Q: I’ve set up my chart of accounts to show different job stages in the “cost of goods sold.” For instance, I have accounts for “site prep costs”, “framing costs,” “roofing costs,” and so forth. This works great for entering cost information, but I’m having trouble getting the kinds of reports that I need. What am I missing?
A:Items! “Items” are key to unlocking most of the job-costing features in QuickBooks. Not only do they provide an additional, alternative level of detail, but the more advanced features of QuickBooks (e.g., job estimates, purchase orders, invoices, etc.) are actually built on them.
Instead of putting your job stages in your chart of accounts (COA), keep your COA simple by using COGS accounts such as:
Direct labor-compensation
Direct labor-payroll taxes
Trade contractors
Job materials
Other job costs
Then create double-sided “service items” to link to each of these accounts. This technique means that you can see account-based reports showing results by account, as well as item-based reports showing results built on the Items that you create.
Here’s an example of how to set up “items” showing two job stages (the numbering is up to you):
02 Site prep (title–which will create a subtotal on item-based reports)
020a Site prep–employee comp/taxes
020b Site prep–trade contractors
020c Site prep–materials
020d Site prep–other job costs
03 Foundation (title–which will create a subtotal on item-based reports)
030a Foundation–employee comp/taxes
030b Foundation–trade contractors
030c Foundation–materials
030d Foundation–other job costs
If you:
create “service items: and structure them in this manner,
enter your estimated costs using the QuickBooks “estimates” feature, and
enter job costs using Items (see the “Item” tab at the bottom of “checks, bills, and credit card charges,” and enter job income on invoices …
… you’ll be able to see “estimate vs. actual” reports, with subtotals for each job stage. (This is the report “most often requested” by my new construction clients.)
Videos
Click here to see what your item-based reports and account-based reports could look like if you use the technique described above.
Click here to see what a double-sided item looks like, and how to make entries using items.
–Diane Gilson (dcg@infoplusacct.com) created the accounting firm of Info Plus(+) Accounting in 1994 with the intent of providing current and future-oriented management accounting services to small- and medium-size businesses. Since the firm’s inception, Diane has worked exclusively in QuickBooks, a powerful, flexible, multifunctional software accounting system currently used by 70% to 85% of small- to medium-size businesses in the U.S. She is a Certified QuickBooks Advanced Professional Advisor and Certified QuickBooks Enterprise ProAdvisor (through Intuit), and a Certified QuickBooks consultant (through the Sleeter Group Consultants Network).