Job costing in QuickBooks tells you whether a specific job made money, not just whether the business as a whole did. For contractors juggling several jobs at once, this is the difference between knowing which types of work are actually worth bidding on and guessing. Here is how to track job costing in QuickBooks for contractors, set up correctly from the start.
Last verified: October 2026.
Why job costing matters more for contractors than most businesses
A contractor’s profit margin can swing wildly from job to job depending on material costs, labor hours, and how accurately the bid matched reality. Without job costing, a profitable job and a money-losing job blend into one overall number, and you have no way to tell which type of work to pursue more of and which to avoid or price differently next time.
How to set up job costing in QuickBooks Online
- Turn on Projects if you are on QuickBooks Online Plus or Advanced, under Settings, then Account and settings, in the Advanced tab.
- Create a project for each job, tied to the customer it belongs to, from the Projects menu.
- Assign every transaction related to that job to the project, including invoices, expenses, bills, and time entries. This is the step people skip, and it is the one that actually makes job costing work.
- Track labor by job. If you run payroll through QuickBooks, assign employee time to the correct project so labor costs land where they belong, not in a general payroll expense.
- Review the project’s profitability report as the job progresses, not only after it closes, so you can catch a job running over budget while there is still time to adjust.
How to set up job costing in QuickBooks Desktop
Desktop uses Jobs under each Customer rather than a separate Projects feature. Create a Job under the relevant Customer, then assign every invoice, bill, and timesheet entry to that specific job rather than just the customer. Desktop’s job costing reports, including the Job Profitability Summary and Detail reports, break down income and costs by job once everything is tagged consistently. The accuracy of these reports depends entirely on how consistently your team tags transactions to the right job, which is worth reinforcing as a habit, not a one-time setup step.
What to include in job costs beyond the obvious
- Direct materials, tagged to the job at the time of purchase, not lumped into a general materials expense.
- Direct labor, including payroll taxes and burden, not just the hourly wage.
- Subcontractor costs, recorded against the job they were hired for.
- Equipment and tool costs allocated to the job when it makes sense, especially for rented equipment tied to one project.
- A share of overhead, if you want a fully loaded cost per job rather than just direct costs. This requires deciding on an allocation method with your accountant.
Comparing estimated costs to actual costs
The real value of job costing comes from comparing your original bid to what the job actually cost once it is done, or even partway through. QuickBooks Online’s project feature shows estimated versus actual income and costs side by side. A consistent pattern of jobs running over budget in the same category, such as always underestimating material costs on remodels, tells you exactly where to adjust future bids.
Common mistakes with job costing
- Tagging some transactions to jobs and not others. Partial tagging gives you a partial, misleading picture rather than no picture at all, which can be worse because it looks complete.
- Lumping all labor into one payroll expense instead of assigning hours to the job they were worked on.
- Not reviewing job costs until the job is finished. By then, it is too late to correct a job running over budget.
- Ignoring overhead entirely. A job can look profitable on direct costs alone while actually losing money once a fair share of overhead is included.
Job costing and change orders
When scope changes mid-job, track the change order as its own line within the project rather than quietly folding extra costs into the original estimate. This keeps your estimate-versus-actual comparison honest, and it gives you a clear record if a client questions why the final cost differs from the original bid.
What job costing tells you that general reports do not
Your overall Profit and Loss tells you whether the business made money this period. Job costing tells you why, by breaking that number down to the job level. Reading both together, starting with our guide to running a P&L report that makes sense, gives you the full picture: the business-wide number and the job-level detail behind it.
When job costing alone is not enough
If you run many jobs simultaneously, need detailed labor burden calculations, or want integrated estimating and scheduling, a construction-specific platform may serve you better than QuickBooks’ built-in job costing. Our comparison of accounting software for contractors covers when that upgrade makes sense.
Frequently asked questions
Do I need QuickBooks Online Plus for job costing, or does Simple Start work?
Project tracking for job costing requires Plus or Advanced. Simple Start and Essentials do not include the Projects feature.
How detailed should job costing be for a small contractor?
Start with direct materials, direct labor, and subcontractor costs tagged consistently. Add overhead allocation once the basics are solid and consistently tracked.
Can I see job costing in real time, or only after a job is done?
You can and should check it while the job is in progress. QuickBooks Online’s project dashboard updates as transactions are tagged, so you catch a job running over budget before it is finished.
Does job costing work the same way in QuickBooks Desktop and Online?
The concept is the same, but the setup differs. Desktop uses Jobs under each customer, while Online Plus and Advanced use a dedicated Projects feature with its own dashboard.
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