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and we're gonna do job casting because the job costing reports we're gonna do allocating billable mileage we're going to talk about allocating inventory cost so we'll jump straight into my topics and then every shell comes back she can do hers if not I can cover her her topic I'll channel just kind of prepare for that as I as I do this okay so let me switch over to QuickBooks desktop here okay and I start with just basic allocation of expenses to job so what other things that Michelle was going to mention is that in order to get any sort of job costing involved you have to when you create a check or when you create a bill you have to make sure that here in the bottom part and this is as basic as it gets on the job costing world is we want to pick an item itself we don't want the job cost to expenses and there's a reason for that most of the other reports world but we want to always job cost to expense to items not expenses and then whatever they're the cost of that item is done is to be allocated to the job here on their drop down where it says customer job you have to pick whatever that job is gonna be so that's in a nutshell that is the simplest easiest way to tell QuickBooks yes I had this expense and it does belong to this job now in the world of QuickBooks desktop because of the job costing reports we want to compare the items versus the original estimated items so whenever we look at the actual estimate for this job so we're going to take a look at the estimate for this job in a second we want to see all of the sales components in there so I'm gonna go ahead and hit save and close and I'll double check it Michelle are you back hey Hector can you hear me yeah yeah I can hear you just fine I just started with my topic so do you want to just yeah okay my power went out and it's rebooting so you go on with yours and hopefully when it's my turn again I'll be ready to go all right perfect okay so as I was mentioning earlier we want to be working off average an original estimate we want every line item in the estimate and when we job cost it we have to we want to select the original line item when we jump costed this is going to play a very important role in the reporting process now these estimates can be invoiced in full or they can be invoiced partially doing progress invoicing we're not going to get into that that's actually part of that those basic certificate advanced certification part in in in job costing so I'll refer to that but Michelle talked about double-sided items and that is the the most important component of it if you're working with QuickBooks Online or QuickBooks desktop our recommendation is to always use an item in both the income and the sales side and make sure that the item if it's not an inventory part that you actually override hit this little checkboxes here overwrite and make sure there is a cost component that's gonna hit the cost of goods sold and then there's an income component that's gonna hit the income side and quick QuickBooks will know that if the transaction is in a check bill credit card charge or expense in QuickBooks Online it knows that it's gonna post to this account but if the account is in a sales receipt or an invoice is gonna post to the income account so that's really the important thing between the two now let's talk about one of the features that doesn't get talked about very often which is allocating mileage okay so the way to allocate mileage is here under the company menu there's a button down here called enter vehicle mileage and when I click on enter vehicle mileage is going to give me a drop down screen for vehicles now you can access your vehicle list here on their list menu customer vendor profile list and under vehicle list so your vehicle list again because we're talking about mileage is going to be for vehicles however you can actually create any sort of asset that you're going to charge for and it may not necessarily be mileage so if you have for example if you have a forklift and you charge per hour or or if you charge per minute or whatever you can actually essentially use the the mileage function for that as well so let me go ahead and create a new vehicle here I'm going to call this one I'll just call it truck and then I'll hit OK and then I'll create another one here called the forklift and I'll kind of show you both of those concepts there so this is the vehicle itself now also if I am going to charge my client or or charge a job for the usage of that vehicle whether there's a forklift or a truck I have to also create an item for that because unfortunately the vehicle itself is not tied to an item so I have to sort of in parallel create an item for that so I'm going to call this one truck usage and not put here miles and then I'm gonna put my reimbursable mileage rate here which in this case is going to be let's just say a dollar 50 and that's how much we're gonna charge and then I'm gonna click this a check box that's if I want to log the internal cost of mileage and let's say my internal cost of mileage is let's say 75 cents okay now this is a real tricky part is you know when I charge for mileage what account should I hit well technically if I'm gonna charge for mileage that should be construction income because that's that's part of my of my construction deal but when I expense it where is that money going to come from so technically it should come from the same place where you charge your car maintenance your your your truck lease payment your gas so we're gonna put here on there automobile expense we'll create a sub account called mileage okay and this will make sense once we actually show the reports for that so no that shouldn't be the fixed