Labor costing

I'm here to help track your employee's hourly cost, @Aaron at LTJ.

You don't need to have QuickBooks Time or Payroll services to track your employee's hourly costs. You can utilize the Time Tracking feature to record an hourly cost. Let me guide you through the process.

Firstly, let's turn on the Time Tracking feature in your company file. Here's how:

1. Open your QuickBooks Desktop company file.
2. Go to the Edit menu, then select Preferences.
3. Click Time & Expenses from the left menu.
4. Go to the Company Preferences section and select Yes to turn on the feature.
5. Select OK to save the settings.

Once done, you can now enter a weekly or a single timesheet to track your employee's hourly cost. To do so, please follow the steps below:

1. Go to the Employees menu, then select Enter Time.
2. Choose Use Weekly Timesheet or Time/Enter Single Activity.
3. Enter the information needed.
4. Click Save & Close.

After the steps, the information will show on your job profitability report. 

You might also want to read this article to learn more about job costing in QuickBooks Desktop: Track job costs.

Please let me know if you need clarification about labor costing. I'll be standing by for your response, @Aaron at LTJ.

Mark_R,

We have done everything mentioned and no labor cost are pulled through to the "actual" column. Cost for job related expenses comes through for PO's that were put on the job. We also don't see a location to enter an hourly cost for each employee to calculate labor cost from, it looks to me that we would need to have payroll turned on to enter a compensation cost for the employee or another means from QB Time. QB Online seems to have this configured considerably different and better for job costing purposes.

We have read that thread thoroughly and under stand a time sheet is a non posting transaction but we get confused by this note

"Timesheets are a non-posting entry. You must import time to a bill or invoice to include it in the Job Profitability or Company Financial Reports.". 

We don't understand what they mean to "import" time, when creating an invoice we select the job we are invoicing and pull expenses and time through to the invoice by either the pop up window or the "add time/cost" button. Which I would believe we are "importing" to the invoice this way.

It would be nice to pull a report showing all labor hours and material cost that was applied to each job.. don't know if I've found that yet as the "quick report" in the job doesn't pull hours through just cost.

Thanks for getting back to this thread, @Aaron at LTJ. Allow me to clarify things for you.

As mentioned by my colleague above, you can track your employee's hourly costs without having QuickBooks Time or Payroll. Simply use the Time Tracking feature to record an hourly cost. 

With regards to the statement about importing time, it means associating it to a bill or invoice to include in the Job Profitability or Company Financial Reports.

If you wish to pull a report showing all labor hours and material cost that was applied to each job, you may generate two reports, export them to Excel. From there, you can manipulate and condense them into one. For more info on how to generate reports in QuickBooks, feel free to check out this article: Understand reports.

You'll want to save your current customization. Feel free to read this article for the details: Memorize a report.

Keep me posted if you have additional questions about running reports in QuickBooks. I'll be around to help.

I follow the steps to setup time tracking and when I double click on the employee I do not see a "Payroll Info" tab. My options are " Personal , Address & Contact, Additional Info, Compensation, Employment info". Everything is greyed out under compensation. Back in the employee center in the top right there is a hyperlink to turn on payroll, that's why I believe I need to turn on payroll feature to get this function. Please advise. 

Any update on this?

I appreciate you coming back into this thread, @Aaron at LTJ. Let’s work together to figure out what’s happening with your account. 

You don't need QuickBooks Time or Payroll to keep track of your employees' hourly costs, as my colleague noted above. You can enter an hourly cost using the Time Tracking tool.

There are a few things that could cause the payroll info option to be missing, but don’t worry we will get to the bottom of it. I’ve replicated your concern on my file and verified that the payroll info button is visible and working fine.

The unusual behavior that you've encountered might be caused by a damaged component in the program. To fix this, let’s perform some troubleshooting steps. Let’s start with ensuring you’re using the most recent version of your QuickBooks product. This way, you’ll receive security updates and bug fixes.

You’ll need to be an admin to update QuickBooks Desktop. You can also set up QuickBooks to automatically download the updates. I’ll show you how:

1. Go to the Help menu, select Update QuickBooks.
2. On the Update QuickBooks window, go to the Options tab.
3. If you want to turn on Automatic Updates, select the radio button for Yes.
4. To share automatic downloads with other computers on your network, select the radio button for Yes.
5. Select Mark All, then click Save.
6. Head to the Update Now tab. You also tick the Reset Update checkbox to clear all previous update downloads.
7. Click Get Updates to start the download.
8. When the download finishes, restart QuickBooks Desktop.
9. When prompted, accept the option to install the new release.

