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Progress billing template for Building services

this video is over an hour long because it's a compilation of multiple lessons I'm updating for my full QuickBooks Online for construction and contractor's course I'll put a link in the description for all my paid courses so you can see what that looks like but this video you're going to see is actually about half of the content that I'm putting in this course it's going to be pretty complete as you go through the hour plus of this video you will actually see 90% of the functionality that quick books online plus and QuickBooks Online Advance has to offer when it comes to construction and contractor type of accounting however if it becomes super evident that your contractor business your construction business needs a lot more functionality this is where you go to websites like apps.com apps.com you type the word construction and then you can see all the apps that are designed to work within the QuickBooks Online ecosystem one of my favorite is called noei I'm actually going to have a video coming soon in the channel that's going to go deep dive into how no IFI works as an add-on to QuickBooks online but without regard of third party apps this video should give you a really good sort of a through see walk through on everything that QuickBooks Online plus and QuickBooks Online Advance has to offer when it comes to construction and contractor Project based management for accounting in QuickBooks online so have a brand new QuickBooks Online file it actually contains no data I just set this up I'm going to start making the basic configurations and then I'm going to walk you through all the screens so you understand what the workflow would look like first thing I'm going to do is I'm going to click on the gear menu top right and then I'm going to go into chart of accounts I want to make sure that I have the proper chart of accounts for all the workflows so all my transactions are reporting into the right place let me start simply by going down and looking at my income accounts and seeing if I have the proper income accounts that I need so I have billable expense income discounts sales sales of product Services uncategorized these are default accounts that come with QuickBooks Online I'm going to create my own set of income accounts for this chart of accounts that's for a construction company so I'm going to scroll the way up I'm going to look at the new button on the top right of the screen click on new and then I'll create the first account so the first account I'm just going to call this construction income pretty simple straightforward account type is going to be income so I have to scroll down until I find income under detail type I'm just going to choose other primary income pretty straightforward option okay then I'm going to click on Save and that's it I have my construction income account if I type c in the chart of accounts it will filter it down I got my construction income account now under the construction income account I want to create sub categories or sub accounts so let's do each one I'm going to click on the new button on the top right and then I'm going to do the first one labor I'm going to make this a sub account so I click on the little check boox make it a sub account and we'll make that a sub account of construction income now for the account type I'm going to continue doing the same thing and I'll select income and then other uh primary income that would be kind of the common theme here then I'll click on save perfect I'm just going to remove the filter here and just type the word income and then we can see all of our income accounts and then I'll remove the word income and I'll put uh labor and then there's my uh labor income account now notice that there's also a cost of Labor uh that's actually a cost to good sold which is a good sort of counter account to that I probably want to change the name of that account to labor income it would probably be a lot easier to read so we're going to go to edit there and I'm just going to put here labor income and then click on Save and that's it I'll remove the filter one more time so we get to see our whole chart of accounts I'll scroll all the way down one more time so we can see our income accounts and notice I have my construction income account and the sub account of Labor that's what I wanted to see now unfortunately there isn't a duplicate button that would be quite nice if you could duplicate from here you just scan it's just not an option so you're going to have to be creating each of these accounts uh separately so let's scroll down let's go to new again and now let's do materials income again every construction company is going to have its own style I just happen to be following this particular schema uh labor income equipment that sort of thing uh but you're going to follow your own uh system based on how you manage your company so we're going to make this a sub account of construction income again click on Save and then we'll do one more we'll call this one equipment in income so we got equipment income follow the same formula this is going to be an income account other primary income sub account of construction income yeah so there we go you see a preview of what these are going to look like construction income income equipment labor income pretty clear you get to see exactly what that's going to look like if I want to more in the future I can do that I'm going to go ahead and click on Save I'm going to type here in the search cogs for a second because QuickBooks creates this cogs or cust to good sold accounts notice it created cust to good sold labor cust to good sold R Rental Equipment cust good sell Freight cust to good sell materials and supplies or supplies and materials this Freight I might not need maybe I never really pay for Freight so if I don't want that I can just delete that account like I don't have to have accounts that I'm never going going to use it's up to