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 clean up my QuickBooks file?
Start by checking reconciliation status and running reports to identify problems. Work through reconciliation first, then fix miscategorized transactions and remove duplicates. The time required depends on how long the file has been neglected.
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Track materials, labor, and equipment costs by assigning every expense to a specific job in your accounting software. Compare actual costs to your original estimate after each project to see your real margins and improve future bids.
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Use customer types or classes in your accounting software to separate maintenance accounts from project work. This lets you see profitability for each type of work and know which side of your business actually makes money.
Read answerHow do I integrate QuickBooks with my field service software?
Most field service software has a native QuickBooks integration or connects through Zapier. The technical setup is straightforward, but planning what syncs and aligning your chart of accounts beforehand prevents messy data and cleanup work later.
Read answerWhat accounting method should a contractor use?
Most contractors under $30 million in gross receipts use the cash method for tax simplicity and timing flexibility. But accurate job costing often requires tracking revenue and costs on an accrual basis internally.
Read answerHow do I fix years of bad bookkeeping?
Start by gathering all bank and credit card statements, then prioritize the most recent three years. Bank reconciliation forms the foundation. Work month by month, matching every transaction and separating personal from business expenses.
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