QuickBooks Online Plus or Advanced is required. The Projects feature doesn’t exist in Simple Start or Essentials, so if you’re on a lower tier, upgrade before anything else. QuickBooks Desktop has strong job costing as well, though the workflow differs and most new construction clients are on Online.

Before you turn on Projects, clean up your chart of accounts and products/services list. Job costing only works if your cost categories are consistent and detailed enough to be useful. At a minimum, separate materials, subcontractors, direct labor, equipment rental, and permits as cost-of-sales accounts. Within products and services, build items for each cost type you want to track. Generic categories like “construction expense” make reports useless later.

Turn on Projects in Account Settings under the Advanced tab. A Projects menu will appear in the left navigation. Create a project for every active job and use a consistent naming convention so they sort logically. Something like “Smith Residence 2024 Kitchen Remodel” reads better than just “Smith.” Assign each project to the right customer. Same customer, multiple jobs still means a separate project for each one.

Enter a budget for each project pulled directly from your estimate, broken out by the same categories you’ll use to code actuals. If your estimate has line items for framing labor, framing materials, and framing subs, the budget should mirror that. The budget becomes your baseline for measuring whether the job is running over. Handling this well is the foundation of construction job costing that actually produces useful numbers.

Code every expense to a project as it happens. When you enter a bill, credit card charge, or check, the project field has to be populated. This is where most contractors fail. Transactions get entered in a hurry without project assignment, and six months later the reports show nothing meaningful. Every material purchase, subcontractor invoice, equipment rental, and permit fee gets assigned to a project before it saves.

Track time to projects if you have W-2 employees. Use QuickBooks Time or another tracker that flows into QuickBooks. Labor hours assigned to projects give you actual labor cost by job, which is usually the hardest cost category to get right.

Record revenue through progress invoicing. Create an estimate for the full contract, then invoice a percentage or specific line items as work progresses. Each invoice tied to the project updates project revenue automatically.

Review the Project Profitability report weekly during active construction. It shows budgeted cost, actual cost, and revenue for each project side by side. You catch overruns while you can still react instead of finding them at the end of the job.

Watch out for a few common pitfalls. Credit card charges often get entered without project assignment because the bank feed import skips that step. Subcontractor invoices get coded to the wrong project when the sub works multiple jobs in the same week. Committed costs from signed contracts that haven’t been invoiced yet don’t show up in QuickBooks natively, so a sub committed at $40,000 who’s only billed $15,000 can make your job look healthier than it really is.

Setup takes a few hours if your chart of accounts is already in good shape. If it isn’t, fix that first. Trying to clean up accounts after transactions are coded creates a mess that’s harder to untangle than setting up correctly from the start. If you’d rather have someone handle the setup and the ongoing project coding, bookkeeping services in Pasadena can cover both so your reports stay accurate without you babysitting data entry.