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Actually, it doesn't matter as long as you get a tax deduction for the expenditures.
If I were you I would include the materials in the Cost of Goods Materials & Supplies as they are billed to customers by figuring them in to what you are charging.
The Supplies category, line 22, would be used for general supplies that you aren't directly billing to customers; more along the lines of "overhead type" expenditures; perhaps small tools if you don't list them separately, paper supplies, possibly sandpaper, things such as that; often, on a major renovation a contractor will set up a separate account with his supplier & everything that is purchased for that job is re-billed to the customer, whereas the same type of expenditure may be classified as "supplies" when the purchase is not for any particular job.
So, the bot***** *****ne remains, as long as you are taking a tax deduction somewhere, that's what is most important.
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