QuickBooks For Architects – Two Methods For Job Costing

Don't forget that QuickBooks Online integrates seamlessly with BQE CORE, the award-winning project accounting platform built for professional services firms. CORE offers business intelligence, project management, time and expense tracking, billing, accounting, and reporting together in one intuitive package. With it, you can perform instant job costing, so you don't need to waste your time performing work-arounds. You can integrate CORE with QuickBooks, or handle your accounting within CORE so it's right alongside all of your other essential business processes. 

Job costing is of particular importance for architects. You will need to know what it cost you to provide your services to a particular client. As an architect using QuickBooks (or any accounting software), you need to see what you are charging compared with what it cost you to complete each job, so you can improve your skills when it comes to estimating similar jobs in the future and have a sense of how well you did on each job that you complete.

Once you're finished here, check out Part 5:

QuickBooks For Architects – How to Bill Costs Back to Your Clients

Are you marking up the time of your employees and subcontractors sufficiently? Are you billing back other direct costs in a manner that is consistent with your agreement with the client? These are questions which can only be answered by running reports in QuickBooks. In order for those reports to give you the right information, you need to know how to handle job costing in QuickBooks.

There are two methods for job costing in QuickBooks. I call one the direct method because you are directly assigning an expense to a job. The other method is by using what are called “2-sided items.” Let’s see what these look like.

Direct Method of Job Costing in QuickBooks

Of course it’s much more fun to watch the video so I am going to leave much of this up to the video to demonstrate.

There are 3 ways (essentially) to get expenses on the books:

• Write a check

• Enter a credit card charge

• Enter a bill to be paid later

You’ll notice that in QuickBooks, the bottom portion of each of these forms looks the same. We are looking at the “Expenses” tab in the bottom portion. That section has the Account which is where we assign the “expense.” Further across there is a drop-down that says “Customer:Job.” This is where we select which job that expense goes to. If you need to split the amount between two or more jobs, then you enter the same expense account on several lines, divide the amount up among the line items as needed and assign the jobs. This is the direct method because you are directly assigning the expense to the job.

2-sided Item Method of Job Costing in QuickBooks

This method is a little more involved and indirect because we are going to use 2-sided items in QuickBooks. This allows us to assign the item to an expense account so that we can use the “Items” tab instead of the “Expenses” tab when entering expenses in QuickBooks.

The advantage of this method is that we have all income and expenses driving through the same item(s), which makes for some nice reporting. Using the direct method, you have income by item, but the expenses are for lack of a better way to describe it--disconnected from the items.

The 2-sided item method is more involved in terms of setting up each item and assigning it to an expense as well as an income account. As with many things in life – you get out what you put in. By taking the time to set this up, you get really good information out of QuickBooks.

Watch the video and comment on this post if you have any questions.

Once you're finished here, check out Part 5:

QuickBooks For Architects – How to Bill Costs Back to Your Clients