Job Costing for Contractors: Simple Basics

Costing Basics for Contractors: Tag Every Cost to a Job

⏱ Time: 10 minutes
Have open: Your Starter Spreadsheet (Setup, Transactions and Job Profit tabs)

Job costing basics come down to one simple habit: tag every job cost to the job that caused it. Simple habit, huge payoff! You’ll finally know which jobs made money, which ones quietly ate your profit, and how to bid the next one so it doesn’t happen again.

This uses the Starter Spreadsheet from The Contractor’s Bookkeeping Toolbox. Its Job Profit tab does the math once your costs are tagged.

What to tag to a job

Tag it: materials, subs, field crew pay, rentals for that job, permits, dumpsters.
Don’t tag it: fuel, insurance, phones, software, small tools you’ll keep using. That’s overhead (see the job costs vs. overhead guide).
Income gets tagged too. Every payment and deposit goes on its job, or Job Profit can’t show profit.

Without QuickBooks

Tag costs in the spreadsheet

Add every job to the jobs list on Setup with its contract amount.
On Transactions, pick the job in Job (if any) for every job cost and every payment.
Use a catch-all job like “Small repairs” for little one-day jobs.
Once a month, read Job Profit: paid so far, costs so far, profit so far and left to bill.

Jobs that run past Dec 31

Job Profit shows the whole life of a job, even across years. When you start next year’s copy, follow the 5 rollover steps printed on your Setup tab:

Start a fresh copy of this spreadsheet for the new year and change the Year at the top of Setup.
Enter each account’s starting balance from your Dec 31 statements.
In the jobs list, keep only the jobs that are still going. Finished jobs stay in last year’s copy.
For each job you kept, copy 3 numbers from last year’s Job Profit tab: Paid to you so far, Job costs so far and Deposits held. They go in the gray columns.
Don’t copy last year’s transactions over. The 3 numbers carry the job’s history, and Job Profit adds them in for you.

The year-end guide walks through the full close-out, step by step.

In QuickBooks Online

Job costing in QuickBooks

Turn on Projects: Settings, Account and settings, Advanced, then Organize all job-related activity in one place (Plus and Advanced plans).
Turn on Track expenses and items by customer on the Expenses tab.
Create a project for each job and pick it in the Customer/Project column on every job cost.
Open the project to see income, costs and profit. See Intuit’s Projects guide.

QuickBooks keeps the history, so a project that runs into January just keeps going. No carryover needed.

Spreadsheet vs. QuickBooks

Spreadsheet: one copy per year, and the gray columns carry a job’s history forward.

QuickBooks: one file forever, so projects run across years on their own.

Common mistakes

Tagging some costs and not others. A half-tagged job looks way more profitable than it is, and then you bid the next one too low.
Forgetting your crew’s pay. Labor is often the biggest job cost. Leave it off and every job looks like a winner (spoiler: they’re not).
Pasting last year’s transactions into the new year. Your Statement Check and P&L will be off. Use the gray columns instead.
Judging a job mid-stream. Costs come before payments, so a job can look scary halfway through. Look at the whole job when it’s done.

Quick questions

What’s job costing?

Tracking income and costs by job so you can see each job’s profit.

Should overhead be split across jobs?

Not in these books. Job Profit shows profit before overhead. Your P&L shows the rest.

What if a cost covers two jobs?

Split it into two lines, one per job.

Do finished jobs carry into next year?

No. They stay in last year’s copy. Only jobs still going move over.

Next up: Recording a truck or equipment loan: principal vs. interest

Holly b. is a construction bookkeeper who’s spent many years in contractors’ books. She writes these so you can do your own, or so you’ll know who to call if you’d rather not.