How do I track project costs and profitability?
Set up your accounting software to track costs by project or job. In QuickBooks, this means using the Projects feature or Classes depending on your version. Every expense gets assigned to a specific project when you enter it. No generic buckets, no “I’ll sort it out later.”
Track three cost categories for each project: labor, materials and expenses, and subcontractors. Labor is often the hardest because it requires time tracking. Your team needs to log hours against specific projects daily. Weekly is too late because people forget. Materials and subs are easier if you code invoices and purchases correctly when they happen.
Capture all the costs that actually belong to the project. Direct costs are obvious but indirect costs matter too. That trip to the supply house serves multiple jobs. Your truck doesn’t run for free. Some businesses allocate overhead as a percentage. Others just focus on direct costs and ensure their pricing covers the rest. Pick an approach and stick with it.
Compare your estimate or budget to actual costs while the project is still active. Waiting until the job is done means you can’t adjust. Review weekly on larger projects, at least at key milestones on smaller ones. When framing runs 15% over budget, you want to know before drywall starts.
Calculate profitability after the project closes. Revenue minus all direct costs gives you gross profit. Track this for every project and look for patterns. Which project types make money? Which clients generate tight margins? Which crew runs efficiently? The answers are in the data if you’re capturing it correctly.
Most businesses that struggle with project profitability aren’t tracking costs properly. They know the invoice amount and they know they paid bills, but they can’t connect costs to specific jobs. A bookkeeper for small business who understands project-based work can set up the structure and maintain it monthly so you’re not guessing at margins.
The discipline matters more than the tools. Job costing requires coding every transaction correctly and logging time honestly. Skip those steps and your profitability reports are fiction. Do them consistently and you’ll know which work is worth pursuing and which to walk away from.
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More Questions
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