Once done, you’ll need to reopen your QuickBooks file and run the payroll tax table update.

if the issue persists, we can run the Verify/Rebuild tool utility to detect the data damage: Verify and Rebuild Data in QuickBooks Desktop.

Drop me a response below if there are other things you need help with the time tracking or any other QuickBooks-related concerns. Take care, and keep safe.

JamaicaA,

I have done all of these suggested steps and does not seem to be helping with the issue. I was not able to update the payroll tax table as we do not have payroll with QB, we use an outside source and import into QB. Please advise next steps?

Good morning, @Aaron at LTJ. 

Thanks for taking the time to get back with us. 

Running the Payroll updates aren't necessary since you're using a payroll service outside of QuickBooks. As my colleagues have mentioned above, you won't need QuickBooks Time nor Payroll in order to track your employees hourly costs. 

Since the steps above aren't working for you, I recommend contacting our Technical Support Team. This way, one of our tech support agents can review your account in a secure environment and investigate this matter further. You can use the link I've included below to connect with an agent. 

• QuickBooks Desktop Support

Please let me know if you have any questions or concerns. I'm always here to lend a hand. Take care! 

I spoke with Tech and went through all the data rebuilding and updates, they are telling me I DO need payroll to have this functionality. 3 Different people in this thread have claimed other wise, is there anyone here willing to direct message and see who is correct?

Thank you for coming back, Aaron at LTJ. I'm here to shed some light and to clear up some of the confusions.

Our Support Team is right, you'd need to have the payroll activated to track the employees labor costs.

Once you have the payroll functionality, you'll be to enter employees' timesheets and make sure the hours are billable to customers/jobs. Here's an article for more details: Get started with QuickBooks Desktop Payroll.

I'm also adding this link to give you the idea on how to create and run payroll in QuickBooks Desktop,

I'll be around if you still need assistance with anything. Just drop your comments below. Have a wonderful day!                                      

Hey Archie,

Since we have an outside payroll service I don't feel it necessary to pay for QB Payroll just to utilize its labor costing feature. So I tried utilizing manual payroll and ran a serious of test to get cost to pull through that way and still cannot get it to function. Do I need a paid version to get this to work? The Payroll info tab did show in the employee center and I followed all suggested steps as before.

Allow me to jump in and help with your questions about tracking labor costs without a payroll subscription, Aaron. 

You can track time entries and associate them to a job without a payroll function. This is the reason why previous responses indicates that you don't need a payroll subscription to enter the employee's work hours.

Please note that time entries are non-posting transactions and will not show up in costing reports. Because of this, you'll need to associate a payroll item in the timesheet and use it in a paycheck. This is the only way to post the labor under cost under the Act Cost column.

You mentioned that already activated the Manual Payroll feature. This means that you don't need to have the paid version to be able to track labor costs.  You just need to follow these steps to use the time data to create paychecks:

1. Go to the Employees menu and double-click on the name of the employee. 
2. Proceed to the Payroll Info tab check the box for Use time data to create paychecks.
3. Select OK.

Once done, edit the time entries and select a payroll item under the Payroll Item column. Let me show you how:

1. Go back to the Employees menu and select Use Weekly Timesheet under Enter Time.
2. Click the drop-down list under the Payroll Item column, then click Add new.
3. Choose Hourly Wages and select Regular Pay.
4. Follow the succeeding steps on how to create the payroll item. 

After that, create a paycheck to pay the employee for the tracked hours. Let me share these final steps with you:

1. Select Pay Employees under the Employees menu.
2. Make sure the date in the Pay Period Ends is the last date of the week in your timesheet entries. This is to include all tracked hours in the paycheck.
3. Check the name of the employee and click Open Paycheck Detail.
4. The number of hours and the payroll item will automatically show up.
5. Choose Save and close, click Continue, and then select Create paychecks.

Then, open the profitability report and check if the amount is already showing up under the Act Cost column. 

