Real tracking of your business financials comes from Job costing. If it is not done right, then you may always be in doubt about your profits. The reason why this is so is that job costing allows you to track down all your expenditure. When these very expenses are compared with the revenue earned helps you figure out the real profits.
QuickBooks for Contractors Job Costing
Job costing is really an important part of tracking financials. It becomes all more important for contractors. Thus do it with utmost care. To do job costing with ease, Quickbooks offers the best solution.
Implement Job Costing within QuickBooks
If you are new to using QuickBooks or implementing Job costing for the first time then here is how to move forward. Follow the steps:
- The very first thing you would need to do is to get started with Customer: JOB. This you would need to create for every single job you create.
- If the case is like that you only have 1 job against 1 customer then the best practice would be to still create a job. This will only help you stay organized and if you get another job for the same customer then recording things will be a lot more convenient.
- The best part about creating a job is that all your previous entries related to the said customer can automatically be shifted to Job 1 if you want to create a new job entry.
- The next thing in the process would be to set up items. This is required to optimize your job costs. The more detail you give the better it would be.
- Now assign all the expenditures you make to the job. This will show you the real picture of the cost recorded. The level of detail required and what different terms would mean to you will be as follows:
- Timings to be billed for: Here you would need to enter the time spent (hours) on a said job.
- Purchases that are related to a JOB: Here enter the payment method used for purchases. This can be in the form of:
- Credit Card,
- Cheque, or anything else.
- You would also be required to enter the items purchased. Once done allocate the said items to the appropriate JOB.
- Other Expenses: If you have any other expenses that have nothing to do with direct purchases made, then these will be a part of other expenses. They are also said Overhead expenses. Thus expenses like “supplies for Office use” or “office rent” will become a part of Overhead expenses. The best practice to record Overhead expenses is to create a new Customer: JOB and name it Overhead and then include these expenses.
- Recording Mileage: As you would want to track every single thing when it comes to recording expenses thus why leave behind vehicle expenses. Under the mileage tab, you can specify the very said thing.
- Any other expenses: If you are left behind with any other expenses like stamp charges or freight paid then you can record them under this tab.
- Recording estimates: Do you know you can record them even outside of the QuickBooks platform? If you plan to do so then do it within the spreadsheet now you will only be required to create invoices. To do so just create a simple invoice within QuickBooks with all your info. and copy-paste the estimates. This will convert invoices out of your spreadsheet estimates.
- Invoice: Here, provide a summary of each invoice as the invoices have been created out of spreadsheet estimates.
This completes your job costing tracking. Now, whenever you want to check out the financial health of your business then you can simply check in your Job cost report and compare them with the revenue earned. This report is further helpful in analyzing how different jobs are performing and how you can make them profitable but allocating budgets.