Job costing in QuickBooks Online, step by step

QuickBooks Online can do solid job costing for most small and mid-sized contractors. It rarely does, because the features that make it work are optional, and the default way most people enter transactions skips all of them.

This is the setup in the order that works, and the habits that keep it working. Menu names and plan features change from time to time, so treat the specifics as a map rather than a click-by-click script, and check Intuit’s current documentation where something looks different.

First: check your plan

Job-level features — projects and class tracking in particular — have historically been limited to the higher QuickBooks Online plans. If you are on an entry-level plan, you may not have them. Check before you build anything, because a year of transactions entered without jobs is very hard to fix afterwards. See which accounting software should a contractor use.

Step 1: Separate job costs from overhead in the chart of accounts

Job costing is only as good as the chart of accounts underneath it. Direct job costs — materials, subcontractors, direct labor, equipment rental, permits — belong in cost of goods sold. Overhead — rent, office staff, general insurance, software — belongs in expenses. If they are mixed, every job report will be wrong in a way that looks right.

Our contractor chart of accounts is a structure you can copy.

Step 2: Turn on projects and create one per job

With projects enabled, each job becomes a project under the customer it belongs to. Use the same job name or number the field uses — the office, the crew and the books should all call a job the same thing.

For small service work that is not worth a project each, an alternative is to track work types with classes instead, and reserve projects for installs and larger jobs.

Step 3: Use classes for divisions, not jobs

Classes answer a different question from projects: which part of the business. Service versus install, residential versus commercial, one location versus another. A job belongs to one project and one class.

Using classes for individual jobs is a common mistake that makes the class list unmanageable within a year.

Step 4: Put the job on every transaction

This is the step that decides everything. Every invoice, every bill from a supplier or sub, every card purchase and every check needs the customer and project selected on each line that relates to a job.

Where this breaks:

• Bank feed transactions accepted without assigning a project — the fastest way to lose job costing
• Supplier bills covering several jobs on one invoice, entered as a single line instead of split by job
• Returns and credits that are never assigned back to the job they came from

Make the rule simple: nothing job-related gets accepted from the bank feed without a project on it.

Step 5: Get labor onto jobs

Materials are the easy part. Labor is where job costing usually fails, because it is the largest cost and the one that does not arrive on a receipt.

The two common approaches:

• Time tracking that records hours by job, connected to QuickBooks, with a cost rate for each employee so hours turn into dollars on the job
• A periodic allocation — splitting each payroll’s cost across jobs based on timesheets — which is less precise but far better than nothing

Either way, the cost rate should be burdened — wage plus payroll taxes, workers’ compensation and benefits — not the wage alone. The true hourly cost calculator works it out. See job costing for contractors for why labor matters most.

Step 6: Connect your field software carefully

If you invoice from ServiceTitan, Housecall Pro, Jobber or similar, decide which system creates the invoice and make sure the job carries across. Syncs that drop the job, or create duplicate customers, are the most common source of broken job reports. See connecting field service software to QuickBooks.

Step 7: Read the reports monthly

Once the setup is right, the reports do the work:

• Project profitability — revenue, costs and margin for each job
• Profit and loss by class — which division of the business is carrying the rest
• Profit and loss by customer — useful for repeat customers and property managers

Look at them after every month is reconciled. A job report built on an unreconciled month is a guess — see QuickBooks does not match your bank if the reconciliation will not balance.

When QuickBooks is not enough

For long commercial jobs with pay applications, retainage and a monthly WIP schedule, QuickBooks can still work with careful setup, but many contractors add a spreadsheet or construction software alongside it. See WIP schedules.

Related

• Seven QuickBooks mistakes contractors make
• Construction bookkeeping, step by step
• Do I need a bookkeeper if I have QuickBooks?

General information. QuickBooks features, plan contents and menu names change — confirm current details with Intuit. We are not affiliated with Intuit.