How to Use Job Costing in QuickBooks

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You don’t accidentally run a great business.

Maybe you have a great idea and maybe you have great people working for you, but in order to run a great business you need to understand how your business works.

Knowing how you make money is one of the biggest components of understanding your business, but almost as important is knowing how you spend money.

job costing in quickbooks

Luckily, QuickBooks makes it easy to track where you’re spending money so you can both understand the process and make the whole operation more efficient. By using the “job costing” functionality, you can track the cost of each individual job so you can make better estimates and choices in the future.

Job costing best practices

In QuickBooks, each customer can be associated with any number of jobs. To use job costing, you first need to setup a job within a customer record. So if you’re working with John Markus on a new design for his front room, you should create a Front Room Renovation job under John’s customer record. ┬áDo this for both a customer you only expect to work with once and for those you’ll have ongoing relationships with.

Once you have a job in place, you can allocate items and costs to that job. To assign costs, you simply need to fill in a check, bill, or credit card entry in QuickBooks, choosing John Markus from the “Customer:Job” column.

For items, you will first need to enter the types of items into QuickBooks that you commonly use. For instance, when working on John’s renovation, you may make use of copying services, stamps for mailing documents, or printing services. Each of these should be entered as an item in QuickBooks so that it can later be recorded against the job.

The level of detail you put into your items will be reflected in the details you receive in your job costing reports. If you enter a different item for large format printing and for normal printing, for instance, you’ll be able to compare how much those items are affecting your costs later down the line.

Man Examining Almost Empty  Wallet  With Magnifying Glass

Now you need to make sure that everyone who works for you is accurately tracking the items and time that they spend. While this should be a best practice for every business, it’s especially important for job costing, as each item and hour will need to find a home in QuickBooks to get an accurate view of your business.

Job cost reporting

After you’ve set your system up, you can run a whole series of reports to get a better view of what’s going on with your business costs. Here are three basic reports that can generate a lot of value for you, just by giving you new insights. All of these reports can be found under the “Reports” menu, and you can find a list of more common reports here.

  • Profit and Loss by Job. This report gives you an overview of jobs you’ve completed. You can easily see if a job was profitable or not and compare costs on similar job types to see where excess is going to waste. Summarized income and costs also allow you to see where the biggest paydays and bills are hitting your bottom line. This report can help you figure out items you might want to buy in larger quantities or customers that have been especially profitable. It’s the first real dip into examining your profits.
  • Expenses Not Assigned to Jobs. This report gives you a catch-all view of costs that may be falling through the cracks. You may discover you have items that never end up being assigned to jobs or you may catch items that should have been assigned but weren’t. For billing on time and cost basis, this report can be especially helpful.
  • Job Estimates vs. Actuals. At the slightly more advanced end of the spectrum, you can compare your estimated costs to your actual costs. This requires using estimates in QuickBooks, but the payoff is fantastic. For each job, you can see if you were over or under budget, make adjustments for common errors, and get more out of all your future work by providing more accurate estimates early on. You can drill down into specific jobs, as well, to find out why specific jobs went well or poorly.

Keeping an eye on the future

While all of these reports are backward looking, they give you a chance to be better in the future. By seeing where you’re making errors, you can fix your process to make things better next time. You can also ensure that you’re actually making money when you expect to, so that you don’t get to the end of the year only to find yourself falling short.

In addition to QuickBooks, Capterra’s accounting directory contains a huge selection of robust software packages. If the reporting in QuickBooks isn’t enough, we can help you find a better solution for your needs. Check out the accounting directory and get in touch.

Looking for Accounting software? Check out Capterra's list of the best Accounting software solutions.

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Andrew Marder

Andrew Marder is a former Capterra analyst.

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