by Marie | Jun 2, 2019 | Bookkeeping 101, Classes & Location, Company Setup & Management, Preferences & Customization, QuickBooks Online
There are four (4) levels of Quickbooks Online subscription: 1) Simple Start, 2) Essential, 3) Online Plus, (4) Advanced. Class tracking is only available in the Online Plus and Advanced editions.
To Turn on Class Tracking in QuickBooks Online:
Step 1. Click on the Gear icon at top right of screen (your company name) and select Account and Settings under the Your Company tab
Step 2. Click the Advanced button in the left menu bar, then click the pencil icon at Categories to edit preference.
Step 3. Check the box at Track classes (You may also want to check the box at Warn me when a transaction isn’t assigned a class)
Step 4. Click Save.
Now when you go to create your Invoices, bills, checks etc. the class option will be available for use.
by Marie | Jun 2, 2019 | Bookkeeping 101, Classes & Location, Preferences & Customization, QuickBooks for Mac
To Turn on Class Tracking in QuickBooks Mac:
Step 1. Click on QuickBooks in the top menu bar, then Preferences to open the Preferences window.
Step 2. Click on the Transactions under Workflow and check the box that says Use class tracking.
Step 3. Click Ok.
Now when you go to generate your Invoices, bills, checks, etc. the class option will be available for use.
by Marie | Jun 2, 2019 | Bookkeeping 101, Classes & Location, Preferences & Customization, QuickBooks for Windows
To Turn on Class Tracking in QuickBooks Windows – Pro, Premier, Enterprise:
Step 1. Click on Edit, then Preferences in the main menu to open the Preferences window.
Step 2. Click on the Accounting icon in the left pane of the Preferences window.
Step 3. Select the Company Preferences tab in the right pane.
Step 4. Checkmark the Use class tracking item on the Company Preferences tab.
Step 5. Click OK to close the Preferences window.
Now when you go to generate your Invoices, bills, checks, etc. the class option will be available to use.
by Marie | Oct 4, 2016 | Classes & Location, Company Setup & Management, Financial Statements & Reports, Preferences & Customization, QuickBooks for Mac, QuickBooks for Windows, QuickBooks Online
The main difference between class and account, is that every transaction must have an account assigned to it, while it’s optional to assign a class. So think of the class list as having a second chart of accounts which you can apply to transactions to group them into categories different from those provided by the Chart of Accounts.
Accounts mostly organize transactions into financial categories – income, expenses, receivables, payables etc., but classes let you organize transactions into any categories you want, and you have full control over what those categories are. The Class list is empty when you first create a QuickBooks company file, so you can set up any number of classes you want in it. Most often you’ll use classes for grouping transactions into management information categories as opposed to the financial accounting categories provided by the Chart of Accounts.
As a general rule, use accounts to identify the “what” of a transaction and classes to identify the “why” or “what for”. For example, if you buy Office Supplies for multiple departments and you want to keep track of each department’s use, the “what” is office supplies; the “what for” is the various departments – administrative, sales, production, etc. So office supplies (expense) should be an account and each department should be set up as a class.
Creating lots of sub-accounts is a common mistake among new QuickBooks users; however, it should be avoided at all cost. To illustrate the problem, consider this fragment from a simple chart of accounts:
Office Supplies
Marketing
Accounting
Now here is the same fragment of the chart of accounts, but with sub-accounts added:
Office Supplies
Administrative Department
Sales Department
Production Department
Marketing
Website
Events
Accounting
Bookkeeping
Audit Prep
As you can see in the illustration, the account list can become exponentially long which will produce very lengthy, unattractive financial reports. The Classes list in QuickBooks can have up to five levels (classes and subclasses), which gives you more functionality and flexibility in using the class feature. To have class information arranged in reports in a way that provides the most benefit, it does help to give some thought as to how the list should be structured.
To Turn on Class Tracking in QuickBooks Windows – Pro, Premier, Enterprise:
- Click on Edit, then Preferences in the main menu to open the Preferences window.
- Click on the Accounting icon in the left pane of the Preferences window.
- Select the Company Preferences tab in the right pane.
- Checkmark the Use class tracking item on the Company Preferences tab.
- Click OK to close the Preferences window.
To Turn on Class Tracking in QuickBooks Mac:
- Click on QuickBooks, then Preferences in the main menu to open the Preferences window.
- Click on the Transactions under Workflow and check the box that says Use class tracking.
- Click OK.
To Turn on Class Tracking in QuickBooks Online:
There are four (4) levels of Quickbooks Online subscription: 1) Simple Start, 2) Essential, 3) Online Plus, 4) Advanced. Class tracking is only available in the Online Plus and Advanced editions.
- Click on the Gear icon at top right of screen (your company name) and select Account and Settings under the Your Company tab
- Click the Advanced button in the left menu bar, then click the pencil icon at Categories to edit preference.
