How do I know which jobs are making money?
The only way to know which jobs are making money is to track costs at the job level. Most contractors know their total revenue and total expenses for the year, but that tells you nothing about individual project profitability. You could have three profitable jobs carrying five money-losers and never realize it until tax time.
Job costing means assigning every cost to a specific project. When your crew spends 20 hours on the Thompson kitchen remodel, those hours get coded to that job. When you buy materials for a foundation pour, that receipt gets tagged to the project. Subcontractor invoices, equipment rentals, permits, dumpster fees. Everything ties back to a job number.
The costs you need to track include labor hours multiplied by fully burdened rates, which includes wages plus payroll taxes and workers comp. Materials purchased specifically for that job. Every subcontractor invoice allocated to the correct project. Equipment rentals or charges if you own your own fleet. And all the direct job costs like permits and temporary facilities that only exist because of that specific project.
Once costs are tracked, you compare them to your original estimate. This is where the real insight comes from. If you’re 50% complete on a job but you’ve already spent 70% of the budgeted labor, you have a problem you can still address. Wait until the job is done and that information is just an expensive lesson for next time.
Your accounting system should produce reports showing revenue, costs, and profit margin by job. You should be able to pull up any active project and see whether you’re on track. Construction job costing requires your chart of accounts structured for how contractors actually work, with consistent coding habits so costs get assigned to the right projects every time.
Most contractors who set up QuickBooks themselves end up with a system that can’t produce these reports. Generic setup doesn’t include job costing. The software can do it, but it needs to be configured correctly from the start.
If you’re busy but not sure which jobs are actually profitable, that’s a setup problem. Having someone who understands construction accounting configure your system properly gives you the visibility to make better decisions on future bids and catch problems on current jobs before they get worse. Our bookkeeping services in American Fork focus specifically on contractors and tradespeople because job costing isn’t something you can bolt onto generic bookkeeping after the fact.
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More Questions
How do I account for holding costs on investment properties?
Track holding costs by property and decide whether to capitalize them into the property's cost basis or expense them. The treatment depends on what type of investor you are and what you plan to do with the property.
Read answerWhat is labor burden and how do I account for it?
Labor burden is the true cost of an employee beyond their hourly wage. It includes payroll taxes, workers' comp, benefits, and paid time off. Accounting for it correctly means applying a burden rate when costing jobs so your bids reflect what labor actually costs you.
Read answerCan I find a local bookkeeper in Utah County who understands job costing?
Yes, though bookkeepers with genuine job costing expertise are less common than general bookkeepers. Look for someone with actual construction industry experience who can explain how they track costs by job, not just by expense category.
Read answerHow do I track costs for each construction project?
Assign every expense to a specific job at the time it happens using cost codes that match how you estimate. Track labor, materials, and subcontractor costs separately by phase, then compare budget to actual weekly.
Read answerHow do I handle progress invoicing in QuickBooks?
Progress invoicing in QuickBooks requires creating an estimate first, then billing against it in portions. Enable the feature in settings, structure your estimate by phase or milestone, and create invoices from the estimate as work progresses.
Read answerHow do I allocate overhead to individual jobs?
Overhead allocation distributes indirect costs like rent, insurance, and admin expenses across jobs based on labor hours, labor cost, or total direct costs. Calculate a rate using your annual overhead and apply it to each job to see true profitability.
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