you really so we're simplifying it and we have a cost of Labor equipment rental and supplies and materials cost to good Soul account which is my direct expenses and then if I type income and we see all of our income accounts I got equipment income labor income and materials income so it's pretty simple pretty straightforward we get to see uh a a one: one ratio between my income accounts and my cost to control accounts and it's going to make a lot more sense once we start invoicing and you start seeing what that looks like okay so I'm done with the chart of accounts let's now go into our products and services list there's two ways to get to it once you can click on the sales tab on the left hand side and then click on products and services that's one option the other one is we can click on the gear menu and then we can click on right here it says list we can click on products and services list either one take you to the exact same page I'm going to zoom in a little bit so you can see a little bit better now I'm going to click on add an item to create the very first item and the first item is going to be the uh the item type is going to be a service that's kind of the first step so we're going to call this one labor okay we're going to follow the exact same pattern we'll skip skew and category for now we can go back and look at those stuff later or maybe with a within a different context on description we'll put just here labor charges and then the income account I'm going to type labor and then on the sales side on the sales side the income account is going to be labor income okay you see there it's called construction income labor income it's a full sub account then on the purchasing side or the expense side I want to click on this little check box because I want to be able to use that Labor uh item in a expense in a bill in a in a purchasing expense type of transaction so the expense account for this am mon type uh labor that's going to be this cost to good sold labor uh account so now you see how this stuff starts making sense we got an item or a product or a service that's that is going to be linking the sales side you see up here to the income account and the purchasing side or the expense side to the cost of good so account that's kind of the first step we'll click save and close now on this screen you do have the option to duplicate that's actually pretty cool um so you can just basically um right click there and now on this screen this is pretty neat here it says edit right next to it you can right click now on this screen here's my labor item right on the action column instead of clicking on edit I can click on the drop down menu and I can click on duplicate we didn't have the ability to duplicate on um on the chart of accounts but we do on this screen so we definitely want to take advantage of that click on duplicate it's going to create a new item called Labor copy we don't need that we're going to call this equipment and then we're just going to come down here and put equipment charges okay so we're kind of following the same formula the income account is not going to go to equipment income the expense account is going to go to equipment rental okay and then we click save and close and then we're going to do one more which is going to be going to duplicate that that's going to be for materials so we put here material this part again seems a little bit repetitive um kind of boring really but it is kind of part of the setup like you want you need to have that product and service that's going to tie to the to the actual forms to the transactions tying to the correct income account and then uh tiing to the correct cust of good sold account and we're going to start with this simple premise of we got three items we got equipment labor and materials this one called ours QuickBooks created by default uh sometimes we can get rid of it sometimes we can't let's see if this one will let me okay it won't uh just because it's a very specific item that's used in other context so unfortunately we kind have to live with uh that hours um item uh we can we could reorganize the list in such a way um so we put these three equipment labor materials into like its own category so that way we see them as a different grouping so we can do that that so I'm going to click on more on the top right and then click on manage category so I'm going to create a category I'm going to go to new I'm just going to type this construction okay and you don't have to do the categories this is just one way that I'm thinking you can organize your product and services list just in case you have other items there that you don't want to confuse so I can select all of my items here the ones that I want again the ones that I want to put in the subcategory and then I can click up here it says assign category and I can assign all of them in one shot to construction then I click on Save and now they're all part of a category and then this one called ours I can put it into some other category for now so I'm going to go back to manage categories and I'll create one called other and then I'm going to put ours here under the category of other now this is this um process of selecting a whole bunch and then clicking on ass signing category that's the batching option if you want to do one at a time you just edit it and then there is a drop- down for category so you can select each category each item you can change this category one by one if you need to okay beautiful so now we have our item set up we have a chart of account set up now we can start creating some transactions now the very first thing you want to do is create your customer and then create your project so to create your customer we're going to click here says customers and leads go go in there and then I have a couple of tabs I have overview customers marketing I'm going to go into customers and here's my customer list or my customer database I can import it if I happen to have a spreadsheet so I can take my spreadsheet and import