My advise is to set it up so the expense categories on your books to roll up to the categories on schedule C if you're a sole proprietor. Page 2 of schedule C has an "other" category where you can customize some expenses like tools, safety equipment and a few specialized expenses unique to your business. For a service business I don't like the cost of goods sold section unless you have inventories. Your goal is to match your income statement with your schedule c form as closely as possible. You may, for example, want to break down wages between supervisors and general workers on your books for management purposes, but set up the system to subtotal all wages together for line 26 in schedule c. There will be less after the fact massaging of the data when you later want to compare your tax return to your business income statement.