Adding these articles as well for more guidance when using this feature:

• Set Up Job Costing and Item Tracking 
• Track Job Costs in QuickBooks Desktop 

Please keep me posted if that resolves your question about tracking labor costing. I'll keep an eye on this thread as well in case you have follow-up questions. 

Hello JenoP

I have been searching through the forum for HOURS with the same question that dozens of others have.  

HOW TO PUT LABOR COST AGAINS JOB PROFITABLITY WITHOUT RUNNING QB PAYROLL and WITHOUT CREATING PAYCHECKS.

Some say you MUST run payroll (in Quickbooks) and create paychecks in order for the labor costs to show up in the Job Profitability Report because recording time won't do it - even if you assign hours to jobs and mark them "billable" in the timesheet. 
 Some say you do NOT need to run a payroll or create paychecks as long as you assign the hours to both a a customer job and a service item  AND mark the line "billable".  

You start our your reply  by saying:
"You can track time entries and associate them to a job without a payroll function. This is the reason why previous responses indicates that you don't need a payroll subscription to enter the employee's work hours."

But by the end of your explanation you contradict yourself by stating:
"After that, create a paycheck to pay the employee for the tracked hours. Let me share these final steps with you . . . 5. Choose Save and close, click Continue, and then select Create paychecks."

This has been the most frustration experience of my 15 years with QB.  My employer recently discontinued Enhance Payroll (we use QB Pro 2023 Desktop version).  We are using an outside service to do payroll. But now we cannot track labor expenses on our jobs.  I have tried all the option and suggestions in at least a dozen postings.  I tried creating an invoice for my customer job and using the popup window that offers the option to "Select the outstanding billable time and costs to add this invoice".  Doing that shows the employee's names with that job recorded as billable hours, but NO DOLLAR AMOUNT / COST is there.  It creates a $0.00 invoice.

Even if the answer is "Sorry, you're screwed. QuickBooks won't do that."

Thanks!

We aim to provide you with a better experience than what you are currently encountering, DAC7047. Allow me to share some steps you need to take for you to get back in working order.

Before doing so, please note that time entries are non-posting transactions so you need to link them with posting transactions to reflect in costing reports. For you to be able to see the amount or the job cost when creating an invoice, you need to review first your item list. This ensures you put a price on a certain item.

Here's how:

1. Go to the Lists menu. 
2. From there, look for the item and double-click on it so you can edit.
3. From the edit page, enter the Rate.
4. Then click Ok.

Once done, go back to the customer page and create an invoice again. There should now be an amount.

Additionally, if you want to keep track of your sales, you can run a sales report by going to the Reports menu. You can also customize it to focus on the information that matters most to your business.

Let me know in the comment below if you need further assistance or have other questions about managing invoices. Take care and have a good one.

this actually works, @Nicole_N.

I'm trying to enter time using timesheets and check the box as billable to indicate as billable housr but when creating invoice, it always gets zero amount after selecting from the prompt page. I followed your instructions to check the item list which I didn't think of as the reason and that resolve the problem. I now have an amount indicate in my invoice thanks to your detailed steps. You save me

Thank you for trying to be helpful.  But I do not think you fully understand the problem or my question (and the question asked by dozens of others.)
IF I wanted to invoice a customer for a service, this would work.  Except I would have to create Items for Labor rates for each of the employees and it still would not include the other costs of labor such as insurance and taxes.

However, I do NOT want to invoice a customer for the labor required to install their brick. 

Let me get specific.  We are a masonry company.  We install or clean brick and stone.  We give our customers a quote for the job based on several factors, but we do not itemize or direct bill the labor hours. 

However, we do want to calculate job profitability based on our costs for both materials and LABOR. 

The labor comes into the equation when I enter the workers' time in the Weekly Time Sheet and assign certain hours to certain jobs in the Customer drop down field. Previously this was accomplished when I was ran our Payroll inside Quickbooks and created paychecks.

Since I no longer creating paychecks inside QB, it has been suggested that making all time hours billable and then creating invoices will accomplish the same thing.  But it really doesn't.

I understand that I need to put a service in the "Service Item" field and Check the "billable" box at the end of each line.  And then create an invoice in Customer Job screen.  But when I do that, the invoice shows $0.00.  --- Unless I create an actual paycheck.  And if I were creating the paychecks -- I would not NEED to do any of those steps because the paychecks automatically post as costs again the jobs.

