It requires that R&D generally be expensed as incurred now.
So, in QBO, it should be considered an Overhead Expense, not a Direct Cost or COGS.
How to set up R&D as Overhead (O/H) in QuickBooks Online?
Figure out the main primary operating costs for R&D and categorize expense types.
In the QBO Chart of Accounts detail types are already defined. I would select “Other miscellaneous service cost” as a detail type to track costs related to R and D.
For example, your Chart of Accounts should be like this:
- Salary and Benefits
- Purchased Materials
- Independent Contractors
- Equipment Expense
- Travel Expense
- Other R&D Expense
This is just an example. Only your CPA can give you better guidance for your business.