QuickBooks Job Costing for Contractors & Others

by Lynnea Bylund on April 14, 2011 · 2 comments

Quickbooks Job Costing

Job costing, which is the single most important task in an estimating systems process flow, is something that is often neglected by so many start-up, small and mid-sized construction companies. Failing to job cost effectively or failing to execute it altogether, would be similar to a pilot attempting to fly a plane through thick cloud cover without being instrument rated.

We  just talked with a very agitated construction company owner.  He has been doing business in Orange County and San Diego County for a decade, but his company has grown to where he knows he must keep a better watch over his ‘job costs.’  He was worried that his reports and financials we “not right.”

We decided to assist him by reviewing what his current QuickBooks file is doing for his business. He wants help to figure out if he’s doing his “job costing” correctly so he can know how much money he’s making on each job.

See Job Costing in Wikipedia

Rebecca Tervo, a CPA and QuickBooks expert in Michigan gives a through primer on the subject of job costing, here –

Rebecca Tervo CPA Rebecca Tervo CPA

Job costing was part of my duties when I worked for a manufacturing company several years ago. I had to make sure the proper systems were in place to track all the employee hours and materials and supplies properly to each job. It was an ongoing process of reviewing data on a regular basis to check for flaws in the system and for inaccuracies in the numbers. I enjoyed it immensely, and learned a lot about how a breakdown in the RECORDING of information can really screw up the job profitability reports.

But, a manufacturing company isn’t the only business that needs job costing.

Job Costing

What is job costing? Simply put, it is a way to track the profit and loss on specific jobs or projects for your business. Knowing how profitable or unprofitable your work is will help you make better business decisions when moving forward.

Manufacturing businesses aren’t the only companies that can benefit from job costing:

Interior Designers can track profit by customer project

Road Construction companies can track actual profit vs estimate

Plumbing contractors can track whether they are making or losing money on each service call

Law firms can track profit and loss per case

Consultants can track profit and loss per consulting job

Online business managers can track profit and loss by project

and more….

As you can see, job costing can be very useful for many types of businesses. Figuring out the profitability of a specific project requries you to track several pieces of information.

Information that’s used to determine job profitability

In order to properly “cost” your jobs, you’ll need to have a way to track income and expenses for separate projects. One other note: All costs related to a specific job are also called ”cost of goods sold”. My choice to track job costs is QuickBooks. Here’s the information you want to track for each job:

Labor cost- including time for employees and subcontractors; and any taxes, insurance, and benefits you pay for this labor.

Materials cost- parts, supplies, products used on the job

Cost of equipment to get the job done- example: did you rent any equipment? Also, figuring out a way to allocate the use of your own equipment on a job is important.

Mileage, travel, meals-this is all an important part of getting the job done and needs to be carefully tracked

Licenses, permits, etc-any extra licenses or permits that are required for the job need to be tracked to the job

other-ANY expense that is directly tied to the job is considered a job expense.

The Job Cost Result

Now that you have a way to track expenses by job, you’ll be able to get a summary at the end of each job or project that will look like this:

Total income for the job


Total job expenses (from list above)


Job Profit or Job Loss

Job costing is extremely important for several reasons and helps you:

keep up on the current pricing of each job cost item

know if you’ve been overbilled by your vendors

point out inefficiencies in the work process

point to problems with subcontractors and employees

If you can’t figure out how to setup a job cost system that works for your business, please contact a qualified professional (CPA, accountant, bookkeeper, Certified QuickBooks Proadvisor) to help. The investment of time and money in setting up a proper job costing system goes a long way in helping your business be more profitable.

Are you using job costing in your business? If so, what type of recordkeeping system do you have? If not, what’s the holdup? Let us know in the comments below or drop us a line!


1 Sharonda Voelker April 16, 2011 at 2:41 pm

Amazing! Thanks! Job costing is the key to profitable contracting.

2 Jaguar Repair Mechanic Guy May 22, 2011 at 5:19 pm

This was really helpful. We encounter similar issues with large auto repair jobs. Our bookkeeper says THANK YOU!

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