In order to run a successful business, it is important to have a firm understanding of how your business operates. As part of this analysis, you need to know how you are making money. You also need to know how you are spending money.
Job costing allows you to see how much money is coming in and how much is leaving your business, based on a particular job or service. By being aware of this information, you can better assess your profit margin and where you may need to make changes to increase the efficiency of your business.
Setting Up Job Costing
Job costing allows you to track the specific costs associated with each individual job so that you can make more accurate estimates in the future. Additionally, this feature allows you to make more informed decisions regarding your business.
QuickBooks allows you to associate each particular customer with one or more jobs. Start the process by setting up a customer record. This needs to be completed even if you only plan to work with the customer once. Then, set up a specific job under the customer’s record.
Now, you can allocate specific items and costs to the specific job. Input items that you commonly utilize into QuickBooks. Provide specific details about the items so that your reports will better reflect the true costs of each job. Ensure that your staff is following the same steps so that your job costing data will be accurate.
Create a bill, check or credit card entry by selecting the customer under the column marked “Customer:Job.”
Using Reports
With job costing in place, you may wish to run a variety of reports to help you better understand the costs associated with each particular job. Here is an overview of some of the most common reports that you may wish to run.
Profit and Loss by Job Report
This particular report allows you to see a summary of jobs that you have completed. This allows you to compare one job to the next to see the profit of each one. Look at the summarized income and costs line to see the biggest profits and the biggest expenses that affect your bottom line. This report also gives you important information about which customers are providing more money to your business.
Job Estimates vs. Actuals Report
To see if you are accurately forecasting for your business, run this report. With this report, you compare the figures that you estimated you would expend for a particular job and the potential profit you estimated with the actual cost and profit of the job. This information can be particularly revealing and can help you make adjustments to your future estimates to more accurately reflect these figures.
Expenses Not Assigned to Jobs Reports
This report lets you see if there are certain expenses that you are not really factoring in to your job costing analysis. This information can help you by giving you the opportunity to reassess the actual costs and profits of jobs.