overhead on projects

Let me provide some information about overhead charges so you'll be guided on what to do, shannonb123.

Overhead costs and operating expenses should be tracked separately for a number of reasons. Calculating overhead costs is done by adding up all overhead costs, breaking them down by month, and dividing the total by monthly sales. To sum up, I've provided the formula below:

(Overhead ÷ monthly sales) x 100 = overhead percentage

For the overhead allocation rate:

Total overhead ÷ total labor hours = overhead allocation rate

Also managing job costing depends on your business plan and customers. But there's no single right way how to do it. To give your more information, read this article for more details: What Are Pay Rates, Cost Rates, And Billable Rate.

Additionally, QuickBooks Online (QBO) offers a variety of reports that will tell the aspects of your business. You'll want to customize them to make sure you'll get the information you need. An article is added for more information: Customize Report In QuickBooks Online.

Fill me in if you need additional assistance with overhead charges. I'll be here to help.

If overhead was a poor word to use, then how about this for project breakdowns,

I need my projects in QB to look something like this:

Job Invoiced total: $1,000

- company initial commission 15%: $150

= $850

- labor: $100

= $750

- materials: $100

= $650

- commissions to salesman 50% = $325

= $325

- commissions to owner = $325

= $0

How can I put in the company commissions 15% without it being taken out of any bank account?

Were you ever able to figure this out?  

Hello there, @sma1721. I'm here to share some insights about creating overhead charge for projects in QuickBooks Online (QBO). 

In QBO, overhead costs and operating expenses have to be tracked separately. You'll come up with the total calculating overhead costs by adding them all, breaking them down by month, and dividing the total by monthly sales. Refer to this formula: (Overhead ÷ monthly sales) x 100 = overhead percentage. 

For additional reference, check out this article: How to calculate and track overhead costs for your small business. 

To further assist you in managing overhead for projects in QBO, I highly recommend reaching out to your accountant. They can advise and provide steps on how you can handle the entry. This is also helpful to make sure that they are allocated to the correct accounts in your company. If you're not affiliated with one, you can use our Find an Accountant tool to look for one near your area. 

Furthermore, job costing depends on your business plan and customers. You can read this link for more details: What Are Pay Rates, Cost Rates, And Billable Rate.

I'm always here ready to help if you have any other concerns managing your projects in QuickBooks. Have a good day ahead and stay safe. 

Was this figured out? We have the same issue. 

Hello there, @ODCAD.

Let me share information about overhead costs on a project in QuickBooks Online.

The overhead costs are tracked by adding all of them and dividing them by monthly sales. Here is the formula: (Overhead ÷ monthly sales) x 100 = overhead percentage

To learn more about calculating and tracking overhead costs, you can read this article: How to calculate and track overhead costs for your small business.

I also recommend reaching out to your accountant to assist you in managing overhead for projects in QuickBooks Online. You can get advice from them and ask for guidance with the step-by-step process of making the entry. They can also help you make sure that they are allocated to the correct accounts in your company. If you don't have an accountant, you can click this link: Find an accountant.

For future reference, you can read this article about job costing: What are pay rates, cost rates, and billable rates?

Feel free to click the Reply button below if you have questions about the overhead cost of the project in QuickBooks Online. I'm always here to help. Have a great day.

I did find a post on linked in explaining on how to do this.  I don't think the person from Quickbooks is understanding what any of us want.  We are not asking on how to calculate overhead, just how to cost it to a job.  Here is the link from the post I found. 

https://www.linkedin.com/pulse/allocating-overhead-costs-jobs-quickbooks-bilal-ahmad-zzsbf#:~:text=A....

Hope this helps you 

Your response is incorrect. 

Let me explain.

The the term 'Overhead' is used in Government Contracts as a percentage added to COST elements. 

Unless you have one specific building for one specific project, it is is calculated globally across the company OH/GA/FR %

Do NOT lump this data together.

The math is as follows:

Building, electricity, insurance bills, and other costs of this type, are lumped together in a total, for a sum of "Overhead Costs." THAT NUMBER/sum, is then allocated to the number of people you have, LABOR costs. 

Therefore, if you have $50,000.00 in Labor Costs (hourly rates X hours = $50,000.00),

THEN you divide that LABOR cost by the OVERHEAD sum, to learn your OVERHEAD %. as follows:

Overhead total Costs:  $63,000.00

Labor Total Costs:  $50,000.00

OH% Rate:   $50,000.00/$63,000.00 = 0.806452 or 81%

There are two other percentages that are added to the BASE COST which are called General & Administrative (G&A%) and Fringe (FR%).

Each of these are added to the BASE COST ($50,000 labor RAW rate)(hourly pay rate)

for a total of the ACTUAL COST of labor, or ACTUAL cost of a sellable item.

For instance: 

Labor RATE is $15.00 hour

OH% RATE is 81%

G&A% is 47%

FR% is 52% (Fringe includes all the costs related to processing your employee payroll, your vacation time paid, your EE insurance, workers' comp insurance, etc)

ALL of these percentages are added to the BASE LABOR RATE in a specific order, to determine what it ACTUALLY COSTS YOU for the employee.  Simple math (not in sequence) is:

$15.00/hr X OH 81% = $12.15.

$15.00/hr X GA 47% = $7.05

$15.00/hr X FR 52% = $7.80

Total of all COST FACTORS:  $42.00/HR is your ACTUAL COST for that employee, PER HOUR.

There is an added process to this, that is not in this example.  The %factors are stacked in a specific order, but too complicated for this conversation. 

The POINT:

As a company, YOU have to develop your Chart of Accounts to collect these SUBCATEGORIES OF COSTS, i.e.,

Parent = "G&A" and then add all the sublines for each of the costs of General And Administrative costs.  You can add more account numbers at any time.

Parent = OverHead, add sublines for each of the samples listed above, add as many as you need.

Parent = FRINGE, add sublines for each of the costs related to direct employee costs, as mentioned. 

THIS IS HOW YOU REACH YOUR COST ALLOCATIONS to determine what the OH % is. 

THIS has NOTHING to do with 'commissions.'

Commissions is a percentage of PAY, i.e., a BONUS, paid to the employee as a reward, etc. 

TWO COMPLETELY DIFFERENT PROCESSES. 

The issue in QB is:  The system is not originally designed with this Chart of Accounts type.  You have to build it.

And, most civilian accountants just dump everything in 'overhead,' when in fact, there are three categories of percentages that help you dissect your costs of employees.  What if you analyze that  your FRINGE rate is becoming excessive, and you figure out your insurance company doubled your premiums without notice, because you were using 'auto pay?'

Yuh.

More detail saves your ...... tail.