Job Costing in QuickBooks
Job Costing in QuickBooks: Step-By-Step Guide
Before you can start tracking costs, you’ll need a QuickBooks Online Plus subscription, because Budgets are not available in the Simple Start or Essentials levels. When you’re ready to begin Job Costing in QuickBooks, the first thing you need to do is track expenses by customer.
Step 1: Track Expenses by Customer
To track expenses by customer, you’ll first need to adjust your expense tracking preferences in the Company Settings. Click the “Company Name” and/or Gear Icon in the top right hand corner of your QuickBooks Online Screen, then click “Company Settings.”
In the “Sales” tab, click on the Sales form content in the menu, and check the box next to “Custom transaction numbers.” We’ll need this for progress invoicing and receiving partial purchase orders:
The next thing we need to do is tell QuickBooks Online that we want to track expenses by customer (and if necessary, tell it that we want to make expenses and items billable). To do this, click the “Expenses” tab in the Settings screen, then click “Bills and expenses” to edit. You’ll want to check “Show Items table on expense and purchase forms,” “Track expenses by customer,” and “Make expenses and items billable:”
Don’t forget to hit the “Save” button as you make your changes.
The Markup and option to track billable expenses and items as income are determined by your industry and the specific processes your business has in place.
The last bit of setup we need to do is regarding estimates. Click on the “Advanced” tab in the Settings screen, then click “Automation” from the menu. Here, you want to make sure you check the box next to “Copy estimates to invoices” (and you can choose whether to allow pending and accepted estimates, or just accepted). Click the “Save” button, then “Done” in the bottom of the settings screen.
Step 2: Update Setting On Your Customer List
The next step is to adjust the settings on your customer list. We’ll be using sub-customers (these are called Jobs in the desktop editions of QuickBooks), and choosing the “Bill with Parent” option in the customer preferences
Step 3: Adjust Settings on Products & Services
To use Products and Services (what is called the Item List in QuickBooks Desktop editions) for job costing, you’ll need to tell QBO that you purchase each one from a vendor. Not everything on this list needs to be set up this way—just those that you pay a contractor to do or any products that you purchase to sell. To access this list, you’ll want to click the “Company Name”/Gear Icon, then choose “Products and Services” from the List menu.
Step 4: Submit Estimates and Invoices
Generally, the workflow is to create an Estimate, have your customer approve it, then convert the Estimate to an Invoice. To create an Estimate, the easiest way is to use the “Quick Create” button, the QuickBooks term for the plus sign that is visible on any QuickBooks Online screen.
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