An important costing technique that can make your bookkeeping easier is job costing. But what, you may ask, is job costing?

It is a costing technique where revenue and expenses are tracked by the specific job they relate to, instead of being grouped by function (e.g. supply purchase, travel expenses, etc.). If your business undertakes a lot of contracts where each new project comes with relatively unique specifications, then job costing just may be the costing technique for you.

Here are some ways that job costing could improve your bookkeeping and benefit your business:

• It allows accurate tracking of revenues and expenses related to a specific project, which in turn makes it easier to track the profitability of that project; this can help you decide whether to accept a similar job in the future
• It provides you with the chance to make proactive changes: if significant discrepancies are identified between estimated and actual costs before a job is finished, you will have the chance to take corrective action before the job is even complete
• It enables you to give more accurate quotes for similar jobs in the future, because you will be able to rely on historical data to better estimate the costs; this in turn will help you calculate the desired markup accordingly
• It gives you better knowledge of your own business: by providing you concrete data on the actual margins on specific jobs, you would be able to judge whether your expectations about profitability of these jobs are accurate

Ultimately, using job costing takes a lot of the uncertainty out of your business: you can use the past experience of your own company to help make management decisions that arise in the future.

There are a number of ways that QuickBooks has of making job costing an easy and manageable part of your business’s bookkeeping. If you’re interested in pursuing this further, talk to us and we can get you started!