it uh importing customers is a very common situation where you set up QuickBooks uh for the first time but your business has already existed for many months or years when you're starting from zero you'll probably be creating the customers as they start showing uh showing up but you can import it um here with a spreadsheet if you need to I'll just create one by one simply I'm going to click on ADD customer manually click on that and then I'll start so let's say this customer is called Joe Mitchell we'll go here to first name Jo Mitchell okay and that's it I can add email phone number address all that stuff you can do for the sake of time I'll skip all that and then I'm going to click on save so I'm going to have officially my first customer uh once I go into the screen now the screen looks like this I got my list of customers here I can pick uh from my multiple customers I'll create one more customer there's a little tiny plus button here that you can use to create a new customer okay and then let's say this one's called Mary Garcia and then I'll click on save so I have two customers I got Mary Garcia I got Joe Mitchell now in the context of construction or Contracting what you want to do is you want to create projects so the customers are your your your billing entity they're who you you're going to send the invoices too but the projects are going to be the measuring entity of each project okay so each each time you're going to do work for them you want to put them as a new separate project so we're going to click on start project and create the first project and let's just say this is called the kitchen remodel and then that's going to be for Joe Mitchell okay and on start date we can put okay the project is going to start June 1st and the project should end and this is like a projected end date it should end August 31st and the default status is going to be in progress or not started you could choose whatever you want and add additional notes if you need to I'm going to click on Save and now my kitchen remodel project is in here if I click on the old projects Link in the top I'm going to go to the very first page where it shows all your projects and there's filters here so you can only look at in progress not started all statuses so you can see all your projects I'll create one more project and then we're going to call it uh backyard Remodel and then that would be a project for Mary Garcia and then Mary Garcia's project started let's say May 1st and it should end we'll just put here August 14 okay and let's say we'll put this one in in progress and then click on Save so now I got two projects let me just go back here to all projects I got two projects that have different statuses so one is in progress once's not started and we have the two start dates and project and then projected ending dates there as a general um starting point for the information about the project now we haven't done any transactions here we just kind of got started by creating the chart of accounts the items the projects this is slow build towards you know eventually was going to be all of the transactions related to to these two projects let's start by clicking on the backyard Remodel and then inside my back backyard remodel project I'm going to start with the very first transaction per se which should be your starting point which is your estimate so I'm going to click on the drop down menu here and then click on estimate I do want to bring something out there's something else called a cost estimate which I'm going to cover afterwards that's actually available in the advanced edition of QuickBooks Online all this time at this point we've been working with QuickBooks Online plus um and everything that I'm showing you now up to the point that I let you know from this point forward this is going to be Advance only all the stuff is available in the plus edition of QuickBooks Online okay so we started a regular estimate not a not a cost estimate a regular estimate and then down here it tells you what project is for it's for my backyard project so very very clearly stating there what it's for there's my build to to now I didn't put an address at the beginning that's why it's not showing here but I can put 101 Main Street and then continue putting my address and it will save that so so that's one other place that you can do that and then we're going to start with entering all of the line items from the project so we're going to start with let's say labor and let's say for this project it's going to be just to say 15 hours of labor for $150 per hour and then we're going to have here equipment and let's say we're going to charge a flat fee for the equipment we're going to bring of 500 and then we're going to do materials and let's say the materials are just going to be uh 12,500 okay so there's my project uh for the for the uh backyard Remodel and it's right here 15,250 now in this estimate we're not putting any information about what it cost me what it cost my company uh because the way um the the projects Works in QuickBooks Online plus you don't have the ability to project your cost you as I mentioned earlier you got to be in the advanced Edition to have a cost estimate which is the one where you put both your internal cost and what you're going to charge your customer so on the plus edition of QuickBooks Online estimates to projects are only for you to put the the the amounts that you're going to charge not the amounts that you're going to pay for okay all right so now we have the estimate set up we're going to click on set save we can actually preview to see what this estimate is going to look like and then there we go it's got labor equipment and materials here's the $3 amounts here's the 15,000 now many people tell me Hector I don't I want this estimate to look much different I don't want to break it down into these three things maybe internally I want to know what the three things are but I don't want to show my customer the three things how would I do something like that