Tracking Jobs in QuickBooks: Part 1
Job-costing is not just for contractors. While that’s probably the most common understanding of this concept in QuickBooks, you can also use the software’s jobs tools to track income and expenses for any related group of items and/or services.
Think of them as projects. If you’re an expert in business promotions, for example, you probably have multiple projects going on simultaneously that consist of materials you might need to order for your client (like special paper) and the actual work you do (design, content-creation, etc.). You could also have to track expenses like mileage, and you may price your services by the hour.
QuickBooks can handle all of this. If you’re conscientious about documenting all of the pieces that go into every job, you’ll be able to run reports that show you how much you spent and took in on each. This information can help you better price your services and manage your time to maximize profitability.
In part one of this of a two-column series, we’re going to explore the basic elements that go into job-tracking. Keep in mind that there are many different ways to work with jobs. How you choose to do it will depend on the structure of your business.
First, let’s look at a simple example. The first step involves setting up a job for an existing client. Even if you think you’re only going to be doing one project for them, you can still set it up as a job so you can assign all related income and expenses to it. This will make it much easier if you get additional work from the customer down the line â?? and if you have to bill the customer for something that’s not related to a specific project.
To create a job, open the Customers menu and select Customer Center. Make sure the Customers & Jobs tab is highlighted. Select the customer by clicking on it. Right-click the name and select Add Job from the drop-down list. When the New Job window opens, click the Job Info tab.
Figure 1: You can track your Jobs by keeping their status current in the New Job window.
Fill in the Job Name field. In this example, we’ve selected a name that’s broad enough that we’ll eventually be able to break down into specific tasks. If your customer has an outstanding balance as of the current date, that amount will appear in the Opening Balance field.
Enter a Job Description. The Job Type field is optional, but creating these classifications can help with advanced reports that gauge profitability. Consult with us if you want to explore these.
Open the Job Status list and select the correct one, then choose a Start Date and Projected End Date. You’ll document the End Date when you’re finished. Click OK.
Creating Item Records
You may already know that if you buy and/or sell products and/or services, you have to set up individual records for each one so you can include them on sales and purchase forms. You’ll need these to record income and expenses related to your Promotion job. If you’re new to QuickBooks, here’s how it works.
Open the Lists menu and select Item List. In the window that opens, click the arrow next to Item in the lower left corner and select New. A window like this will open:
Figure 2: The New Item window.
The Item Type list will drop down. Select Service. In the example above, youâ??re creating a record for a service you sell: Website Development. Enter that in the Item Name/Number field. Ignore the U/M Set field; this is not available in QuickBooks Pro or Premier.
Enter a Description and your hourly (or project) Rate. Choose the correct Tax Code status and select the Account. When you’re done, click OK.
Warning: You may not have an Account in your Chart of Accounts that fits the specialized income and expenses you want to track. If you need assistance setting this up, don’t hesitate to call.
You’ll repeat this process for other types of promotional work you do (making flyers and brochures, designing and ordering branded products, general content creation, etc.).
Think it through first
Before you create your first job, spend time envisioning how you want it structured. Remember that every invoice or timed activity or other income or expense you enter will only be assigned to one Customer:Job, but you can include as many Items as you want. If you need help envisioning this, please call, and a QuickBooks professional will be happy to help you think this through and go through the setup with you.
Next month: a look at how the records you’ve created can be used.
Tracking Jobs in QuickBooks: Part 2
Last month, we showed you how to start building a foundation for tracking jobs in QuickBooks. We explained that you can use the software’s jobs tools to track income and expenses for any related group of items and/or services (you can think of them as projects, if you prefer).
We covered three elements of preparing to use “jobs”:
- Creating job records that you can use in transactions (example: develop promotional materials)
- Creating item records that can be assigned to jobs (example: website development)
- Determining whether you’ll need to create a new account in your Chart of Accounts for your job income and expenses. You should consult with a QuickBooks professional anytime you think it might be necessary to modify the Chart of Accounts.
Using Your Job-Related Records
Now that you’ve recorded the items and jobs themselves, you can start using them in transactions, and eventually track your progress by generating reports.
Let’s say you worked eight hours on website development for your promotion job. You would open the Employees menu and select Enter Time | Time/Enter Single Activity to open this window:
Figure 1: You can enter individual, billable activities and assign them to jobs.
In the example above, you are limited to recording one day’s work on a specific SERVICE ITEM. You would verify the date and select from the drop-down lists to complete the fields for employee NAME, CUSTOMER:JOB, and SERVICE ITEM. You can either use the timer to time the job or enter the number of hours manually in the DURATION box. Click in the Billable box to create a checkmark and add NOTES if you would like. The CLASS field is optional; talk to us if you’re not familiar with this feature.
If you worked on two separate service items on the same day for that CUSTOMER:JOB, you would create two individual records. You can also enter billable activities directly on a timesheet by clicking Employees | Enter Time | Use Weekly Timesheet. Once you select the employee NAME at the top, any single activity(ies) you created that week will appear as individual records, and vice versa.
Writing a check or using a credit card for a job-related purchase that should be billed to the customer? You would fill out these forms in QuickBooks like you usually do, making sure that you document the items or services by highlighting the Items tab, select the correct CUSTOMER:JOB, and make a checkmark in the BILLABLE? column.
Figure 2: If you write a check or charge your credit card for purchases that can be billed to a CUSTOMER:JOB, be sure to record it in QuickBooks.
If you will be doing some billable driving for your job, you should also be tracking your mileage in QuickBooks. Open the Company menu and select Enter Vehicle Mileage. If you haven’t created a VEHICLE record in QuickBooks, click and easily do so. Complete the rest of the fields and save.
Tip: Do you want to see some of your overhead expenses on job costing reports? Create a CUSTOMER:JOB named “Overhead” and assign related costs to it.
Billing the Billables
When the time comes to invoice your customers (Customers | Create Invoices), you’ll see how your careful work in QuickBooks simplifies that task. Open an invoice form and select a CUSTOMER:JOB. If you’ve entered billable items for him or her, this small window will open:
Figure 3: When you create an invoice for a CUSTOMER:JOB who has billable time, mileage, or other expenses, QuickBooks can automatically add them.
If you leave the first option checked and click OK, another window will open that lists all of the expenses you’ve marked as billable to the customer, arranged by type. Click in the first column of each expense you want to include and click OK. Your invoice containing those entries will open. Do any editing necessary, and then save it.
Note: You’ll probably notice two fields in the Choose Billable Time and Costs window that refer to Markup. This is an advanced concept that we can explore with you, should you want to charge customers more for expenses you’ve incurred on their behalf.
QuickBooks contains a wide variety of reports related to your work billing customers for jobs. Click Reports in the navigation pane or Windows menu, then Jobs, Time & Mileage to see what’s available. Choose a date range and click Run to see them appear with your own data.
If you’ve never worked with jobs in QuickBooks, we strongly recommend that you let us help you here. There are a lot of moving parts, and you don’t want to miss out on any of your efforts or expenses that are billable.