Job costing in QuickBooks: Tips and setup

Although construction companies may already use QuickBooks for accounting, job costing requires a different workflow to set up and maintain. Because QuickBooks wasn’t built around project-based operations, the job costing workflow can feel unintuitive for construction teams.

The good news is job costing in QuickBooks is still possible, and integrations with platforms like Miter make the process even easier. Read on to learn how to job cost in QuickBooks Online and QuickBooks Desktop.

What is construction job costing?

Construction job costing involves tracking all expenses tied to individual jobs or projects. This includes:

• Direct costs linked to a particular job, like labor, materials, and equipment
• Indirect costs supporting it, like office spaces, admin salaries, and phone allowances

During a general accounting process, companies use profit and loss reports to see whether the business is making money as a whole. But contractors need to know how profitable each individual job is. Based on this information, they’ll be able to make more accurate estimates and see which types of jobs are most profitable. 

In construction, many moving pieces impact project costs, including worker’s comp rates and differences in employee pay rates and their billing rates. That’s why having the right job costing software on hand makes such a big difference; teams need granular control over their data to get an accurate picture of expenses.

The importance of job costing in construction

Without meticulously accounting for every expense, contractors are essentially flying blind. Understanding job costs and the financial performance of previous projects means contractors can confidently plan for future jobs.

When done right, job costing empowers contractors to:

• Create more accurate estimates and competitive bids using historical cost data
• Deepen client trust with a detailed and transparent breakdown of costs
• Spot cost overruns early in the project before they become problems 
• Compare actual costs against original estimates
• Manage cash flow and keep projects on budget
• Identify which job types and customers are most profitable 

Construction job costing in QuickBooks Online vs. job costing in QuickBooks Desktop

Job costing in QuickBooks varies depending on whether companies use QuickBooks Online (QBO) or QuickBooks Desktop (QBD).

QBO offers simplified, cloud-based project tracking that provides insights without overcomplicating things. And QBD offers more advanced, granular tracking and customizable reporting to provide a complete financial picture on an item-by-item basis.

Here’s a quick look at the software’s differences:

QuickBooks Online 

• Setup requirements: Uses a simple Projects feature to track jobs; can use Classes/Locations and sub-customers for additional categorization

• Reporting methods: Offers standard profit and loss reports as well as customizable reports
• Limitations: Less robust hierarchical job structure; construction reporting requires customization rather than native construction-specific features

QuickBooks Desktop 

• Setup requirements: Allows job tracking under customers with detailed hierarchical structures (such as Customer > Job > Sub-jobs)

• Reporting methods: Provides detailed reports (including job profitability, cost to complete by job, and estimates by job)
• Limitations: On-premise software that requires in-house server hosting for multi-device use

By integrating time tracking and payroll with QBO and QBD, Miter bridges these gaps. Miter automatically syncs your complete work breakdown structure (jobs, cost codes, GL accounts, and departments/classes) directly from QuickBooks, eliminating double data entry. Once employees track time to jobs and cost codes in Miter, the platform breaks down labor costs into granular categories like earnings, employer taxes, and benefits, then pushes fully burdened, job-costed journal entries back to QuickBooks. This gives you accurate, real-time job costing in QuickBooks, without manual labor allocation or post-project data entry. 

How to set up QuickBooks for job costing: 5 steps

No matter which version of QuickBooks contractors use, the key steps to job costing are similar. Here’s how to get started.

Step 1: Enable job costing and project tracking.

Start by turning on job costing features: 

• QuickBooks Desktop: In the preferences page, head to Job & Estimate Preferences, and tap the Enable Job Costing option.
• QuickBooks Online: Head to the company settings or preferences page, and turn on the job costing feature.

Step 2: Set up jobs or projects and assign customers.

Next, create the customer or project profiles: 

• QuickBooks Desktop: Every job or project is linked to a customer. Set up multiple jobs for one customer to manage different projects for them.
• QuickBooks Online: Go to the Business Overview menu, and select Projects. From here, create a new project for each job.

