Job Costing in QuickBooks Online
Many of my clients face a particular challenge — Job Costing — that had to be a struggle to do through QuickBooks. I believe it is an important enough issue I have been doing a series of articles on the subject, as many of you have already read. This week I have a run through of socotax’s article, Job Costing in QuickBooks Online. If you want additional information or help with Job Costing in QuickBooks for your business, contact me directly and we will design a process that fits your unique business needs.
Why Job Costing Matters
Job costing is an important tool for organizations that pair a relatively high dollar volume per customer with a low number of customers. Meaning that all businesses can benefit, but can prove most helpful for those who work a small amount of expensive jobs. Accurate figures from a quality job costing system will set the stage for future estimates, costs and goals. Some other key benefits include:
● Tighten cost control of jobs
● Assess performance of teams and/or individuals
● Prevent overruns of future jobs
● Build a cost history for estimating
Typical Issues with Job Costing
Although job costing seems to be a no-brainer, there are a few common deterrents. Traditionally, the process requires a lot of upfront work that business owners do not see as a top priority. You may have been faced with these issues before implementing a job costing system:
● Hard to organize all materials used
● Difficult to track accurate labor costs from individuals
● Relying on statistics alone rather than actual input
● Often takes a lot of clerical staff and time to organize
How QuickBooks Online Can Help
Although QuickBooks Online does not have a feature solely for the purpose of job costing, there are a few unique ways to do so.
QuickBooks Online does not use “jobs” per se in their software. Instead, they use Sub-Customers which happen to be very simple to set up. Using Sub-Customers is the first option directly within QuickBooks Online for job costing. Here’s how you can get started:
● Add Sub-Customers through the Customer Center found in the left navigation bar
● Next, from within the Customer Center, select the New Customer button in the top right
● You will see the Customer Information window open where you’ll need to add in some information (see below)
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● Set up the Parent customer (the actual customer’s name) and be sure to save
● Now add the job as a Sub-Customer by clicking New Customer on the upper right
● Enter the job name in the “Company” field and check “Is Sub-Customer” box
● Choose the parent customer from the list and indicate whether you want to invoice the Sub-Customer with the parent
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● Click Save after completing these steps.
Another option within QuickBooks Online Plus is to use Class Tracking. This feature allows you to track income and expenses for specific parts of your business. You’ll be able to set a different class for each detail line of transactions. Again, this feature is only available to QuickBooks Online Plus users. To turn on this feature, start with these steps:
● Note that you will need to establish Categories if you have not previously done so. If you need to create Categories or add new ones, you can do so this way:
○ All Lists > Classes or Locations > New
● Once you’ve established the necessary Categories, navigate to your Company Settings through the Gear icon
● Click Company from the left menu
● Next, navigate to the Categories section and click Edit
● Check the box or boxes for the Categories you want to enable
● Configure the settings for the Category and save
One 8 Solutions Resources for QuickBooks Online
With QuickBooks Online there are a massive number of apps out there, some good, some bad, that can integrate directly with QuickBooks Online and help you with a range of needs, including Job Costing. For example TSheets, which can be helpful with employee tracking and even sometimes with job costing for materials, and works from a mobile phone! Read more on my resources page.
Job costing is relevant to businesses, no matter the industry. Businesses already partnering with QuickBooks should consider using the platform itself or a third party app to work more efficiently.