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Job costing overview

Watch a 4-minute tutorial about job costing

Job cost tracking is an extremely important part of a contractor's business. Job costing means tracking the expenses for a job and then comparing those expenses to the job's revenue. This tells you which jobs are making money and which are not.

Why is job costing so important?

With the QuickBooks job costing tools you can easily see exactly how much money you spent—and made—on each of your jobs. You won't have to wait until you do your taxes at the end of the year to see how your business is doing. Plus, you'll be able to see which types of jobs are winners and which are losers, so you'll know which jobs to take in the future.

Job costing in QuickBooks can also help you estimate more accurately. Estimating may be the most important—and most difficult—part of running a contractor business. But unless you compare your estimated costs to your actual costs after the work is complete, you have no way to know if you are estimating too high or low, and no way of improving your ability to estimate in the future. The QuickBooks job cost reports make it easy for you to compare your estimated costs to actual costs.

To use job costing to its full advantage

Job costing in QuickBooks Contractor Edition is easy. You are probably already entering most, if not all, of the information you need into QuickBooks. If you follow a few simple steps, full job cost reports will be at your fingertips whenever you need them.

  1. Set up a Customer:Job for each of your jobs.

    Even if you have only one job for a particular customer, it's a good idea to set up an individual job for that customer. This allows you to keep track of your income and expenses on a job-by-job basis, and it can simplify your bookkeeping if you add another job for that customer in the future.

  2. Set up your items to optimize for job costing.

    The level of detail in your Item list determines the level of detail in your job cost reports.

  3. Assign all your expenses to jobs.

    To get a complete job cost picture, make sure to assign all your expenses to jobs. QuickBooks makes this easy—simply make sure you select the appropriate job in the Customer:Job column whenever you enter a bill, check, or timesheet. Overhead expenses that aren't specific to a job can be assigned to a "dummy" job, as described in the link above.

    You can use the Expenses Not Assigned to Jobs report to check that you haven't missed any expenses.

  4. Enter your estimates in QuickBooks.

    The link above outlines different strategies to do this. You can create your estimates directly in QuickBooks. If you prefer to create estimates with a spreadsheet or outside program, you can just bring summary estimates into QuickBooks. Finally, if you create estimates outside of QuickBooks, but you create invoices in QuickBooks, you can simply enter your invoice information in the Create Estimates window and then automatically turn your estimates into invoices.

    You can use some job costing reports without QuickBooks estimates. However, if you enter estimates in QuickBooks, you'll be able to use the full range of QuickBooks job cost reports to make sure your project budget is on track and to evaluate how accurate the estimates are and adjust them appropriately for future projects. Estimating more accurately can in turn help you make more money from each job and win more jobs in the future.

  5. Create invoices in QuickBooks and choose the right Customer:Job on the invoice form.

    If you create your invoices outside of QuickBooks, enter at least a summary of each invoice into QuickBooks so the revenue is included in the job profitability reports.

  6. Use the QuickBooks job cost reports to learn how your business is doing on a job-by-job basis.

The Job Costing Center

Use the QuickBooks Job Costing Center to see a summary of some of your most important job costing data, including your 3 most and 3 least profitable jobs, plus links to job costing reports.

Go to the Contractor menu and click Job Costing Center.

See also

KB ID# H_CONT_JOB_COST_OVERVIEW
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