Recently a prospective client asked us about ‘job costing’ in QuickBooks (smart client). She was planning on buying the QuickBooks Premier Contractor (she’s in the interior design and remodeling business) and converting the existing accounting systems. Her plan is to primarily use QuickBooks for job costing and wanted recommendations that might help her transition smoothly.
There is no better question to ask at such a time. Many times I find that a majority of companies that opt to use QuickBooks for their job costing procedures do not achieve their full desired results.
In order for the implementation of your QuickBooks to reach the required functionality there are 8 specific preferences that need to be activated.
1. Estimates. Make sure to enable the estimates option in the QuickBooks menu. This is done by clicking on the Edit > Preferences > Jobs & Estimates > Company Preferences. Once you are on this tab, click to the Yes radio button that is located under ‘Do You Create Estimates?’ At the end of this process, you will be able to use estimate links in various jobs.
2. Progress invoicing. This feature can be enabled by clicking on the Edit > Preferences > Jobs & Estimates > Company Preferences. Then click on the Yes button in the Do You Do Progress Invoice? Work box. This particular feature will enable you to create invoices for incomplete jobs according to their percentages of completion. The estimates will be created according to the line items.
3. Inventory warning. Based on exactly what is available, this feature will allow for the pop up of a warning that the available inventory will not be enough. In order to do this, start by clicking on Edit> Preferences > Items & Inventory > Company Preferences. After clicking on the last tab, check the ‘Warn if not enough inventory to sell’ box and click on the radio button ‘Quantity Available’. This particular feature helps you come up with more clear estimates of delivery time since it helps you know when the goods you quote are not in hand yet.
4. Make sure to utilize billing and time. In this case, start by clicking on Edit > Preferences > Time & Expenses and choose the radio button labeled ‘Yes’ under the Do You Track Time? field question. At the end of the day, this feature will allow you as a timesheet user to put down actual time right against the job in question.
5. Create the invoices using expenses and time. In a case where you use the material billing plus time method, start by clicking on Edit > Preferences > Time & Expenses > Company Preferences. After this, choose the ‘Create invoices from a list of time and expenses’ check box. This feature goes a long way in including time and expenses to the invoices since for one, it always reminds you the expenses that are reimbursable as well as the time in relation to that particular job. In addition to that, it also gives you an easier mans of including both costs while creating the invoice.
6. Reimbursable expenses. In the same tab mentioned above, simply check the ‘Track reimbursed expenses as income’ box. This will allow you to fully enable the reimbursed expenses. It enables one to post jobs categorized as out-of-pocket expenses for the job such as travels or meals. This will come highly in handy for the purpose of reimbursement.
7. Charge payroll to jobs. If you opt to charge the payrolls you use for your QuickBooks on jobs, start by clicking on Edit > Preferences > Payroll & Employees > Company Preferences. On this tab, check the ‘Class and Item tracking for paycheck expenses’ Job Costing option box. You will get an option between Earnings items and Entire paycheck. At the end, job-cost reports will directly receive all payroll charges of employees.
8. Items provide by the subcontractor. In order to set up items for new service, start by choosing the ‘This service is used in assemblies’ box. Alternatively, you can pick the box stating that it is the partner or the subcontractor that performs it. The next step before choosing anything else is to issue the subcontractors with their pay. Then add items line to your estimates by starting to use the items tab and not the expenses one. This will help your job cost reports to be even more organized. It also helps collect the required information required to create annual 1099 Forms for the subcontractor.
Out of experience, it can be certified that these 8 preferences highly aid with project-costing situations as well as those for job-costing.