Q: I’ve set up my chart of accounts to show different job stages in the “cost of goods sold.” For instance, I have accounts for “site prep costs”, “framing costs,” “roofing costs,” and so forth. This works great for entering cost information, but I’m having trouble getting the kinds of reports that I need. What am I missing?

A:Items! "Items" are key to unlocking most of the job-costing features in QuickBooks. Not only do they provide an additional, alternative level of detail, but the more advanced features of QuickBooks (e.g., job estimates, purchase orders, invoices, etc.) are actually built on them.

Instead of putting your job stages in your chart of accounts (COA), keep your COA simple by using COGS accounts such as:

  • Direct labor-compensation 

  • Direct labor-payroll taxes 

  • Trade contractors 

  • Job materials 

  • Other job costs

Then create double-sided “service items” to link to each of these accounts. This technique means that you can see account-based reports showing results by account, as well as item-based reports showing results built on the Items that you create.

Here’s an example of how to set up "items" showing two job stages (the numbering is up to you):

  • 02  Site prep (title--which will create a subtotal on item-based reports) 

  • 020a  Site prep--employee comp/taxes 

  • 020b  Site prep--trade contractors 

  • 020c  Site prep--materials 

  • 020d  Site prep--other job costs 

  • 03  Foundation (title--which will create a subtotal on item-based reports) 

  • 030a  Foundation--employee comp/taxes 

  • 030b  Foundation--trade contractors 

  • 030c  Foundation--materials 

  • 030d  Foundation--other job costs

If you:

  • create “service items: and structure them in this manner, 

  • enter your estimated costs using the QuickBooks “estimates” feature, and 

  • enter job costs using Items (see the “Item” tab at the bottom of “checks, bills, and credit card charges,” and enter job income on invoices …

... you’ll be able to see “estimate vs. actual” reports, with subtotals for each job stage. (This is the report “most often requested” by my new construction clients.)

Click here to see what your item-based reports and account-based reports could look like if you use the technique described above.

Click here to see what a double-sided item looks like, and how to make entries using items.

--Diane Gilson (dcg@infoplusacct.com) created the accounting firm of Info Plus(+) Accounting in 1994 with the intent of providing current and future-oriented management accounting services to small- and medium-size businesses. Since the firm’s inception, Diane has worked exclusively in QuickBooks, a powerful, flexible, multifunctional software accounting system currently used by 70% to 85% of small- to medium-size businesses in the U.S. She is a Certified QuickBooks Advanced Professional Advisor and Certified QuickBooks Enterprise ProAdvisor (through Intuit), and a Certified QuickBooks consultant (through the Sleeter Group Consultants Network).