Learn how to use the job costing tools in QuickBooks Desktop for Mac to track how much money you spend and make for each job.
Job costing means tracking the expenses for a job and comparing those expenses to your revenue.
In QuickBooks Desktop for Mac, when you record a job-related purchase or expense, you can assign and make it billable to a customer. This makes it easy to invoice them later for the job costs. This way of tracking ensures you can run reports that show your job’s profitability.
Make sure to set up each item with enough info. The level of detail in your Item List will determine the preciseness of your job cost reports. Learn how to add, edit and delete items in QuickBooks Desktop.
Note: These steps are for QuickBooks Desktop for Mac. If you have QuickBooks Desktop for Windows, follow these steps instead.
Step 1: Set up jobs
Be sure to organize the work you do for your customers on a job-by-job basis. This lets you track the actual time and expenses that go into a particular job, and then compare those against your revenue.
Step 2: Assign time or costs to jobs
Track the actual costs and time that go into projects you do for your customers. Don’t forget to assign expenses and employee time to the jobs you set up in Step 1.
Select the appropriate job in the Customer:Job column when you enter a bill, check, credit card charge, or timesheet.
- For billable time: Record the hours spent on the job, using either a weekly timesheet or a single activity entry. Be sure to mark each entry as “billable,” and to assign the hours to the specific job.
- For job-related purchases: (items purchased for a job, subcontractor services) Use a bill, check, or credit card charge to record the purchase. On the Items tab, enter each item or service you purchased. In the Customer:Job column, be sure to assign each item or service to the job you are doing for the customer.
- Mileage: Record the mileage in the Enter Mileage window from the Company menu. If you want to change the amount for this expense (to charge the customer more than the standard rate), you can change it on the invoice.
- Other expenses: (freight charges, postage, etc.) Use a bill, check, or credit card charge to record the expenses. On the Expenses tab, enter each expense. In the Customer:Job column, be sure to assign each expense to the job you are doing for the customer.
Step 3: Create job estimates
In QuickBooks, think of estimates as project budgets. This is where you can track the costs (and revenue) you anticipate for the job, before you start the work.
You can still track your job costs even without entering estimates in QuickBooks. However, using estimates lets you see your estimated vs. actual job costs and revenue. This makes it easy to see if you’re meeting your budget goal and target revenue for a job. Having these hard numbers readily available in your QuickBooks reports can give you better insights for your future projects.
If you haven’t already, turn on the estimates feature:
- Go to QuickBooks menu, then Settings.
- Select Sales and Invoicing.
- Select Customer and/or job estimates are prepared.
To start creating estimates for jobs, go to Customers, then Create Estimates.
When you create an estimate, select the Customer:Job dropdown and be sure to find the specific job you set up in Step 1.
Note: If you prefer to create estimates with a spreadsheet or outside the program, you can just record summary estimates into QuickBooks.
Step 4: Invoice your customers for job costs and time
- From the Customers menu, select Create invoices.
- Make sure to select the appropriate Customer:Job.
- To add billable time and costs to the invoice, select Time/Costs.
- Select the tab(s) for the kind of costs you want to include in the invoice:
- Time: Time billable to this job.
- Expenses: Job-related expenses. Examples: fees you paid on behalf of your customer, freight charges you want to pass on to your customer.
- Mileage: Mileage traveled for this job.
- Items: Items billable to this job.
- In the Use column, select each cost or item you need to invoice your customer for. Or, Select All to include all costs you see in the tab. If you see a cost that you know you’ll never bill your customer for, select the cost in the Hide column. This simply permanently hides costs from the Time/Costs window, and doesn’t delete them from transactions or reports.
- Calculate sales tax for billable expenses: In the Expenses tab, select Selected expenses are taxable. On the invoice, a “T” appears next to each expense to let you know that it is taxable.
- Change the markup for expenses: In the Expenses tab, change the Markup amount or %, and select the appropriate Markup Account. This only applies to this invoice, and doesn’t change your default markup in Preferences. If you don’t want your customer to see the markup amount on their invoice, select Print selected time and costs as one single item.
- Combine time activities into a single line item: In the Time tab, select Options to combine all activities that have the same service item into a single line on the invoice. You can also change how QuickBooks fills in the Description field on the invoice or in the customer register.
- Select OK, and then complete all other details of the invoice.
Step 5: Use reports to track job costs and see job profitability
You can utilize Job Reports to find out which job is profitable and which is not. It will help you create better estimates, analyze how well each job is progressing financially, and identify problem jobs before it's too late to be saved.
To access various job reports:
- Go to the Reports menu.
- Select Jobs, Time, & Mileage.