How do most web-based companies deal with COGS in their financials & accounting?
Answers
Sheldon, interesting question. I am asking the same thing for PS firms. Not an expert, but my guess is that you build a cost model for the Website (including upkeep, hosting, etc) and then allocate based on your revenue model. For example, if you charge $49 per month, You then charge to that a portion of the hosting, data creation, etc. You then have to subtract those items from the actual cost. Extending that example, if a person spends half their time on the website, then you have to put have their time into the cost model and then subtract from salaries to ensure you do not have the expense twice.
Hope that helps a little.
Don
From a financial reporting perspective, I would recommend google searching for web-based public company Form 10-Ks or searching for them through sec.gov. For both
Jeff
Well, it would depend on the industry of the web based business. Are you a retailer or a service provider or a subscription model.
The accounting for an industry is not different because it is web based.
It's easier if you can organize it by department. You have your direct third-party hosting and software costs, and then you have a specific department internally dedicated to maintaining the web site, perhaps another for customer support, and stick those in COGS. But yes, check out 10Ks as well.