Step 3: Create cost codes or categories for labor and expenses.

Plan a cost code structure by deciding on a logical numerical system that reflects all of the company’s activities (such as 1000-Excavation, 2000-Concrete, 3000-Framing, 4000-Electrical). 

While there are many ways to set up cost codes, a hierarchical structure with parent items (3000-Framing) and sub-items (3100-Framing Labor, 3200-Framing Lumber) will provide more accurate job costing reports.

Enter each cost code as a new item, and assign it to the appropriate expense account. Here’s how: 

• QuickBooks Desktop: Go to the Item List to add a new item. Choose the category that best fits the cost code, like “Service” for labor and “Inventory Part” for materials. Add the cost code to the “Number” section, and fill out any other relevant details, like description and related expense account. Save any changes, then add items as needed to invoices, sales receipts, and purchase orders. 
• QuickBooks Online: QBO separates items into two categories: product and service. To set one up, head to the Products & services page, then add a new non-inventory item or service. When filling out the details, add the cost code to the SKU box. After saving the product or service item, use it for any related customer or sub-customer.

Step 4: Tie labor and expenses to jobs.

Capture all costs in the field as they happen. Then, assign every timesheet, bill, check, and credit card charge to the correct job: 

• QuickBooks Desktop: Create a new expense, and choose the right project in the Customer:Job column to tie the two together. 
• QuickBooks Online: Either connect labor costs to projects after running payroll or use estimated hourly costs to get a rough, but faster, idea of costs. For other expenses, go to your project, choose Add to project, then tap Expense.

Step 5: Review job costing reports to monitor performance.

After tracking all job costs in QuickBooks Online or Desktop, run and review reports to assess job profitability:

• QuickBooks Desktop: Head to the Reports page, and tap Jobs, Time, & Mileage. QBD Premier Contractor Edition or Accountant Edition also break reports down by industry.
• QuickBooks Online: Open the Projects menu, then click Project Reports > Project Profitability. Narrow down which customer, vendor, and date range to review, then select Run Report.

Best practices for accurate job costing in QuickBooks

To get the most out of QuickBooks for job costing, follow these tips: 

• Use standard cost codes across jobs.
• Record time and expenses as close to real time as possible.
• Include all expenses, even small ones, as each cost adds up.
• Enter data on a timely, consistent basis.
• Review labor hours and associated cost codes for accuracy before finalizing payroll.
• Integrate tools like Miter to reduce manual entry.

How Miter streamlines job costing in QuickBooks

Miter eliminates manual data entry by sending fully burdened labor costs to the QuickBooks ledger to keep financial data aligned. That means every direct and indirect labor cost is automatically mapped to the correct job, phase, and cost code. Contractors get detailed cost tracking rather than just summary totals.

Our platform automates the flow of labor and expense data directly to specific jobs by integrating with both QuickBooks Online and QuickBooks Desktop. The integration capabilities differ slightly, with our QBO integration fully automated via API, and QBD integrated via the QuickBooks Web Connector.

When companies use Miter to sync job costed payroll, time tracking, and expense data to QuickBooks, they reduce errors and see up-to-the-minute project insights without duplicating work.

Don’t just take our word for it; here’s what customers using Miter’s QuickBooks integrations have to say:

More time saved: Bell Incorporated, an excavation firm, shared that automating their time tracking and payroll with Miter reduced processing time “from four full eight-hour days to a day and a half.” Cutting their workload by more than half gave them more time to focus on other parts of their business, like compliance and stakeholder engagement.

More revenue generated: With Miter, Adams Plumbing streamlined their payroll and improved union compliance. They used Miter to calculate union fringes in real time, manage complicated overtime rules, and create certified payroll reports. As a result, the company was able to “work twice as many jobs” and take on “individual contracts that are as big as an entire year was previously.”

If you’re a contractor using QBO or QBD, explore how Miter can help make your life easier by eliminating manual entry, handling payroll compliance, and giving you better job cost insights.