QuickBooks Job Costing for Construction: What Works and What Doesn't#

Executive Summary#

QuickBooks Online can track costs by project—that's the good news. The challenging news: QuickBooks Online's "Projects" feature was designed for general business project tracking, not construction job costing. This guide explains how to get the most from QuickBooks Online's job costing capabilities and where supplemental systems or workarounds become necessary.

What QuickBooks Online Offers for Job Costing#

The Projects Feature#

QuickBooks Online's Projects feature allows:

Creating projects (jobs) within the system
Assigning income and expenses to specific projects
Basic profitability reporting by project
Time tracking assigned to projects

For contractors coming from no job costing at all, this represents meaningful improvement. Costs and revenue associated with specific jobs become visible, rather than blended into company-wide totals.

What Works#

Expense Assignment:
When entering bills or expenses, you can assign them to projects. Material purchases, subcontractor invoices, and other direct costs can be tracked by job.

Invoice Tracking:
Invoices created for projects link automatically. Revenue by project is straightforward.

Time Tracking:
QuickBooks Online's time tracking feature allows hours to be logged against projects. For basic labor cost tracking, this provides some visibility.

Project Profitability Reports:
Built-in reports show revenue, costs, and profit by project—useful for basic performance assessment.

Where QuickBooks Online Falls Short#

No Cost Code Structure#

Construction job costing requires cost codes—breaking down job costs into categories that enable analysis and control:

What's Needed:

Labor by phase (rough-in, finish, service)
Materials by system or area
Equipment by usage type

What QuickBooks Online Offers:
Flat project structure. All costs assigned to a project land in the same bucket. Breaking down "labor" from "materials" requires using QuickBooks Online's account structure, not project-level cost codes.

Workaround:
Use Classes or Tags to add dimensions, but this creates reporting complexity and doesn't provide true cost code functionality.

No Budget Comparison#

What's Needed:
Budget entered by cost category with actual vs. budget comparison as work progresses.

What QuickBooks Online Offers:
No native project budgeting. You can track actuals but can't compare against plan within QuickBooks Online.

Workaround:
Maintain budgets in spreadsheets, export QuickBooks Online actuals, create comparison manually. This works but is labor-intensive and disconnected.

Delayed Information#

What's Needed:
Real-time job cost visibility. If Monday's labor was over budget, know it Tuesday.

What QuickBooks Online Offers:
Costs appear when transactions are entered—typically when timesheets are processed (weekly or bi-weekly) or when bills are entered (often after receipt, sometimes much later).

Result:
Job cost reports lag actual work by days or weeks. Project managers see historical data rather than current position.

Labor Costing Limitations#

What's Needed:
Labor costs reflecting fully-burdened rates (wages plus employer costs), allocated to cost codes based on time worked.

What QuickBooks Online Offers:
Time tracking captures hours. Payroll captures costs. Connecting them to produce accurate labor cost by project by cost code is manual work.

Challenges:

Time entries may use different categories than job cost needs
Burden rates aren't automatically applied
Union payroll complexity exceeds QuickBooks Online capability

Equipment Cost Gaps#

What's Needed:
Owned equipment usage charged to projects at internal rates reflecting true cost.

What QuickBooks Online Offers:
No equipment tracking. No internal rate application. Equipment costs either stay in overhead or require manual journal entries to allocate.

Work-in-Progress Accounting#

What's Needed:
For percentage-of-completion accounting, tracking costs incurred against estimated total cost, computing completion percentage, and recognizing revenue accordingly.

What QuickBooks Online Offers:
No WIP tracking. Progress billing for invoicing is manual. Completion percentage calculation happens outside QuickBooks Online.

Maximizing QuickBooks Online for Job Costing#

Account Structure#

Design your chart of accounts to support job cost reporting:

Cost of Goods Sold / Direct Costs:

Labor - Direct
Materials
Subcontractor
Equipment
Other Direct Costs

These accounts, combined with project assignment, give basic cost category breakdown by job.