and the way we solve that is with bundles so we'll go back and do that um in a second the other thing I want to show you here is which is customization you can also edit uh some of these things so if you wanted to remove some of these additional pieces of information that you don't need you know estimate status estimate number um you estimated date all all these things um you can actually choose what you want to show if you want to show that or not so that's some couple of options you get there so we're going to go go ahead and click on Save and then I can send it to my customer maybe get a payment you know that that process we're not going to cover here we're just covering the sort of the accounting step by-step workflows so I'm going to x out of that and then I should have finally a an estimate in the books which is showing right here estimate one1 for the backyard model now I'm going to create another estimate for the other project so now I got this other project called the kitchen remodel but for that one I'm going to hide the detail so I'm just going to have one lumsum item that we're going to show to the customers in an estimate we're not going to break it down with all the items we'll still keep an internal breakdown but we won't show that to the to the to our client so we're going to go here on the sales tab on the left hand side and then go into products and services and then in product and services we're going to go to new on the top right we'll click on new and then we're going to do a new bundle bundle that's what we're going to do right so when we do a bundle uh we're just going to call this uh project I'm just going to call it uh project cost or something like that this really doesn't matter what you call it um and then here with the sales description we're going to put uh total project cost and then here it says items included in the bundle that's where I get to choose do I want to see the details or do I not want to see the details so we're going to hit no or uncheck that we're not going to see the details but then we're going to break down and put our labor and the second one would be materials and the third one would be equipment okay so we are putting all this stuff in here we're presetting sort of a template quantities we're going to leave all that stuff in one we actually don't need to mess with that and then click on Save and close so now that I have my my bundle it's going to be much easier for me to create those estimates break down the details but not show it to the customer when you print or email the the estimate so let's go back into projects and then we're going to go into kitchen remodel so we're going to go inside of a kitchen remodel project for Joe Mitchell and then we're going to click on add to project on the top right and then we're going to do estimate so we'll go to estimate and then down here where it says product or service we're going to pick this project cost bundle now unfortunately they don't label it so it's really obvious to you that that's a bundle and not a regular item you kind of just have to know we'll select project bundle and then it pre loads the three items for me and then it puts hidden under it to remind you that that stuff is not going to print now inside you can actually enter all the details so let's say this is going to be 34 hours at $125 an hour so let's say it's going to be $5,000 so this will be $5,000 and then my materials will be let's say um 27 $3,700 and then for equipment let's say it's going to be uh 1,500 okay so now you get to see the total which is uh 10,200 that's what your customer will see once I click on Save and I go to PDF view you see that for the customer it's simply project cost 10,200 so no details we keep information about the details internally but the customer doesn't see any of those details so we'll go back to um our project screen so we can see all of our projects we still don't have any income or cost cuz we've only done setup at this point point now before getting started I'm going to go into reports where it says find report by I'm going to type the word estimate so we can see what are the reports that we have available so we we have estimates by customer and then we get to see a report of the two active estimates that we have okay these are Under pending status and then I'll go back into the report page again type estimate one more time and then we have estimate and progress invoicing summary by customer when click on that it's going to show me it's going to show me both of my customers pending status amount none of it has been invoiced okay and remaining amount 100% remaining amount so let's start creating um some invoices for this project so let's go into projects and let's say for the backyard remodel project we want to invoice let's say 20% of it so we go to transactions I'm going to click on the estimate itself and then I should be able to create an invoice straight from here I'm going to click on manage on the top right of the screen and then where it says actions I have make copy delete or audit history and then I have pending so I'm going to switch pending to accept it and then once I I I switch pending to accept it now I can convert to an invoice so let me save that and then I'm going to click on convert to an invoice okay and then the entire thing will be converted into an invoice because I don't have something was something's called Pro uh progress invoice enabled I got enable progress invoicing so instead of uh the whole thing being invoice it will ask me what percentage would you like to invoice so we'll ex out of that we'll click on the gear menu top right of the screen click on gear and then we go to accountant settings right there under your company then we're going to click on the sales tab the left hand side sales and then we scroll down to something called progress invoicing you want to turn that on it's really good feature to have and then we click here on update and then save and then done okay that allows me to go back into my estimate