asset account it should actually use an expense account so let me see on the expense accounts where is my auto expense or there is track car and truck expense of making a sub account on their current or expense and hit save and close and we'll give this a number [Music] so when I charge my internal books my jobs for mileage I'm gonna charge 75 if I charge my client I'm gonna use 1.5 and then I'm gonna hit next here and then I'll juice here forklift usage and we're going to call this hour hours and then let's say we're going to charge for the forklift usage three hundred and fifty dollars an hour and that's when we charge our client and let's say our internal cost if we actually pay for the forklift when we rent it we're gonna choose maybe the same expense account that we used to pay out the people that we rent the equipment from if that happens to be the same account that's typically going to be on their job related cost or something like that if it's an internal asset it's a little bit trickier just because there's no real cash payment being allocated but let's say that we our internal costs for the usage of a forklift is a hundred and seventy five dollars per hour so then I want to go ahead and hit OK and then I close my eye in this so back I got my two vehicle is and then I can now select the vehicle I want to charge for so let's say this is going to be lets say forklift okay and then I can say which which date we did it at normally we we charge per day we can actually do it across a span of days but I recommend just doing it in a single day and for example here where it says total miles let's say I'm just going to charge for 18 hours of forklift usage now this is say this is what you call it work around this is none of this stuff is intuitive right no one will ever figure this out on their own and I start playing with QuickBooks for a very long time to say how interesting I could use my vehicle mileage module to charge my client for equipment usage so let's say we're gonna do here select the job garage rebuild and then here where it says item this is where we pick the item that we just select so we click here for cliff usage I'll skip class for now and I'll skip notes and then if I want to mark it billable I can click the billable tab right so that's only if I want to charge my client for it so I'm going to go ahead and hit saving now by the way very important thing people ask you know what happens if I don't mark this billable will they still charge the hundred and seventy five dollars to the job the answer's no so this vehicle mileage is a non posting transaction it can only give you internal reports that we can use let's say let's save this I can show you I can see a report of mileage just so I know what the usage is right so in this particular case it's going to be based on the item that's being used so I'm gonna go ahead and mark it available because I do want to charge my client for that and then I'll hit save and close then when I go and in self-explanatory for mileage right so if I wanted to add mileage for the vehicle is self-explanatory that would just be a normal usage right so I would just put I can put a start date I mean I started odometer and an ending reading and it will calculate it for me and at the same time I can put it to the job and pick the item now the item is the most important piece for invoicing so when I go invoice my client let's go into customers create invoice and then I'll pick that that client that I was using it for I'm gonna go ahead and hit cancel because I'm not gonna use the estimate for now and then I'm gonna select my outstanding billable time and cost and we're gonna see here under mileage we're gonna see two items here we're gonna see our forklift that were charging three hundred and fifty dollars for for the usage and then we have our mileage that we're charging a dollar fifty for and then when we hit ok those two items go in there so this is how we charge for the items now the tricky part and this is gonna be very similar to Michelle's example on the on on on taking the internal expenses that don't really tie it to a pair the tricky part is now charging the actual internal cost of the mileage to the job so we'll do that in one second so this is how we charge essentially our client for forklift usage and truck usage so I'm gonna go ahead and hit hit save and the way we charge the way we're gonna charge the job for the usage which we're gonna use a check so I'm going to create a check here and then here under the pay of the order off I'm not really gonna pay a third party so I can create a vendor here called internal internal equipment usage this spelling will be great if I knew how to spell that correctly so I create a vendor called internal equipment usage and then under item I can I can have my forklift usage right here and I can say look I used it for 18 hours and that will charge 175 dollars to the job as long as I select the customer job here but then the important part is I'm actually not really paying someone 3150 that's just tracking internal cost same mechanism Michelle's gonna use for charging and owners time so on the second line I'm gonna pick the same exact item and then I'm going to pick quantity and here I can do negative 18 which will basically reverse the check this is what's called a seer check but the key thing here is that I have a job at the top and I don't have a job at the bottom that way when I when I pull a profit and loss that 30 130 150 is gonna net and my my profit and loss itself will not be charged but when I look at my job cost reports it will be charged so let me go ahead and hit save and close here okay so that would basically create the internal charging of the usage and then you saw through