- Check the box at Track classes (You may also want to check the box at Warn me when a transaction isn’t assigned a class)
- Click Save.
After completing these steps, a Class column will appear in many of QuickBooks’ form windows. In some cases such as for invoices, you may have to customize the form’s template to have the Class column appear.
by Marie | Aug 25, 2016 | Invoicing & Receivables, Preferences & Customization
Estimating is not only important for construction companies, but any company that produces Invoices, give quotes, bids, and proposals can use estimates in QuickBooks to get a handle on their job costing. Even if you do not provide your clients with estimates, you need to enter them in order to get the most out of the QuickBooks job costing reports. These reports, especially the “Job Estimates vs. Actuals” reports, are the key to making sure your existing job budgets are on track. They are also important when evaluating the accuracy of your estimates so you can make adjustments for future projects, as well as a requirement if you want to do progress invoice.
Setting Up Estimates in QuickBooks Contractor Edition
- Turn on the Estimate function at Preferences, then Jobs & Estimates.
- Create service items that match your project phases at Lists, Item List. You might also want to create sub-categories for materials and labor for tracking purposes, and use groups (see below) so they do not show up separately on your estimates and invoices.
- Create group items for items that you often sell together, this speeds up data entry and also allows you to hide details on estimates and invoices. For example, you could make a “Cupboards” group by grouping the items for all the materials and labor used. Each item in the Cupboards group has its own cost and selling price. When you choose an item for your estimate or invoice, you simply have to enter a quantity to get the total price for cupboards. You can also choose not to include the detail on your estimates and invoices by not checking the “Print items in group” box.
- Customize your estimates by clicking on the Customize button at the top of the Estimate form, then select Additional Customization.
- You can create multiple estimate forms for different needs and manage them at Lists, Templates.
- You can also memorize completed estimates that you use frequently by going to Edit, Memorize Estimate. You can also duplicate estimates at Edit, Duplicate Invoice.
- You can download free customized estimate templates from Intuit at: http://community.intuit.com/library/forms.
Entering Data for Accurate Reporting
- In order to get detailed estimate vs. actual job costing reports, you need to enter both estimated costs as well as revenue.
- You can either enter a $ or % markup to determine revenue, or you can enter revenue to determine the markup.
- If you want one line item for all revenue, enter $0 in the revenue column and add an additional item line for the revenue with no cost entered.
Linking Estimates with Invoices, Purchase Orders, and Sales Orders
- You can create invoices directly from the estimate by clicking on the Create Invoice button. You can invoice for the entire project or select progress invoicing. For progress invoicing, first turn on the function at Preferences, Jobs & Estimates. Then QuickBooks will give you the option of invoicing either for a fixed percentage of the entire estimate, or for different percentages of each line item on the estimate.
- You can also create sales orders directly from the estimate. First turn on the function at Preferences, Sales & Customers. Once you do, the purchase order button will be hiding under the Create Invoice button (click the down arrow to the right of it to see your options).
- You can also create purchase orders directly from the estimate. First turn on the function at Preferences, Items & Inventory. Once you do, the purchase order button will be hiding under the Create Invoice button (Click the down arrow to the right of it to see your options).
Change Orders & Estimates
A change order function is built into the contractors editions of QuickBooks. If you do not have the contractors edition, you can create new estimates for change orders, but this requires separate invoices. A better option is to create estimate & change order subtotal items and add change order items as separate line items on the original estimate.
by Marie | Aug 25, 2016 | Employee Setup & Management, Payroll Setup & Management, Preferences & Customization
There are several steps needed in order for payroll to flow properly to the job costing reports – especially if you want to include payroll taxes and benefits. The step-by-step instructions below will help guide you through the setup.
You must have a QuickBooks payroll subscription to use these instructions. If you are trying to use job costing with a non-QuickBooks payroll provider, you will not only make your bookkeeping much more time-consuming but also introduce opportunities for errors to be made. QuickBooks offers a complete payroll solution, just like ADP and Paychex, and at a great price too.
Since labor is usually the biggest expense for most companies who are doing job costing, it is vitally important that it be included in your job cost reports. If you don’t include labor, your jobs will seem more profitable than they really are. Even worse, some of them might even be losing money without you even knowing it. This not only affects your present situation, but can lead you to create inaccurate estimates for future jobs.
Here are the steps for setting up payroll for job costing in QuickBooks:
Step 1. Set up Preferences:
- Go to Edit, Preferences, Company Preferences and select Payroll & Employees
- Select “Full Payroll” or “Complete Payroll Customers”
- Check “Job Costing, Class and Item tracking for paycheck expenses”
- Go to Time & Expenses
- Select Yes under “Do you track time?”