and then when I'm ready to convert to an invoice it's now going to give me a popup saying how much of the is invoice would you like to estimate so I can do percentage of amount and then put 20% and then QuickBooks will only invoice 3,500 which is 20% of the 15,000 what's really cool also I can click on manual entry for each line click on create invoice and then inside each line I can put whatever percentage I want so I can come in here and put 20% 20% 20% and then I'll redo the calculation for me so you don't have to um do this you don't have to do progress invoicing okay that's only if you want to use this style of of invoicing if I click on Save and then we get to see what that looks like that's always the really important piece is what what does it look like to my customer now we see something like quantity three because it was um you know a 15 before believe what the original was and then we had one divided by by five or multiply by 02 this stuff could be confusing to your customer so you kind of want to be careful with using progress invoicing in this specific matter it's actually a lot easier to read when you use the other method lumsum method so we'll show you that as well so I'm going to click on Save what I would probably do let me go back into my my invoice what I probably would do um to provide some context I'll probably click and drag a line all the way in the top and then put here uh 20% to get project started or something like that so just basically adding a little bit of note um so it's a bit easier to understand more contextual when I go back into PDF view the customer can read clearly okay this is that's exactly what what what they're trying to achieve here they're trying to invoice uh 20% of the invoice or the or the estimate rather okay so that's a just kind of a something to think about when it comes to uh the presentation of your forms right because your customers will always act confused as an excuse not to pay you that's a kind of like the ethos of a customer so we have an invoice here for 350 let's go back into all projects and let's take a look at what the screen looks like now it looks like one of our projects has some income now this doesn't measure whether or not the customer has paid you or not this is whether whether you have invoiced your customer that's a different issue whether they have Pages at invoice different issue altoe let's go into kitchen remodel and let's invoice let's say 35% of this of this estimate and that's what the contract set so that's what we're going to do we'll go to kitchen remodel we'll go to manage here we'll convert it from pending to accept it that's a really important piece it needs to be accepted and then we click convert to invoice then once we convert to invoice we're going to do a flat percentage of the amount and do 35% and then we're going to click on create invoice so once we do that remember this particular estimate had a had a had a bundle with a lump sum so you're going to have all sorts of like what look like complicated numbers and quantities and percentages here but then once we actually save it and do a PDF view you it's going to be much easier for your customer to read and understand and again I would probably go in here and in the description of of um of of the invoice I would put something like 35% of the total project cost to get the work started okay okay and then we'll save that and we'll go back and see what this looks like and again adding more clarity your customer will pay you much quicker if you're being clear about what you're invoicing okay there we go okay so let's X out of that and let's go back into both of our projects and notice I got uh both my projects here and the income associated with the project 100% profit margin because there's no cost so far but that gives you a general idea like how projects work and kind of like what's the purpose of everything we've been doing up to this point now let's add some expense transactions so let's go into new and let's go into expense and let's say that I'm going to use uh let's say uh pay cash for some materials for example so let's create here the vendor let's we'll create Home Depot so we'll create a vendor really quick for Home Depot and then we're paying this out of our cash account you can pay this with a credit card or with a bank account we haven't even set those up in this file yet but just give you a general idea and then under category and this is kind of the tricky part is do you want to use the same items you used on the invoice and the answer is yes you do but here I don't even have the choice to do that so I would have to go straight into my materials cogs account and register the expenses straight into my C's account so let's say this was 98762 and I'm going to select there's a key element here customer project that's going to be for the kitchen remodel and then we're going to click on Save now we're going to ex out that for a second and then uh we're going to go back into projects and we get to see now we got profit margin now we got a cost element now these things starting to make more sense now I'm going to go back into the kitchen remodel project go back into transactions and take a look at this expense and as I mentioned earlier we only had a category an account as an option we have the option to use um items or products and services which I recommend you do especially as a really important setup towards working with QuickBooks online advanced so you can get more advanced projects which we're going to cover briefly so I'm going to excit of that and show you how to enable that feature so you can also use products and services in expense transactions so we're going to click on the gear menu top right we're going to go to account and settings and in account and settings we're going to go where it says uh expenses actually so this time we'll go to expenses and then we're going to turn on this feature that says show items table on expenses and purchase forms so we turn that on so we're going to click