The setup depends on whether you’re using QuickBooks Desktop or QuickBooks Online. Desktop uses the traditional job costing structure where jobs are sub-customers. Online uses the Projects feature to track work by project. Both can give you labor costs by job if configured correctly.

In QuickBooks Desktop, turn on time tracking under Edit > Preferences > Time & Expenses. Create each job as a sub-customer under the client name. When employees record time, they select the customer:job and a service item that represents the type of work. The service item carries the labor rate so QuickBooks calculates the cost.

In QuickBooks Online, enable time tracking under Payroll settings or add the Projects feature if you’re on Plus or Advanced. Create a project for each job, then assign time entries to that project. The time flows through to job profitability reports that show labor costs alongside materials and other expenses.

The technical setup takes an hour or two. The hard part is getting time entered correctly every day. Crews working in the field need a simple way to log hours against the right job. QuickBooks Time (formerly TSheets) integrates directly and lets workers clock in from their phones with GPS verification. Other apps like Busybusy or ClockShark do the same thing.

Without a mobile time tracking tool, you’re relying on paper timesheets that get entered days later. By then, employees forget which job they worked on Tuesday afternoon or how many hours they spent on callbacks versus new work. The data goes into QuickBooks but it’s not accurate enough to trust.

Set up service items that match your labor categories. If you bill different rates for rough carpentry versus finish work, create separate service items. Link each service item to a cost rate (what you pay) and optionally a billing rate (what you charge). This gives you true labor cost by job, not just hours worked.

Run Job Profitability reports in Desktop or Project Profitability reports in Online to see where you stand. These reports pull in labor hours and costs alongside materials and subcontractor expenses so you can see actual margin by job. If a job is eating more labor than you estimated, you’ll see it here before you finish the project.

Job costing only works when every hour hits the right job. Make time entry part of the daily routine, not something that gets done on Friday afternoon from memory. The discipline matters more than the software.

Most contractors who struggle with job costing have the software set up fine. They’re just not using it consistently. If tracking labor feels like too much overhead while you’re running jobs, consider getting help with the setup and training so your crew knows exactly what to do. A bookkeeper for small business who understands construction can configure QuickBooks to match how you actually work and make sure the reports tell you something useful.