The cleanest way to handle material markups is through item-based invoicing. Instead of lumping materials into a single line on an invoice, you create individual products and services items in QuickBooks Online with both a cost field and a sales price field. The cost is what you paid. The sales price is what you charge the customer. QBO tracks both sides automatically, which means your profit and loss report will show accurate gross margins without any extra work on your end.

To set this up, go to Sales then Products and Services in QBO. Create an item for each material you commonly use, like mulch, pavers, sod, or drainage gravel. Enter your cost in the cost field and your marked-up price in the sales price field. If you typically mark up materials by a fixed percentage, just calculate the sales price accordingly. Some landscapers use a flat 15 to 25 percent markup, others adjust by material type. Either approach works as long as you’re consistent.

When you create an invoice for a job, add each material as a line item using the products and services you’ve already set up. QBO will pull in the sales price for the invoice and track the cost behind the scenes. This gives you a clear cost-of-goods-sold number on your reports and lets you see exactly how much margin you’re earning on materials versus labor.

What you want to avoid is recording material purchases as a general expense and then invoicing a lump sum for “materials.” That approach buries the cost-to-revenue relationship and makes it impossible to see whether your markups are actually generating the margin you think they are. You might be marking up mulch at 20 percent but losing money on stone because your supplier raised prices and you never adjusted. Item-based invoicing makes that visible.

For landscapers who buy materials job by job, you can also use purchase orders tied to specific customers or jobs. This connects the purchase to the invoice and gives you job-level cost tracking that shows profitability per project rather than just overall.

If you’re running estimates before jobs, the same items flow into estimates and then convert to invoices. This keeps your pricing consistent from quote to final bill and reduces the chance of forgetting to include a material charge.

Getting this right from the start saves a lot of cleanup later. If your QuickBooks file isn’t set up with proper items and cost tracking, your reports won’t tell you much about where you’re actually making money. Our Wisconsin small business bookkeeping services include configuring QBO so that material costs, markups, and job profitability all flow through your reports correctly. It’s one of those things that takes a couple hours to set up properly but pays off every time you look at your numbers.