on Save first to save that setting so now that it shows show items table on expenses now we're going to you see that is on now we're going to click on done and then we'll go back to the expense transaction okay and then here on the search tab on the top I'm going to click on EXP expense Home Depot click on that and there's my transaction and notice that now I have this category details as a general category that can uh collapse and expand and I also have item details so I can get rid of this line and now use my materials item and we'll put here the dollar amount again 98762 and then the project now for now it doesn't seem to make any sense to use the items versus the category but later on when you're analyzing and breaking down reports you want to see a onetoone relationship with all the items that you are invoicing and then that you're also expensing so kind of get used to using items instead of categories which means you have to have paid attention at the very beginning where we created the income account the cost to good so accounts and then the items that were pointing to the correct income account and the correct cost to good sold account whether it was in a sales context or in a purchasing uh context they say we're going to pay a subcontractor so let's go write a check we'll write a check to a new contractor let's call this guy uh Garcia plumbing and we'll save that and then we're going to write a check let's say check 1 041 and then the item category in this case will be labor because it's a it's a contractor it's a it's a third party contractor that we're bringing in and let's say that person is charging us for 7 hours $68 5050 an hour for $479 total and then this is also for the kitchen remodel job and then we'll go ahead and click on Save and close and let's say we got a bill from the equipment company that we rent some equipment from and then let's say this is called uh Equipment Depot we'll create that vendor and let's say we haven't paid them yet but we did get the bill for it we'll go down open item details we'll type here equipment equipment item and let's say we just paid $400 and we'll put some description here we'll put uh renting back ho or whatever okay now we'll click on Save EXC outed that bill go back into our projects and now we get to see a lot more richness of information in this project we see our profit margins is also being affected if I click on kitchen remodel I can see a higher level of detail for example I got some construction income here I see cost of good sold which I can expand and see the specific categories that are being affected okay and then if there's um categories that are not cost to good sold that are just regular expenses you're actually going to see them on this side here in the bottom and then if I'm putting uh if I'm doing payroll like actually running payroll through QuickBooks uh the time that I put on time sheets those will be acrw down here as well we'll skip that part because that's just more complex I got to turn on payroll and that all that sort of thing we'll focus on contractors cost to labor materials equipment uh that sort of thing um when where is that um equipment charge let me just go back and see which project did I put that into let's click here it says Equipment Depot and oh yes of course if I if I don't put the customer project it's not going to go in in there correctly so let me just put kitchen remodel so good thing that I missed it because it gives you an opportunity to kind of see how these report will take you into a total tailes Spain because you're expecting certain information to see see in here and if you don't see it uh that's because you probably missed selecting the project inside um the expense transaction itself so this gives you a good idea kind of the progress of the project you kind of see what's going on with the project uh here is say transactions I can see all my transactions associated with the project time activity that would be if I put uh time data into a time sheet to give you a general idea if we go to new and then go into time entry right right there where it says team I can pick which employee I want to add uh time for so I'm going to click here it says add time and then I can add my employee so let's go add employee and then let's say I have Carlos Smith as my employee and let's say we hired him a couple years ago so there's my employee so it's in my database now so now that I have him I can click on him and then I can say all right so he worked let say eight hours on specific project on Mary Garcia backyard Remodel and under service I can put here labor and then I can click on Save and then on Monday worked 4 hours on the other project on Joe Mitchell kitchen room model service would be labor and then click on done so that's how we enter uh time now since we don't have any payroll or any uh prevailing wages set up for any of them what happens is when I go back into into projects and I open up any of any of my projects uh I I under hourly time cost nothing shows up here because there's nothing to calculate I'll go back to the other project uh let's go to Backyard Remodel and let's go into time activity there's the time activity there so I can see that eight hours spent for labor but there's no cost uh because there's no um no cost has been associated with any of the time activities there's a there's a particular area in QuickBooks where you can actually calculate or put the prevailing cost of those employees which is going to be here where it says payroll employees then we actually select the employees name we go up here it says actions and we go to change status and then once we scroll down there's a cost rate so I just enter 4190 in there that's my new cost rate that's how much this employee cost and then once I go back and create more time for it so let's go to new time entry and we'll select our employee again let's say we had hours on a particular project we'll pick here the kitchen remodel under the service labor you can select to make it