IN A NUTSHELL:   I am no longer creating our paychecks inside QuickBooks.  We have an outside payroll company do that.  So I am trying to find a way to post the labor and associated costs against specific jobs/projects so that we can run a P&L or a Job Profitability report that includes the labor costs. 

As far as I can tell, that is ONLY possible if I run payroll and create paychecks. There is no work-around short of setting up labor expense items in the Items List, assigning them a "rate" and then creating invoices for every hour the guys works.  The problems with this "solution" are:

1. That is very time consuming. 2. This does not capture the related liability expenses, and 3. Those labor invoices will sit as Open Invoices for every because we do NOT direct bill customers for labor.

If you read this and I am right about the need to run payroll and create paychecks in order to get labor costs to post against a job's P&L, then please reply to confirm.  I just need some "closure" on this issue.

Thank you!

Thank you for providing such thorough details about your concern, @mmplus. It would be my pleasure to give you the closure you need.

Yes, you're right. You need to run payroll and create paychecks for the labor costs to affect or show in your job's P&L report. 

Time entries are not recorded in costing reports since they are non-posting transactions. As a result, you will need to use a payroll item that is associated with the timesheet and use it in a paycheck.

That said, I would recommend activating a manual payroll in QuickBooks Desktop. For more information, you can make use of this resource: Set up manual payroll without a subscription in QuickBooks Desktop.

Furthermore, I've got you an article to help set up job costs and track your payroll expenses: Set up and track payroll expenses by job in QuickBooks Desktop.

Don't hesitate to get back to this thread if you have more queries about the labor cost in QuickBooks. I'll be happy to help you again. 

I am in the same boat. I am at a marketing agency that wants labor costs to go against a customer. I want non-posting time to go against jobs with an actual dollar amount on the job profitability report. I need to use customer and class. This is for contractors who get paid a set monthly fee. 

I have entered the sub's time on the weekly timesheet with an "item" that is the hourly $ amount we want costed. This is marked as non-billable. All I get is the hours. If I put it as billable, then it charges the customer hours. 

How do I get ANY non-posting cost to go against a customer's profitability? Would making a JE that debits the cost against a customer and credits a fake customer work? 

I did the JE idea and it worked! I set up a GL clearing account to post everything against (should always be zero).

Hello @mwbklb 

It's good to hear that you've found a work around. All the Quickbooks Team member replies look like they are copied and pasted from some Help Manual. Those types of answers only go so far.   I don't think any of them have ever actually used QB in a real business setting. 

I was wondering if you would elaborate on your solution.  I'm an office manager who is being asked to perform all the bookkeeping functions of the small company I work for.  My understanding of JE and GL  is very basic.  May I ask for more details about what steps you took to accomplish this? (If this is too much info to ask for -- I understand.)
Here's where I stand:  I input our guys' time using Weekly TimeSheet in QB. I assign hours by  Customer/job. I used to run payroll and that took care of posting those time entries against customer jobs.  But now an outside company is doing payroll and I just import a GL data file.  That takes care of payroll items, but it doesn't give me costs per job.
I wish I could just use the QB Weekly Timesheet because it so easy to allocate the labor costs to the jobs. But that seems to be useless unless I run a payroll.
Does your solution put those labor hours against customer jobs without actually running a payroll?

Thanks for any help you can offer!

Hello,

Can you explain what you did to solve this issue? I am researching the same problem and hoping for a solution.

Hello, @LowryEng.

To assist you better, can you provide us with more information about the issue you're having? I am here to assist you in any way possible.

You can provide additional details by simply clicking on the Reply button below.

I am eagerly waiting to hear back from you. Stay safe and have a great day!

This is exactly my current issue. Were you able to find a workaround? 

Has anyone figured out how to do this without running Payroll through Quickbooks? I have been having this issues for years. Wanting to add a "cost" to a service item code to be able to track profitability by job including outside services and LABOR. I have yet to find a way and always come to the conclusion that you are unable to do that if you do not run your payroll through Quickbooks. However, I have also learned that Quickbooks Online gives you the option to put in a "Cost" and an "Amount" for each service item while Quickbooks Desktop does not offer that same thing.