Yes, I swear it can be done. I even have a way to get Estimates vs. Actuals.
The official party line is that QuickBooks Online does NOT do job costing. Intuit states: “Currently, QuickBooks Online does not offer a specific job-costing feature…”, but there are a couple ways you can set up Job Costing in QBO.
The method mentioned in QBO help is to use sub-customers (the equivalent of Customer Jobs in desktop editions), and selecting the Bill with Parent option in customer preferences.
To do this you’ll need to be using QBO Plus and have billable expenses turned on in preferences as well.
Your customer list will look something like this:
Next I would set up double-sided items in the Products & Services List – anything you pay a contractor to do or any products that you purchase to sell. The examples below show the settings once you begin editing an existing item, but you can do the same thing when creating a new one.
The first one is contracted labor:
The second is a fountain product:
As you can see, the process is identical for both. It’s just the details that vary. You’ll have to determine how you want to set up the chart of accounts so that it will work the best for you (or your client, if you’re an accounting professional doing the setup).
Now you can create your Job Estimate from the Income List:
Enter the items you need onto the Estimate:
Once the customer approves the Estimate, you’ll be able to convert to an Invoice. One thing I recommend doing is getting the signed estimate approval and any engagement agreement signed, scanned and attached to the estimate via the attach documents feature.
As I mentioned in a previous post, when it comes to converting an estimate to an invoice, inherently, it’s all or nothing – there’s no progress invoicing. However, there is a work around for this: Edit the original estimate to show what your first invoice will be, and change the estimate number. For instance, in the above example, I would change the Estimate to 2112.01 (you’ll need to have custom numbers turned on the Sales Form Entry section of Preferences) to indicate that it was the first of the estimates used for the project. Add the description of the total project in the description of the Estimate so the customer can see the details. Now, duplicate the Estimate by clicking the COPY button at the bottom of the screen.
Edit the line items of the new Estimate to show the remainder of the project, with the details in the description area of a line that has no item in it, just as you did in the original one. Number this one 2112.02. Should you need more than 2 invoices, keep repeating the process and numbering accordingly. Keep in mind, you’ll need to adjust the next new Estimate to the next actual number in the sequence – in this case, it would be 2113.
You can see below how these will look in the Income List:
We’ll add the first half of the job to an invoice. From the Income List you can simply click Copy to New Invoice, as you can see in the above screen shot. We’ll add a description to the invoice that this is the initial 50% down to begin the project:
I also went ahead and billed the remainder, from the duplicate Estimate, so that we can see reports on a completed project.
Now we’ll add our expenses. To make things easy, we’ll put materials and labor on one Vendor Bill:
Now we have our job billed out and complete, we have our expenses in, so we can take a look at the P&L for this job. There are two ways to get this.
One is via a regular P&L – you open up the General P&L and click Customize. In the customize screen you’ll change the Columns from Total Only to Customers. Then in Lists, you’ll filter it by choosing the sub-customer (job) you want to see.
This is the report you’ll see after clicking the Run Report button:
Another way to see this would be to start with an Income By Customer Summary report:
Then drill down into the sub-customer (job) Net Income total and customize it to add the job name to the header:
Now for the GOOD stuff. There is no “canned” report to show Estimates vs. Actuals in QBO. However, I have 2 methods to get this.
One way is to create an Excel spreadsheet that matches the format you’ll want to view the data and enter your estimated amounts. Add appropriate columns for actuals and differences, entering the formulas for the difference rows, but leave actuals blank. Once you start accruing income and expenses, you can run your reports – whichever you’d like, either starting with the P&L or the Income by Customer Summary – and save as Excel. Rename the file whatever you’d like (i.e. KildalServicesEst2112Actuals.xlsx). Link the original Excel sheet you’ve created to the new spreadsheet, by putting an = sign in the cells where you want actual totals, then clicking the corresponding cell in the downloaded report you just named. Now you can run that report in QBO and save as the job progresses. Just remember to save it in the same place and rename it to the same name each time, or your links won’t work.
The other way is to use Budgets. That’s right! Budgets! Each sub-customer (job) in QBO can have a budget – because you can have more than one budget per fiscal year in QBO.
I’ll repeat that: QBO allows for multiple budgets per fiscal year.
Ready for this one? Let’s go! From the Company tab, choose Budgets, then click the New Budget button. Choose to start from scratch:
On the next screen, choose the option to subdivide your budget by customer:
On the next screen, choose the fiscal year, then name the budget. I like to put the Customer, sub-customer and estimate number, but you can choose whatever works for you (or your client) Click the Finish button:
The next screen is where you enter your estimates. First, make sure you use the drop down to choose the correct customer name:
Now for the amounts; you’ll select the lines that correspond to the income and expense related to the project. In our case, we’re looking at Landscaping Services:Job Materials:Fountains and Garden Lighting and Cost of Goods Sold:Job Materials for the fountain, and Landscaping Services:Labor:Installation and Cost of Labor:Installation Labor for the labor. After each line, click Save & Next to get to the next one. I enter the totals in the appropriate months that the billing is expected. When you’re done, click the Finish button:
To see Estimates vs. Actuals, you’ll need to do some customizing. Go to Reports, budgets and open a Budget vs. Actual report, then click Customize. You’ll want to change the customer from all to the customer for whom you want reporting, then set the date range as needed (you must choose entire months), and then click the Run Report button.
I used the QBO sample file for this, and despite the Budget vs. Actual report being set to accrual, it would only show actuals if the customer invoice and any related vendor bills were paid – not sure if this was a glitch in the program or just with the sample file. However, it did give me exactly the information I wanted:
If you’re using QuickBooks Online Payroll, you can get the labor costs for employees, because you can enter timesheets and assign time to customer/sub-customer. If you’re using Intuit Online Payroll, there’s a pretty impressive job costing option available for free.
The other way to do job costing is just use Class Tracking for each job, and my next article will cover that method. Stay tuned!