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December 17, 2020

Track income, costs, and profitability by project

  • December 17, 2020
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Learn how to use projects to calculate your profits and costs by project. These "job costing" features are available in QuickBooks Online Plus and Accountant.

You can use projects to quickly calculate your project income and costs. QuickBooks separates your hourly labour from other project costs so everything is easy to understand. This gives you a clear picture of your profits from every project.

Step 1: Turn on and create projects

If you haven’t already, here’s an easy step to turn on and create a new project.

Step 2: Add project income and expenses

Now that you’ve created your first project, start adding income and expenses.

Adding transactions to projects won’t change how they’re categorised or affect your accounts. You’re simply tagging them so you can track specific project income and expenses.

  1. Open your project.
  2. Select the Add to project button to create a brand new transaction.
  3. Select Invoice, Receive Payment, Expense, Quote, Time, Bill or Purchase order.

You’ll automatically tag new items to projects when you select the Add to project button.

The Time option lets you record a single day of work by one of your workers. If you want to add weekly timesheets, there are a few extra steps we will cover in Step 5.

Working from a quote?

Add quotes to projects before converting them to invoices for your customer.

You can also use progress invoicing to create multiple invoices from a single quote. That way, instead of asking for full payment at the beginning, you can invoice for partial payments throughout the project. This is a good option if you’re charging customers for a fixed fee.

Step 3: Add existing expenses

You can also tag expenses and timesheets (billable or nonbillable) you’ve created outside of the Projects (Take me there) menu.

Add existing expenses:

  1. Go to Bookkeeping, select Transactions, then select Expenses (Take me there).
  2. Find and open the transaction.
  3. Select the project from the Customer/Project ▼ dropdown menu. Do this for each expense item you want to tag. This isn’t the same as the payee for the expense.
  4. Select Save and close.

Add existing timesheets:

If timesheets are not billable, but you still want to add them to a project to understand your profitability, you can find and add them in the Weekly timesheet.

  1. Select + New.
  2. Select Weekly timesheet.
  3. Select the employee or supplier from the dropdown ▼ who has timesheets you are adding to the project.
  4. Select the date range dropdown ▼ and choose the correct week for the timesheets you are adding to the project.
  5. Find the correct timesheets. Then select the Choose a customer or project dropdown ▼ and select the project.
  6. Select Save and close.

Tip: If you have existing timesheets that are marked as billable, you can create an invoice from the timesheets.

Step 4: Add existing invoices

You can add any invoice to a project so long as it wasn't created from a quote and doesn't have any attached time or billable expenses. To add the invoice to a project, replace the name of the customer in the invoice with the project name.

If the invoice is paid and you add it to the project, the payment for the invoice will be disconnected. To avoid charging the customer twice, follow these steps.

  1. Go to Settings ⚙ and select Chart of accounts.
  2. Select Account history on the account the payment was deposited.
  3. Select the payment for the invoice, then Edit.
  4. Select the checkbox next to the invoice, the payment is for, then select the project from Customer dropdown.
  5. Select Save and close.

Step 5: Track your hourly time costs

Tracking your project labour costs is a two-part process. First, you need to calculate the hourly cost rate for each worker. Then you’ll be able to add project timesheets using your hourly cost rates.

Important: Historic time entries created prior to entering an Hourly cost rate will not show in the Time cost by employee or supplier report or Time Activity in QuickBooks Online.

Step 6: Keep everything running smoothly

Now you know how to track project costs and profits. Here’s how to make sure what you’re seeing is always accurate:

  • Use the income and cost columns in the Overview tab as guides. Make sure the correct column total increases when you add invoices, expenses, and weekly timesheets. You can see these costs on the Time Activity tab or your Time cost by employee or supplier report.
  • The Time Activity tab breaks down your team’s work by date. It also provides the total cost of each employee and service you offer.
  • The Transaction tab lists all transactions tagged to a project. You can complete tasks directly from this screen, such as converting a quote to an invoice.
  • Review your Time cost by employee or supplier reports every month. Make sure you’ve correctly tagged all project-related work hours. If you’re missing hours or counting too many, your profit totals will be inaccurate.
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