Certain businesses have unique needs that come into play when they start using QuickBooks to run their business and contracting is one of them. In this episode of MissionBusinessPodcast.com Bernard Roesch shares specific ways that a contracting business can use QuickBooks.
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Certain businesses have unique needs that come into play when they start using QuickBooks to run their business. In this post, we discuss some specific ways that a contracting business can use QuickBooks.
Unique Needs Of A Contracting Business
A contracting business has a number of unique needs that impact how QuickBooks is used in the business and estimating costs is one of them.
- A contracting business needs to be able to estimate the cost of a job, and usually provide that estimate to the customer.
- As the job is being done, expenses need to be tracked against that particular job.
- In some cases, you’ll need to bill those additional costs to the customer.
Set-Up Job Costing In Your Contracting Business
In order to use job costing in your contracting business, there are a number of things that need to be set up in QuickBooks.
Set up jobs under customers – Rather than creating invoices for multiple projects against a single customer, you can create jobs underneath each customer.
- By having a job underneath each customer, you can track income and expenses related to each particular job that a customer may send you.
Setup components of the job – By tracking the individual components of a job, such as painting, materials, or other labor costs, you can start to understand where the revenue and where the expenses are in an individual job.
Create an estimate in QuickBooks – Once you have a job setup and you have the components of a job set up, you can create an estimate in QuickBooks.
- If you create estimates in another estimating system outside of QuickBooks, you need to be sure that that estimate information is brought into QuickBooks.
Record costs – Record costs and input them into each job.
- As a job progresses you need to track the expenses that are related to that specific job, and then
- Record those expenses in QuickBooks within the appropriate job.
Use Job Costing Data To Grow Profits
The data you gather using the job costing system described above will help you be more profitable in the future.
- You can produce reports that show you your estimated expenses, and your actual expenses.
- This helps you identify where your estimates are wrong so that you can estimate more correctly in the future.
Mistakes Contractors Make With QuickBooks
There are a number of mistakes that contractors make when using QuickBooks in their business and listed below are a couple of them.
- If you are producing estimates outside of QuickBooks, make sure that that information ends up within QuickBooks. If you don’t, then you will not be able to track expenses related to the job, and produce the job costing reports.
- Do not co-mingle expenses for different jobs. If you make purchases for multiple jobs at once such as at the hardware store, you need to be sure to track which expenses need to be applied to which jobs. Each time you make a purchase, make a note of what job these expenses need to be applied to.
Additional Resources And Next Actions
If you’re interested in using QuickBooks more effectively in your contracting business, contact Bernard today. We would also recommend our readers and listeners to visit MissionBusinessPodcast.com and get access to a wealth of information that Bernard has been sharing with us in the past.
[Image: https://www.flickr.com/photos/davedugdale/5099605109]
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