Consistent Transaction Entry#

Job costing accuracy depends on consistent assignment:

Best Practices:

Always assign project before saving transactions
Use Purchase Orders to pre-assign job before bills arrive
Review unassigned transactions regularly

Class Utilization#

QuickBooks Online Classes can add reporting dimension:

Possible Use:

Classes for project phases (rough-in, finish)
Classes for cost types (if not using accounts)
Classes for work areas

Limitation:
Single class per transaction (in some QuickBooks Online versions). Can't apply both phase and type simultaneously.

Regular Reconciliation#

Without automated validation, errors accumulate:

Monthly Review:

Transactions without project assignment
Transactions assigned to wrong projects
Timing differences between accrual and cash

When to Supplement QuickBooks Online#

Indicators You've Outgrown Basic QuickBooks Online Job Costing#

Spreadsheet Proliferation:
If job cost management requires multiple spreadsheets maintained alongside QuickBooks Online, the workaround has become the system.

Delayed Discovery:
If you discover project problems weeks after they develop, information timing isn't supporting management needs.

Missing Information:
If common questions ("How many labor hours on Project A's rough-in phase?") can't be answered without significant research, visibility is inadequate.

Administrative Burden:
If producing job cost reports consumes hours weekly, the manual effort isn't sustainable.

Supplementation Options#

Option 1: Construction-Specific Operations Platform

Systems designed for construction that integrate with QuickBooks Online:

Field timesheets that code to jobs and phases
Real-time job cost visibility from field data
Equipment tracking and internal rate application
Budget comparison and variance reporting

QuickBooks Online remains the accounting system; the platform provides construction operations layer.

Benefit: Preserves QuickBooks Online familiarity while adding needed functionality.

Option 2: Full Construction Accounting System

Replace QuickBooks Online with accounting software designed for construction:

Job costing built into accounting
WIP accounting capability
Construction-specific reporting

Consideration: Significant change management, accountant familiarity concerns, and potential over-complexity for smaller contractors.

Option 3: Enhanced Manual Processes

More disciplined spreadsheet systems with regular QuickBooks Online exports:

Structured templates
Defined update frequency
Clear accountability

Reality: Works for very small operations but doesn't scale and remains labor-intensive.

Integration Considerations#

When supplementing QuickBooks Online, integration quality matters:

What Should Sync#

Payroll Data:

Labor costs by employee
Hours by project (for job costing)
Deductions and withholdings

Accounts Payable:

Bills entered in either system
Payment status
Job allocation

Accounts Receivable:

Invoices (especially if billing is generated outside QuickBooks Online)
Payment applications

Integration Quality Factors#

Reliability:
Does data sync consistently, or do gaps require manual investigation?

Timing:
Does sync happen in real-time, daily, or less frequently?

Mapping:
How are cost codes, projects, and accounts mapped between systems?

Error Handling:
When sync fails, is it obvious? Can it be corrected?

Red Flags#

Manual Export/Import:
If "integration" means exporting CSV files and importing them, it's not really integrated.

One-Way Only:
If data only flows one direction, discrepancies accumulate.

Occasional Sync:
If syncing requires manual initiation or happens infrequently, systems drift apart.

How Appello Extends QuickBooks Online Job Costing#

Appello connects field operations to QuickBooks Online through maintained integration. Timesheets completed on mobile devices capture time by job and cost code, flowing into job costing immediately. When timesheets sync to QuickBooks Online payroll, labor costs allocate correctly without re-entry.

The integration preserves QuickBooks Online as the financial system of record while adding the real-time job costing visibility and cost code structure that QuickBooks Online alone can't provide. Budget comparison, variance reporting, and equipment cost allocation happen in Appello, with financial data syncing to QuickBooks Online for accounting purposes.

For ICI subcontractors committed to QuickBooks Online for accounting, Appello provides the construction operations layer that makes job costing actually work.

Conclusion#

QuickBooks Online can support basic job costing—tracking costs and revenue by project—but construction's more sophisticated needs exceed its native capabilities. Cost code structures, budget comparison, real-time visibility, and equipment costing require either extensive workarounds or supplemental systems.

The right approach depends on your situation. Very small contractors may manage with basic QuickBooks Online job costing plus spreadsheets. Growing contractors typically need construction-specific systems that integrate with QuickBooks Online, gaining needed functionality while preserving accounting system familiarity.

Related Reading:

QuickBooks Job Costing for Construction: What Works and What Doesn't