How to Track Job Costs in QuickBooks Online
How to Track Job Costs in QuickBooks Online
You finished a $25,000 job last month. Between materials, labor, and the sub you brought in for two days, you know you spent a lot. But when you look at your bank account, the math doesn't add up. Where did the money go?
That's what happens when you're not tracking costs at the job level. You see money coming in. You see money going out. But you have no idea whether that specific job made you $8,000 or $800.
Job costing fixes that. And QuickBooks Online has the tools to do it. Most contractors just don't know they're there. If you're not sure whether your books are even set up correctly to support job costing, start with the basics of bookkeeping for contractors.
What Job Costing Actually Means
Job costing is simple: you track every dollar of revenue and every dollar of expense tied to a specific job. Materials you bought for the job. Hours your crew worked on it. The sub you hired. When all of those costs are tied to the same job as the invoice, you can pull a report and see your actual gross profit on that job.
Not your overall gross profit for the month. Not a guess based on what you think you spent. The actual number, job by job.
Setting It Up in QuickBooks Online
The key is using Projects in QBO. Here's how it works.
Turn on Projects by going to Settings, then Account and Settings, then Advanced. Toggle on "Organize all job-related activity in one place." Once that's on, you can create a new project for every job.
When you create an invoice for that job, assign it to the project. When you enter a bill from your materials supplier, assign it to the project. When you log payroll hours, assign them to the project. When your sub sends an invoice, assign it to the project.
Everything connected to that job lives in one place.
What You Can See Once It's Running
Once you've been tracking for a few weeks, go to Reports and pull up the "Project Profitability" report. You'll see every job listed with total income, total costs, and gross profit. Side by side.
This is where most contractors have their first real wake-up call. That big install you thought was a home run? Maybe it was. Or maybe the material overruns and the extra labor day ate the margin down to 15%. That recurring maintenance route you've been running? Might actually be your most profitable work by percentage.
You can't know until you track it.
The Mistakes That Kill Job Costing
The most common mistake is inconsistency. You track costs on some jobs but not others. Or you track materials but forget to allocate labor. If half your costs are unassigned, your reports are useless.
The second mistake is dumping everything into one expense category. If all your costs go into "Cost of Goods Sold" with no breakdown, you can see total cost but not what's driving it. Break your COGS into at least three categories: materials, labor, and subcontractors. That way you can see which cost type is eating your margin.
The third mistake is waiting until the end of the month to enter everything. By then you've forgotten which receipts go with which jobs. Enter costs in real time or within a few days. The closer to the work, the more accurate your numbers.
Why This Matters More Than You Think
Job costing doesn't just tell you what happened. It changes how you bid, how you price, and how you run your business going forward.
If you know your average gross margin on installs is 35% but your service calls are at 52%, that changes where you focus your sales effort. If you know a certain type of job consistently comes in under 20% margin, you either raise your price or stop taking that work.
That's the difference between growing revenue and growing profit. A lot of contractors we work with across the Treasure Coast and nationwide are doing great on the top line but have no idea what's actually making them money at the job level.
Getting Started
If you're already in QuickBooks Online, you can start this today. Turn on Projects, create one for your next job, and commit to assigning every cost. After 30 days, pull the profitability report and see what the numbers say.
If the setup feels like more than you want to deal with, that's exactly what we do. We help contractors get job costing running in QuickBooks so they can see which work is worth chasing and which work is quietly draining their margin.
Want a second set of eyes on how your books are set up? Schedule a free call and we'll walk through it together.
-
Job costing in QuickBooks Online is set up through the Projects feature.
You create a project for each job you want to track, then tag every transaction (invoices, expenses, time, materials) to that project as it happens.
When the job closes, you pull a project profitability report to see exactly what you made or lost.
The setup itself takes about 15 minutes per project once you have your chart of accounts structured for contractor work.
-
Yes, QuickBooks Online has job costing through the Projects feature, available on the Plus and Advanced plans.
The Simple Start and Essentials plans do not include Projects, so you cannot do true job costing on those.
If you are running a contractor business and need job profitability reporting, Plus is the minimum plan you need.
-
Tracking job costs in QuickBooks Online for contractors involves a few key pieces.
First, set up a project for each job.
Second, structure your chart of accounts so materials, labor, and subcontractor costs are broken out into separate sub-accounts under cost of goods sold.
Third, tag every relevant transaction to the right project as it comes in.
Fourth, run the project profitability report monthly to see margins by job.
The system works, but it requires consistent tagging discipline to be useful.
-
Customers in QuickBooks Online are who you bill.
Projects are specific jobs tied to a customer.
One customer can have multiple projects.
For example, a homeowner who hires you for both an install and a service repair would be one customer with two separate projects.
Projects let you track profitability at the job level, while customer-level reporting only shows you total revenue from that customer across all their work.
-
You can approximate job costing without Projects by using customer/job tagging or class tracking, but it is significantly more limited and harder to maintain.
Without Projects, you lose the built-in project profitability report and have to build your own reporting through filters and custom reports.
For most contractor businesses, upgrading to QuickBooks Online Plus to get Projects is more cost-effective than working around the limitation.