- You may also want to check “Create invoices from a list of time & expenses”
Step 2. Set up Payroll Items:
- Go to Lists, Payroll Items
- Next, edit every Addition and Company Contribution item to ensure that “Track expenses by job” is checked
- Payroll items can only be mapped to one expense account, so you may want to setup separate ones for Cost of Goods Sold (COGS) and overhead payroll expense
Step 3. Set up Employee Records:
Step 4. Set up Default for New Employees:
- Go to the Employee Center and select Manage Employee Information, then Change Employee Default Settings
- Check “Use time data to create paychecks”
Step 5. Set up Workers Comp:
- Go to Employees, Workers Compensation, then Setup Workers Comp
- Setup your workers comp codes at Employees, Workers Compensation, then Workers Comp List
- Next, go to Lists, Payroll Items to double-check that the Workers Comp payroll item has “Track expenses by job” checked
Step 6. Using TimeSheets
- Go to Employees, Enter Time, then Use Weekly Timesheet
- Complete all information including both a payroll item & a service item. Mark as billable if you do time & material billing
- You may want to add a customer:job called Overhead, so you will have a place to place other entries in order not to forget to make allocation
- Consider using “Time Tracker” or “WorkTrack Time Card” so employees can enter their own time
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by Marie | Aug 24, 2016 | Customer Setup & Management, Preferences & Customization, QuickBooks Essentials
Accurate job costing is one of the most crucial tasks for managing job-based businesses such as construction companies, professional services firms, and even non-profits that are awarded grants. Many owners put this off because it seems too complicated or time-consuming; however, if you are serious about helping your business grow and flourish, you need to do this sooner than later. It will help you to:
- Analyze how each of your jobs is doing financially
- Identify jobs that were not as profitable as expected
- Identify problem jobs as early as possible
- Create better estimates for future jobs
QuickBooks is an inexpensive program that can do powerful job costing with the data you are already entering, providing you set it up and use it correctly. Here are the three (3) steps to get this done:
The first step to setting up QuickBooks for job costing is to set your preferences: You do this by going to Edit, Preferences, then Company Preferences:
Go to Jobs & Estimates and check the box next to Do you create estimates. You might also want to check the box next to Do you do progress invoicing.
If you use QuickBooks for payroll – as every business doing job costing should, go to Payroll & Employees and check the box next to Job costing, class and item tracking for paycheck expenses.
If you track employee or subcontractor time by job, go to Time & Expenses and check the box next to Do you track time. If you do time & material billing, you should also check Create invoices from a list of time and expenses.
The second step is to setup your customer:jobs and use them on every transaction:
Go to the Customer Center and click on the New Customer & Job button.
You might also want to create a customer called “Overhead” or “Administrative” for non-job expenses so you get into the habit of entering a customer:job on all your transactions. The Contractors edition also has a really helpful special job costing report called “Expenses Not Assigned to Jobs”. If you are using classes, you might want to consider doing the same thing so you can use the Profit & Loss Unclassified report to make sure you didn’t accidentally leave off a class. Very useful feature!
The third step is to setup items and use them on every transaction:
Go to Lists, Item List, click on the List button, and select New.
Add a new service item for every job phase you want to job cost. For subcontractors, this could be as simple as Labor and Materials. For general contractors, it could be quite lenghty: plans, site work, excavation, concrete, masonry, framing, etc. In this case, you might want to add sub-items for Labor and Materials to your items if you want to track those costs separately. This also makes it easier to report only the Labor portion of a subcontractor’s invoice on their 1099.
If you are a contractor with short-term jobs, be sure to set up all your Service Items as two-sided, with both an expense and an income account. This does not occur automatically and unfortunately it is not very intuitive. You need to put a check next to This service is used in assemblies or is performed by a subcontractor or partner for the expense box to be added to the setup screen. Contractors often use a cost of goods sold account called something like “job related costs” for “job-related expenses”.
Builders and many professional service firms have projects that span several months or more, generally use a work in progress (WIP) or construction in progress (CIP) asset account because job related costs are not usually expensed until the project is completed. In this case, you should map the expense account to their WIP or CIP asset account.
Depending on your circumstances, there are also several “Other Charge” items you should set up. These do not need to be two-sided if:
a) You use WIP or CIP accounts, you should setup two items: (1) Transfer out of WIP – with WIP as the account and note in the description that the amount should be positive, and (2) Transfer into COS – with COS as the account and note in the description that the amount should be negative
b) You accept customer deposits or retainers, you should setup an item mapped to a current liability account. For better tracking, you should consider setting up a separate current liability account just for deposits.
c) You have customer retention or retainage, you should setup an item mapped to an accounts receivable account and a negative for the Amount (for instance, -10% if your retainage is 10%). For better tracking, you should consider setting up a separate accounts receivable account just for retain age.
This should help you immensely if you put it in place now, and start using it – at all times.
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