the mileage module how we charge our clients so let me go ahead and hit save and close and let's pull up a report here so let's move over to reports I'm gonna go into reports I'm gonna go into job costing and by the way that job costing option it's only available in QuickBooks premier or Enterprise I in the resources we have a slide that explains what functions are available in which feature but if you don't have QuickBooks premier construct contractor Edition installed it would be also on their jobs time and mileage and if you have a QuickBooks Pro this will work as well but the actual option there with all the reports organized as only on on premiere but the report we're actually gonna see it so it's actually on on pro as well so I'm gonna click on jobs time and mileage and then I'm gonna click on job profitability detail and then I'll click on that report and then here on the drop down I can actually pick the job that I want to see and then I can hit OK okay i muted Michel ok so so you're gonna see our actual cost here you see how or for please for cliff usage is 30 150 and our actual revenue here is 60 300 and then we have a difference of 30 150 that's a profit up we have about a 50% margin on this same thing with the truck usage there's no no dollar amount charged to truck usage I would have to do the same thing and create a check you said internal equipment usage and then put here truck and then I forgot how many miles it was it was two thousand miles right two thousand miles and then I'll pick the customer job here and again I'll repeat this put negative 2000 okay that way it's a serial dollar check that's the key right there and as long as I only charge one one customer I'll be good then I hit save and close okay and then you're gonna see that mileage charge to the job that way when I'm tracking profitability I am yeah quite possibly hopefully tracking more accurate numbers and these in terms of understanding our profits okay so the only invoice we created was that one that was posting for ninety three hundred if actually go and pull up the the job itself and grab it from an estimate so because it looks like I created an estimate before I got it from an estimate then I get the choice to choose whether I want to invoice specific line items or the estimate where I want to invoice a percentage this is for progress invoicing my my favorite way are we doing progress invoicing is a third option is the selected items just because it gives me a lot more flexibility in terms of which piece of the job I have completed so far and for the next report for the working process report is extremely crucial that we understand exactly where we stand as a construction company on the job where there were 20 percent done 30 percent done 40 percent done because typically our payouts or invoicing is tied to that percentage that's really really important so if this screen here you see the estimated amount of of the work that we've done for concrete so if we know we've done roughly about let's say 50 percent of that I can just like 50 percent there on their current and in QuickBooks will calculate how much of the items or how much of the amount to bring in there let's say that we did 100 percent of the plans and permit and we've did 25 percent of the lightning and 0 percent of the paint of the paint so QuickBooks will actually calculate exactly how much it should be embracing based on what percentage of each line item of the original estimate you are you are claiming as complete so I'm going to go ahead and hit OK here ok and what this will do is and I can close the screen this will create now an invoice this is called a progress invoice that actually contains a history of the original estimated amount the rate and the total percentage of each now I have a lot of clients at the construction business that don't ever ever even show this invoice to their customer because it becomes confusing sometimes they are contractually agree in agreement to pay in a certain way or there are conditions in which trigger payments and payments are not really even tied to invoices it's really important to keep in mind that creating a progress invoice in QuickBooks is with the sole purpose of recognizing revenue not with the purpose of getting paid getting paid for most construction projects is independent of invoicing so I'm gonna show you one more report that is related to this and I think you're making a lot more sense so I'm gonna go ahead and hit save and close okay and I'll close this and I'll run another report I'm going to go into reports job time and mileage and I'm gonna do job estimate versus actual detail job estimates versus actual detail I'm gonna hit the drop down here and select the job garage rebuild and hit OK okay and we're gonna see with all the detail components of the job the first line here estimated cost this is what's actually on the estimate if I actually double click on that and double click there I actually get to see the estimate what the estimated costs are now you have to have the internal cost in one column and you have to have the markup in another column in order for QuickBooks to differentiate what you plan to receive which is a twenty three thousand versus what you plan to pay which is the eighteen thousand the single most number in the construction is a most important number in job costing or construction industry it's my estimated cost of the job which in this case is eighteen five ninety because this will drive everything so as you can tell for example in this particular job our estimated cost are eighteen thousand our actual cost or twenty one thousand so we're basically over our original cost so the big question is you know are we gonna get paid more because we're