QuickBooks Desktop for Contractors: A Practical Job Costing Guide

Know which jobs make money, and which ones quietly don't.

Ask most contractors how business is going and they'll tell you their revenue. Ask which jobs made the most money last year, and things get quiet. That's not a criticism; when you're running crews, chasing materials and dealing with inspectors, the books come last.

QuickBooks Desktop, especially the Contractor edition of Premier, is built to answer that second question. This guide shows you how to set it up so every bill, timesheet and invoice lands against the right job, and you can see profit by job at a glance.

Which Version Do Contractors Need?

For most small and mid-sized contractors, QuickBooks Premier with the Contractor edition is the sweet spot. Pro can do basic job costing if your jobs are simple. Enterprise makes sense for larger firms with many users or complex inventory.

Step 1: Set Up Customers and Jobs Properly

In QuickBooks, every job lives under a customer. A homeowner might have one job; a general contractor you sub for might have twenty.

1. Go to Customers > Customer Center and add the customer.
2. Right-click the customer and choose Add Job.
3. Name the job clearly, for example "Smith - Kitchen Remodel - 123 Oak St."
4. On the Job Info tab, set the job status, start date and projected end date.

Step 2: Set Up Items That Match How You Estimate

Items are the building blocks of estimates and invoices. Create service items for labor categories (Framing Labor, Electrical Labor), non-inventory items for materials, and other charge items for things like permits and dumpster fees. Assign each item to the correct income and expense accounts so job costs and revenue land in the right place.

Step 3: Create Estimates for Every Job

Go to Customers > Create Estimates, choose the job and add your items. The estimate becomes your budget. This is the baseline QuickBooks compares your actual costs against, so it's worth doing for every job, even small ones.

Step 4: Assign Every Cost to a Job

This is the step that makes or breaks job costing.

• Bills and expenses: on every bill, check and credit card charge, fill in the Customer:Job column for each line.
• Payroll and time: use timesheets with a Customer:Job for each entry.
• Subcontractors: enter sub bills with the Customer:Job filled in.
• Materials from stock: if you track inventory, use the Customer:Job on the transaction that moves it out.

Step 5: Bill With Progress Invoicing

Turn on progress invoicing under Edit > Preferences > Jobs & Estimates. Then, from an estimate, choose Create Invoice and bill a percentage of the whole estimate or selected items. QuickBooks keeps track of what's been billed and what's left.

Step 6: Handle Change Orders

In Premier Contractor, when you change an approved estimate, QuickBooks can record a change order describing what changed and the amount. Keep these up to date so your budget matches the real scope.

Step 7: Track Retainage

Many commercial contracts hold back a percentage until the job is complete. Create a "Retainage Receivable" account and a retainage item, and add a negative retainage line on each progress invoice. When the job closes, invoice the retained amount.

The Reports That Matter

Run Job Estimates vs. Actuals every week or two on active jobs. It's the earliest warning sign that a job is going over.

Contractor-Specific Tips

• Collect W-9s from every sub before the first payment, and track 1099 vendors in QuickBooks so year-end forms are easy.
• Track certificates of insurance for subs. A simple custom field on each vendor with the expiry date works well.
• Separate equipment costs with classes or items so you can see what your machines really cost per job.
• Reconcile monthly. Job reports are only as good as the bank and credit card data behind them.