Contractors Can Better Track Jobs With QuickBooks Desktop

Contractors need to carefully track jobs to understand their individual job profitability. Doing so also provides you with a clear understanding of work in progress (WIP). QuickBooks Desktop, a valuable toolbox for job tracking and organization, can help you maximize profitability and create better efficiencies.

There are five key steps to setting up your QuickBooks file for successful job costing.

Selecting the proper version of QuickBooks: While basic job costing can be done in almost any version (including QuickBooks Online), the best one currently available for contractors is QuickBooks Desktop Premier Contractor Edition. It’s specifically tailored to general contractors and offers unique tools and reports that are not included in other editions. QuickBooks Enterprise Edition also offers WIP tracking and committed cost tracking.

Setting up your QuickBooks file for job costing: You will need to enable several settings. From the Preferences menu, you must enable job costing, items and payroll class and item tracking. This allows you to set up the jobs to which you’ll code your expenses and apply payroll to those jobs (if you are using QuickBooks payroll). Additionally, make sure your chart of accounts includes the revenue and cost of goods sold accounts you want to see when running reports.

Setting up jobs in QuickBooks: QuickBooks allows you to set up customer jobs and sub jobs. Create a customer job if that’s the only work you will be performing for them. You can also set up sub jobs  if you expect to perform multiple jobs for that customer in the future. The software also allows you to include job details like status, start date, projected completion date and other information.

Setting up items and coding revenues and expenses: To assign job costs properly, set up your item list to include revenue and expense items necessary for accurate reporting. Revenue items should reflect the services that you provide and allow for ease of invoicing. They should be coded to the revenue lines on the income statement to which they most closely belong. Likewise, job cost items should reflect the costs you incur during the course of your jobs and allow for ease of payable entry.

These job cost items should be coded to the cost of goods sold lines on the income statement to which they’re most closely associated. You can also code one-time expenses directly to the job by selecting the correct cost of goods sold line and the job when entering the expense. Direct labor should also be coded to the jobs when using QuickBooks Payroll or through manual entry into QuickBooks.

Reporting: After you’ve set up QuickBooks and enter transactions to your jobs, you can take advantage of the contractor-specific reports in QuickBooks Desktop Premier Contractor Edition:

  • Job Profitability Summary
  • Job Profitability Detail
  • Job Estimates vs. Actual Summary
  • Job Estimates vs. Actual Detail
  • Profit and Loss by Job

QuickBooks Enterprise also provides additional reporting available on work in process tracking and committed cost tracking.

With so many benefits, it’s a worthy task to look into QuickBooks desktop. That said, every business is different. So we recommend you contact your construction CPAs to help you make the best choice for your business.

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