over or should we invoice everything we have a hundred percent I mean there's a lot of really important things to kind of just stop and think about okay so that so that's a really important component is you know whether what percentage we are on the job based on the cost versus the estimated cost and that essentially will drive how much you will invoice so although I did an example of invoicing based on a percentage per item which I basically arbitrary went in there and picked the number ultimately you drag those percentages are driven by this specific comparison of estimated cost versus actual cost so for example if the original estimate I'm just gonna have to drive up the cost of this let's say the original estimate we estimated that we were going to have or once at 18 hours of forklift usage which actually didn't do before that and let's say 4,000 of mileage and I'm going to go ahead and hit save and close we're gonna see how I'm gonna save this how this report is now going to show me potential different percentage of a comparison of internal cost and estimated cost and this difference which I'm going to click on customize report and click on this little box here that says percent difference I'm going to go ahead and ignore all the revenue portion because that's actually not important for now so this difference here at 13.2% it's whatever should be left of that job to complete so if you if you they take that number minus one or just take the inverse of that to get to 100% which in this case would be eighty six point eight percent right so eighty six point six percent should be how much were done with that job and that also should be how much we have invoiced so far now for the very long time the limitation that we have with QuickBooks is the report shows like this and you have to make that manual calculation of that 13.2 but in quickbooks enterprise they added a new report called the job working process summary probably one of the most important add-ons in the world of construction contractor and job costing in quickbooks and this is only on quickbooks enterprise and this report actually and i'm going to go ahead and just filter this one to just show one job that way we're not distracted by all the other jobs are going on so i'm going to hit okay so this report we actually see the opposite percent we actually see that percent of completion but we also see a really important number the most important number in the the job costing which is we've invoiced $17,000 so far if I double-click here we see that there are two underlying invoices getting to that 17,000 however based on our percentage of completion we should have invoiced 30,000 so that's that report tells you exactly where you are from the perspective of invoicing that this doesn't tell you whether they have paid you or not you would have to run a different report and receive a Post report on the invoices or something like that but this is a really important report to know where you stand in terms of earn revenue and actual revenue all right so the other common element that people ask for a lot quite a bit is how if I don't purchase materials or that goes specifically for a job very common with you know people when people purchase 2x4 sand cement and they buy them you know by the base or by the by the truckload and they don't want the necessarily job cost or allocate the entire purchase to a job so let's talk about what that actually means so let's say for example I'm gonna buy some some materials and I'm gonna pick here some one of the items here so let's say for example I'm gonna buy a total of five thousand dollars worth of materials but we're only gonna use a portion of that for a job so the problem that most people have at this point is that they're gonna have to figure out well how much of the materials that I'm buying are gonna be for a job and how much are not going to be for a job and then let's say for example is forty fifty then they would have to come in here make the calculation which is very very time-consuming make the calculation and send some of the costs to a job and some of the cost to no job at all so one of the major challenges without that is you're not tracking for inventory and then when the next job comes in you're gonna have to grab it from your inventory quote-unquote which is from your non job cost of cost and bring it back into the job with a co dollar check or any other techniques that we shown here so this is one of the big issues that we have so the alternative to that would be to track inventory so let's say I'm buying five two dollars worth of wire and I use that wire quite a bit for jobs so the way you would do it is like say for example I'm going to create an inventory item here for the wire so I'm going to say that this is five dollars and sixty-five cents let's say per foot whatever it is I'm gonna put sales price I'm gonna put zero and then I'm gonna put here do not sell and then I'll put here for job costing only you're gonna see kind of the dynamic of that and that's really important that you do that that way the QuickBooks user is not tempted to do it and if they end up selling it for some reason then we're gonna pick the same exact cost of goods sold account as an income account and the cost of goods sold account because it's always gonna hit cost of goods sold no matter what someone I go ahead and hit ok and then I'll go ahead and buy their 5,000 dollars worth of wire which will be one thousand feet of wire whatever happens to be and then I'm gonna go ahead hit save and close so that's just a normal purchase of inventory but then what happens is I'm gonna consume I'm gonna use up part of that inventory now for a job for me to do that I have to actually either invoice