Job costing is a concern for any business that needs to track time and expenses as they relate to specific jobs. Job costing is critical for any business that performs several jobs in a month or year. For those that are not familiar with job costing it is essentially the cost of labor and materials that goes into completing a job.
Why should you use job costing?
Job costing can be incredibly valuable to a business owner if it applies to their business. By tracking the amount of labor and specific materials that go into completing a job estimates become much easier to complete. Job costing will also help you determine job profitability, which may in turn drive you to focus or specialize in certain types of jobs.
How do you implement job costing using QuickBooks?
Job costing is a fairly straightforward process to implement in QuickBooks. All that is required is that you assign a Customer:Job to each expense that you incur and also to your labor. Both expenses and labor give you the option to assign a job to them, but also allow you to make the charges billable to the customer or not. You can make the item billable to the customer assigned to it simply by putting a check mark next to the box that says billable? Some of the labor charges that you incur may not be billable to a customer, but are still a cost to your business. I typically track this as non-billable time and also break that into several categories. To learn more about non-billable time read this blog post.
Reporting on job costing and interpreting reports
In QuickBooks under Reports/Jobs, Time & Mileage you can find many job reporting options. There are many options for reporting including job profitability, profit and loss by job, time by job and unbilled time by job. These reports will help you identify both strengths and weaknesses within your business. You can then use the information to tweak certain processes to make them more profitable. You may also find over time that these jobs will help you identify your "sweet spot" or those jobs that are extremely profitable for your business.
Job costing is a simple process to implement into your bookkeeping procedures. It does however take some additional work and careful attention to detail. However, careful job costing will prove extremely beneficial to your business and its profitability. For help with job costing or any other QuickBooks or bookkeeping issue please feel free to email me.