Many small businesses, and contractors in particular, can greatly benefit from job costing. Job costing lets you know exactly how much you’ve made on a certain contract. This tells you not only about the profitability of the job, but it also can help you to tweak your pricing and processes to make each subsequent job that much more profitable. Fortunately, QuickBooks offers a way for you to track job costing.
Here are the steps you’ll take to get job costing in QuickBooks set up for your business:
- Get familiar with the Customer Center. The QuickBooks Customer Center is the core of your job costing information. Here you’ll track each customer you have as well as each job for each customer. You can even set up sub-jobs for things like change orders or additional work. Make sure you include an estimate for each job as well as each sub-job you enter. As you have charges for a job, enter them into the correct job or sub-job as apporopriate.
- Check your Chart of Accounts. Make sure you’ve got all of the necessary accounts to cover both direct and indirect costs on your jobs.
- Enter actual costs rather than simply changing the estimate. An estimate is a static thing. When you revise costs, you should actually revise the job, rather than simply making a change to the estimate. This is especially important once a job is in progress.
- Check your cost codes. Make sure you have the right cost codes entered in your Items List. Any time you create a PO, write a check, or enter charges, assign the correct cost code.
- Set up your payroll items accordingly. You may have different codes for different work classifications done by employees or subcontractors. Enter employee hours using the weekly timesheet to make sure it goes against job costs correctly.
- Train your employees. Make sure everyone who uses the system knows how to put in the correct cost codes, how to enter weekly timesheets, and do any other tasks appropriate to their job.
Job costing can be a wonderful resource if you take the time to make sure you’re giving QuickBooks the data it needs.