Briefly, job costing is simply applying your revenues and expenses to the customers and jobs (or projects) for which they were used. In QuickBooks, for each bill, check, and credit card transaction related to a particular job, be sure to complete the Customer:Job column. Remember to complete this column for both labor and materials.
Once you have entered your customer:job information, you will need to make a couple more decisions:
- Checking the “Billable” box. Will this particular expense (as listed on the vendor Bill, for instance) flow through to the client Invoice?
- Determining whether or not to use markups and how they will be calculated.
Keep in mind that each customer is a job. If you will be doing multiple jobs for this customer, you will need to differentiate between the individual jobs using the Jobs subaccount under Customer.
At the end of the job (or some meaningful point prior to the end), you will be able to process a job profitability report to see how the job is progressing financially. This information is helpful in determining how well you profited on a job, but can also be helpful for determining future rates, seeking more cost-effective suppliers, and calculating the time and labor required for a particular type of job.
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.