or do a sales receipt for it now I personally recommend doing a sales receipt instead of an invoice because normally when we give a client a statement we don't want to see an invoice that's worth $0 with a wire consumption is that's just confusing so I will use a sales receipt instead because typically in construction we don't use sales receipts at all so I'm going to click here on there enter sales receipts and then what I'll do just real quick to just make it easier instead of calling a sales receipt we're gonna call it the inventory usage for a job or something like that that way if we actually print this out you know the people internally in the office they know what the purpose of this sheet is so we're gonna pick the job I'll close that out and then I'll pick their item here wire and here says do not sell for job costing only oops supposed to put sell not see so do that sell for job costing only and that's just to let you know that you're not going give this to the client and then you're gonna put here mm and this is the key element the rate is zero the rate is supposed to be zero there are no sales because I'm not selling the client of wire I am consuming the wire and therefore that five dollars and sixty-five cents times 2,000 should now be sent to the job cost so I'm gonna hit preview that you see you can see what that looks like that's gonna say hopefully when if somebody is tempted to print this I give it to the client those indications show you that that's not something that you it's not gonna be a client facing document just for internal purposes so I'm gonna go ahead and hit save and close and hit yes and then when you see our our our report here we see here the actual cost for this is eleven thousand three hundred wonder why that's a pretty big cost or not two thousand was supposed to be forty percent or one thousand so let me put here times one thousand I guess I could have done that math by myself four hundred so I'm going to consume four hundred not two thousand because I only bought a thousand so I want to consume four hundred feet of wire and then you should see that cost hit my estimate versus actual and that allows me to see it now one of the challenges here is I never budgeted for this in the first place so what I should have done is budget for this wire in the first place and one of the ways that we can budget for that without the client seeing it is we create a new item here I'm going to create a group and then I'm gonna create an item group and I'm going to call this job materials and then what we can do is this little checkbox that says print item some groups I'm gonna uncheck that and then we're gonna put here total job materials on the item and then gonna put wire and I can put any other materials that I normally use whether their inventory part and maybe any other things I can put these pieces here and then my client is not going to see it so whatever that is I can hide it inside of a group and then hit OK and then I'm gonna go back into my estimate my original estimate here and I'm gonna pull up my original estimate and then I can come here in the bottom and pick my group with hidden items and that group is gonna open up both of my items so in here I can budget I can say well I want to use about 400 feet of wire for this and then there's some additional specialty materials which we haven't done yet and we're gonna have one that's safe for 1500s and this could be some internal calculations of materials we're gonna have and then under mark up we're gonna put here negative a hundred percent that way it doesn't charge the job anything from a sales perspective that way our revenue is still the same thirty five thousand however our projected costs are booked in here and then when I show if I happen to be using an actual QuickBooks estimate to show my client I'm just gonna see a line that says job materials with a zero to the outside world but internally we actually calculated that to be you know two thousand two hundred and sixty-four one item fifty hundred for the other item so this allows me for internal calculation purposes this allows me to go back into that report and actually see that I consume all the materials that I originally budgeted for okay so that's it that's the only part that I really didn't want to make sure that I missed let's talk about the additional resources on the on the email that we send everybody with a recording you're gonna get all these links we're gonna have the recording for job costing payroll that happened in January I recommend you watch that one a few if you had questions on payroll we have a recording on manual payroll this is if you don't use QuickBooks payroll you use ADP paychecks some sort of third-party payroll software how would you use QuickBooks payroll for job cost and without necessarily having to use internal QuickBooks features I have another video on just the reports where I go a little bit more in-depth on the basic reports that I've shown here and then the certification materials again you're gonna get an email with this these are actually really really good if you are advanced certified yet I recommend especially the most recent job costing supplemental guide module for that one I like actually walks you step-by-step through everything step by step through job costing to progress invoicing step-by-step to retain edge managing retainage on working process I mean the construction world is actually ever going in complexities that's really important and in the slides I have this slide that shows you what's available in each feature broken down each version of QuickBooks broken down by feature that's actually really good cheat sheet to have to understand job costing and the entire world of QuickBooks