Job costing means tracking income and costs for each job so you can see which ones are profitable. Contractors assign materials, labor and subcontractor costs to each job, record progress billing and retainage correctly, and review profit by job each month.
1Why job costing matters
A construction company can look busy and profitable overall while individual jobs lose money. Without job costing, you only see the total. With it, you see which jobs and which types of work make a real profit.
That information helps you price future bids correctly.
2What to track on each job
- Materials purchased for the job
- Labor, including payroll and hours worked
- Subcontractor payments
- Equipment rentals and fuel
- Permits and other direct costs
- Income, including deposits and progress payments
3How it works in QuickBooks
QuickBooks can track jobs as customers or projects. Each bill, expense and invoice is linked to the job it belongs to. Reports then show profit by job, so you can compare the estimate to what really happened.
4Progress billing and retainage
Many contracts bill in stages, and some hold back retainage until the job is done. If these are recorded incorrectly, income appears in the wrong month and balances owed look wrong.
Record retainage separately so you always know what is billed, what is paid and what is still held back.
5Subcontractors and 1099s
Keep a signed W-9 for every subcontractor before the first payment, and record payments by vendor. At year-end, this makes 1099 reporting simple instead of a scramble.
6Making it routine
Job costing works only when entries are accurate and consistent. Monthly reconciliation and a regular review of profit by job keep problems visible. We set this up so you can see which jobs make money, down to the last dollar.
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