Mastering Job Cost Tracking in QuickBooks Online: A Guide for Service-Based Businesses

If you’re running construction, contracting, or service-based projects in the Fox Valley area (or anywhere, really), job costing in QuickBooks Online isn't a luxury—it’s a necessity. Tracking the real cost of each project keeps margins tight and cash flow healthy.

Why Job Costing Matters

Job costing means assigning every expense and revenue to a specific job—labor, materials, subcontractors, travel, and allocated overhead. Done right, you get real-time insight into project profitability, identify overruns early, and make smarter bids for future work.

Step-by-Step Setup in QBO

1. Enable Projects in QuickBooks Online

Go to Settings → Account and Settings → Advanced, and toggle on the Projects feature. This feature is available in QBO Plus and Advanced plans.

2. Create a Project

Navigate to the Projects menu, click New Project, enter a clear name, assign it to a customer, and save. Think of each job as its own data container.

3. Assign Transactions to a Project

Every invoice, bill, expense, or time entry should be tagged to the proper project. Miss this step and your cost visibility vanishes—opening the door to budget blind spots.

4. Capture Labor (Direct Costs)

Use QuickBooks Time, integrated apps like TSheets, or manual timesheets to log hours. Then allocate those hours to the correct project. You can also set fully-burdened hourly cost rates that include wages, taxes, and benefits for accurate labor tracking—even between payroll runs.

5. Enter Material and Subcontractor Expenses

Record materials, supplier bills, equipment rentals, and subcontractor invoices—and tag them to the job. Accurate classification is key to understanding actual cost vs. quoted estimates.

6. Assign Overhead (Indirect Costs)

Allocate rent, utilities, insurance, admin costs, etc., using logic like labor hours or percentage of total job revenue. This completes the picture on your true job profitability.

7. Use Classes or Locations (Optional)

Want deeper insight by crew, location, or department? Use Class or Location tracking features in QBO to add that layer of nuance to your job costs and reporting.

8. Run Profitability Reports and Analyze

Pull reports like Project Profitability Summary, Time Cost by Employee, and Estimate vs. Actual to review project health. Use this data to adjust bids, renegotiate rates, or reallocate resources before it’s too late.

Common Mistakes to Avoid

• Not tagging expenses to projects—then the data is useless.

• Skipping time tracking—labor is often your highest cost.

• Ignoring change orders or scope creep—not updating budgets kills your margins.

• Delaying bank and credit card reconciliations—this throws off accuracy.

Quick Tips for Service-Based Businesses

• Review reports monthly, not quarterly. This gives you time to pivot.

• Use estimates vs. actual tracking to catch overruns early.

• If using lower QuickBooks plans, set up sub-customers as a workaround to track job-based income and expenses.

• Train your team so everyone tags transactions properly. Small habits save big headaches.

Final Thoughts

Accurate job costing is more than just good bookkeeping—it’s a strategic tool that empowers service-based businesses to price confidently, manage budgets effectively, and protect profitability. When set up properly in QuickBooks Online, job costing provides the clarity needed to make smarter decisions and avoid costly surprises. Whether you're managing a few small jobs or juggling multiple large-scale projects, consistent tracking and review will help you stay on top of your numbers and ahead of the competition.

Ready for Fox Valley Bookkeeping to help you on your job cost tracking journey? Book a FREE discovery call here!

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