there's an easy way to do it, it can be charged literally by how the taxes split themselves out. If there is not an easy way to do this (based on your method, software, whatever), then the easy way is to pro-rate the total.

If it's a very small company and you don't have to get that technical about stuff, you can also get away with just putting them all under admin.