billable or not that's if you want uh to invoice your customer for it later I'm going to uncheck it for a second and then click on done and then click on Save and then we're going to go back into our projects again and then we go into kitchen remodel and then we go and look at our hourly cost which right now is showing zero but if I click on that and I go into the time entry and I make it billable to the customer and this is kind of the tricky part about QuickBooks Online I personally don't like the fact that I have to click on this checkbox but if I put billable to the customer and then click on Save now you actually get a report where it tells you the cost rate and the cost so it's actually showing in the report what would be the cost of that employee I can go back into my project details and now I get to see an actual cost on the payroll side now what's interesting about this is I have not turned on payroll and I'm not going to do that for this example but once you turn payroll on then these this flat number you gave it 4190 or whatever that I went into the employee section and just put a number is no longer going to pull the data from it now it's going to pull the actual data from the paychecks and it's going to include clude your payroll taxes as part of your cost that goes in here up here it says um employee rate hourly cost payroll expenses so if I click on payroll expenses it's going to show nothing because there hasn't been any actual payroll being run but if I just leave it an hourly cost it will use that information that I put in the time sheet the number of hours and then the underlying cost rate on the employee settings to kind of estimate what these uh cost is now what's interesting about this too and again I won't do an example with payroll specifically but this hourly cost is actually non-posting it's just an exercise so these costs 2328 are not going to show up in your profit and loss that will only show up with your profit and loss once you run payroll it's very tricky part about using labor costing in projects so if I click here on payroll expenses my profit for this job is 1,72 because I have not run payroll but if I put here hourly cost my profit is 24198 so because I haven't run payroll when I go run a profit and loss report I'm not going to see the 1,200 I'm going to see the 1700 let's see what that looks like I'm going to click on reports going into profit and loss and then we'll do a profit and loss by customer and then under period I'll just put all dates and then click on run so we can see it as you can see here a kitchen remodel has a profitability of 1702 not of the 12200 because again only actual payroll will post into your profit and loss anything you just put in a time sheet will still be non-posting really important piece to keep in mind so let's go back into uh projects and let's just open up let's say the kitchen remodel project one more time let's go here it says project reports and you get a couple of project reports you get project profitability we can click on that and then we get the same exact report we got before what's interesting about specifically this one is if you run the project profitability not the profit and loss report but if you run the project profitability report so it'll show you the hourly cost you see here it's not a real expense that shows up in your uh profit and loss but it shows in this particular report called the project profitability so you do get a little bit of the look and feel as a p&l including that those hourly costs that again wouldn't wouldn't Post in a regular p&l because we haven't run payroll if you actually run payroll then it shows up no problem I'm just kind of showing you without running payroll so you kind of see what that looks like uh then we have this one called time cost by employee or vendor if I click on that you get same report you saw before these are just the hours of your employees and the cost associated with it for this specific project and the last one here is unbuild time and expenses that's if we marked any particular expense as billable it will show up in here although we don't need to build the customer for that time because uh we already are including it in the estimate and in the invoice here in the project details you just see general information about the project and if you want to add any attachments any pictures any documents contracts whatever to the projects you can do that okay so there's a a lot of usefulness to the project screen L awesome things that you can do if we go back to uh the projects I can start one of these projects if I if that's like a principal project that I want to see all the way in the top I can change the status so if I want to uh mark this in progress or mark it completed or mark it cancelled or edited or deleted I can do it all from here so that allows you to organize this list in whichever way shape or form remember these costs here contain hourly cost if we switch over to payroll it will only pick up the cost from the paycheck including as I mentioned earlier the taxes related to payroll so right now payroll expenses uh there's nothing shoing there because we haven't run payroll in this particular company another great place to point out where you can add your employees uh I rates again if you're not running payroll and you want to use this prevailing wage uh concept we go up here says employee hourly wage click on edit and then we can change the rate here there's a little really cool calculator where you can actually arrive to that number so let's say the wages here is 3350 and then it'll calculate you know what would be the taxes and then you can put here another dollar and then you can manually calculate exactly what um what is the sort of end rate that this employee would have again this is a calculated amount not so much a real mathematical accounting accounting amount and then based on this cost rate that's the actual uh formula that it would use on the future for all uh future transactions it will use uh that uh