If using the QuickBooks software to track your Spec and Custom homes activities, it is recommended that you create a labor and materials items list prior to actually commencing any bookkeeping.
To begin, you can create this list in a spreadsheet and then import into QuickBooks within certain parameters (be sure you fully understand the QuickBooks items import criteria/parameters first prior to actually creating your items on a spreadsheet).
You can also just begin creating an item one at a time directly within QuickBooks as well.
In any case, I would recommend that you create the items list for Spec & Custom homes in this manner:
- Separate Materials from Labor but use very similar items for both types:
- Example: Materials Item called: Drywall Materials and a Labor Item called: Drywall Labor.
- Create two very similar complete items lists: One complete material & labor list is for Spec work and one complete materials & labor list is for Custom work.
- Example: All materials and labor items for custom work are all preceded by an asterisk (*) while all materials and labor items for spec work are just normal:
- Custom work: *Drywall Labor. Spec work: Drywall Labor.
- You can also add special numerical job codes for each item depending on your needs.
- Example: *2000 – Drywall Labor, or for spec work: 2000 – Drywall Labor.
Overall, you do NOT have to create an items list and instead just book all purchasing activities straight into an account (in your chart of accounts), such as Cost of Goods Sold or Construction in Progress for example. However, an items list can help if you want to better understand where all of your moneys are going for a specific job or if you are utilizing some sort of job costing software that has its own criteria for booking things on the front end.
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.