My client, Olivia, hired AccuraBooks a few months ago to do the following:

• Catch up the bookkeeping
• Create a job-costing platform & process
• Provide bookkeeping maintenance going forward

Upon review of Olivia’s bookkeeping in her QuickBooks company file (home design & remodel service), it was discovered there were current customer jobs still open that actually began about 3 calendar years ago.

What this meant was that the previous bookkeeper only booked the direct costs DIRECTLY to expense accounts and NOT to actual job-costing labor and materials items, so as to be able to process detailed per-job profitability reports. Job profitability reports are important because the business owner can see exactly what was spent on various types of labor and materials in one report to ultimately determine if, for example, too much money was spent on a particular type of labor or material.

So, in addition to being tasked with creating an entire job-costing system for Olivia, from the ground up, for her business, but I also had to figure out how I can also take the previous years’ job-related expenses and make them appear on a detailed labor & materials job profitability report.

Ultimately, my solution was the following:

• Process a detailed, per-job, profitability report for each past calendar year.
• Double click on the “No Item” total at the bottom of the report to open up another report that shows all of the transactions that made up this No Item total. Be sure to also customize this report to include “Account” and also sort by account name.
• Download to a spreadsheet and tally up all of the different types of labor and materials, per account name. Be sure to also separate out by all of the possible sub-jobs for a customer (if you have different types of jobs going on for one customer).
• Now click on the check writing feature in QuickBooks and prepare to process a ZERO $$ check payment; be sure to date this check payment for December of that calendar year.
• In the expense/items area of the check payment screen (bottom half) the ITEMS tab will have a positive amount for each labor or materials item that you want to show on your items job profitability report. The EXPENSE tab will have the exact offsetting negative amount for the account that you want to offset to these items. Please note: Be sure the accounts that each item is pointing to is the exact same account that you are deducting from in this check payment. Now click Save & Close and refresh that customized No Item report to be sure it has a zero total at the bottom. Also check your per item job profitability report for that job for that calendar year to ensure you are seeing the results you desired.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.