How do I set up job costing in QuickBooks?
The core of job costing in QuickBooks is tracking every dollar of income and expense by project. Before you touch the software, decide what you want to measure. Most contractors want to see labor, materials, subcontractor costs, and equipment at minimum. Some break it down further by phase or cost code.
In QuickBooks Online, turn on Projects under Settings. This creates a separate layer where you assign transactions to specific jobs. In QuickBooks Desktop, you use sub-customers to represent jobs under each customer. Both approaches accomplish the same goal of grouping income and expenses under a project so you can see profitability at the job level.
Your chart of accounts needs to be structured for construction. Generic charts have broad categories like “Cost of Goods Sold” that tell you nothing useful. You need separate accounts for direct labor, materials, subcontractors, equipment costs, and job-related overhead. Without these distinctions, your job cost reports won’t show you where the money actually went.
Create each job as a customer or project before you start recording transactions for it. Include enough detail to identify the job later. Customer name plus project address works for most contractors. A job called “Smith” won’t help you when you have three Smiths in your system six months from now.
Every transaction has to be coded to a job. Buy materials at the supply house? Code it to the project. Pay a subcontractor invoice? Code it. Record payroll? Allocate hours to jobs. Skip this step and your job costing is incomplete. The software can’t track what you don’t tell it.
Set up items or products and services that correspond to your cost categories. When you create a bill or expense, the item determines which account it hits. This makes coding faster and more consistent than manually selecting accounts every time.
Pulling useful reports depends on all this being set up correctly. The Profit and Loss by Customer report in Desktop or Profit and Loss by Project in Online should show you gross profit by job. If it’s not showing what you need, the setup is wrong somewhere. Either the chart of accounts, the job structure, or the transaction coding has gaps.
The technical setup takes a few hours. The hard part is the ongoing discipline of coding everything correctly. Most contractors who try this themselves get the initial setup done but don’t maintain consistency. After a few months, the job costing is incomplete and the reports become worthless.
If you’re running a construction business, job costing isn’t optional. It’s how you know which projects make money and which ones lose it. Setting it up yourself is possible if you have the time and patience. Having a contractor bookkeeper in American Fork who understands construction accounting do it means you’ll actually use the system instead of abandoning it when things get complicated.
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