Job costing bookkeeping vs. regular bookkeeping

Step-by-step

1. 1. Start with the chart of accounts — then add a second layer

   Regular bookkeeping organizes costs by account: Materials, Labor, Subcontractors, Rent, Insurance. Job costing still uses those accounts, but adds Products & Services items as cost codes. The account answers 'what bucket?' The item answers 'what exactly was this?' and the project answers 'which job?'

2. 2. Build Products & Services items as cost codes

   Create two-sided items for each cost type — Framing Labor, Lumber, Electrical Sub, Permits, etc. Map each item to both an income account and a COGS/expense account. This is what makes an Estimate vs. Actual report possible: the same item appears on the estimate, the bill, and the invoice.

3. 3. Tag every cost to a Customer and a Project

   In job costing, every bill, expense, check, and timesheet gets a Customer/Project assignment. A $2,400 lumber bill is no longer just a materials expense — it belongs to the Smith Kitchen Remodel. Costs stop being 'general' and start being attributable.

4. 4. Use Items, not just Categories, on bills and expenses

   Category detail posts only to the chart of accounts. Item detail posts to the job, the item, and the account at the same time. If you skip the item, your job reports come up blank even though the P&L looks fine.

5. 5. Run job profitability reports weekly

   With projects and items in place, you can run Project Profitability, Estimate vs. Actual, and Job Costing Detail reports by customer, project, and item. Review them weekly — not at year-end — so you can fix a slipping job before it drains the whole company.

6. 6. Keep overhead truly separate

   Rent, office payroll, insurance, software, and admin costs stay as general business expenses. They do not get tagged to jobs. That separation is what makes gross profit by job meaningful — otherwise every job looks worse than it is, or better, depending on how overhead was dumped in.

Frequently asked questions