next time I enter more time it will use that to calculate uh the hourly cost based on that information that you put on this uh employee hourly rate screen so as you had a bunch of employees you can be changing all this stuff um on the Fly and then every time you create new time sheets for them that's the hourly wage for the project that it will load in again and I've repeated this a 100 times once you run payroll that number is ignored and it'll use the actual numbers are coming out of the paycheck let's take a look at a couple more reports related to projects so we're going to go back into reports on the left hand side and then let's go back and look at the uh progress invoice report that we saw earlier that didn't have any numbers so we'll go estimates and progress invoicing by customer summary so we'll pull that report and um now we get to see what this loads here we get to see that now percentages are being loaded here now we get uh original amount we get invoice amount and most importantly remaining amount which is uh the amount of of uh of the estimate that has not been invoiced yet now we'll go back to our report list and then let's do a income by customer summary that's an interesting one as well you get to see every one of your projects and then you get to see the income side and you get also to see the expense side so you get to see plenty of useful information when it comes to reports another interesting report to look at is a detail transaction report so we'll come down here and look up maybe a transaction detail by account that's essentially going to give you everything that's in this file but was interesting about a transaction detail by account is then I could choose how I'm going to group this report and I can group this report by customer for example and then you're going to get to see okay for this particular customer project we got all these invoices expenses bills etc etc and then for this other project we got the bill and all these lines from the invoice you get to see all the information you can um do a little bit more filtering so I'm going to click on customize on the top right of the screen I'm going to go into to filter and I want to go into uh distribution account click on the drop- down menu and select uh income and expense accounts that way the reports a little bit more precise on the information that's displaying for you and then we also click on the little gear menu here and then we'll uh remove amount because amount is a little bit uh confusing and then we'll bring here debit and credit that way now we get to see the report a little bit different context so we have our Joe Mitchell uh kitchen remodel account or project and then we see here debit okay these are all my expenses and we see here credit this is all my income same thing for this other project so that's interesting as well I can instead of grouping it by a customer I can group it by product or service click on run and now we can see a different point of view so now we have in the equipment side we have all of the debits in this case the expenses and then here we have the credits and this is why I like to use um items products and services because I get to see it in this Dimension because if I use if I use accounts instead what happens with accounts is all the income side gets grouped in the top and then all the expense side gets grouped in the bottom and then you don't get to like sort of compare one to one so yeah you can go look at your equipment income and then go down and look at my equipment rental but they're not always the same order there's just a lot more sort of scanning through the report that you have to make which is why I particularly advocate for using products and services because you get to do some some interesting things like this in reports where you can sort of analyze one particular category both on the expenses and the income side on the debits and the credit side we can also go back into sales products and services and make sure that all of the items or the products or services are categorized to the right category so then you can use the categories as groupings for other report so for example I'm going to go ahead and click here it says more and then go to manage categories and then let's say I only have two major categories one's called Labor and the other one is called materials and Equipment we're going to ignore this other for now but we have just two major categories and then we'll go back and enable visualization of categories here and then we just going to make sure that equipment is being TI to materials and Equipment uh hours and labor both tight to labor and the materials being tight to materials and equipment so we have multiple products that all are encompassed only really into two major category so when we go back into reports and then we start running our product based reports so we can do products uh sales by product summary for example that's a good one and then basically you see them grouping here we have our one Labor uh item or product or service and then we have our two materials and Equipment broken down we can collapse each one if we want to and just get a summary in there if we go back and type product or service one more time and we get to see kind of all the different options we have sales by product and services detail that's going to take you to a detail report that you can also collapse so you can see every transaction associated with it you can see the totals associated with it we will go back and do let's say purchases by product or Services uh detail that's also a pretty interesting one so we get to see all the purchases here in the new Reporting System we can also collapse the major categories see the totals these are purchases so this is the cost side so we can see uh we can also expand and kind of see the details uh per transaction in there and let's switch over to the features related to QuickBooks Online Advance I'm going to click on the gear menu top right and then click right there to subscriptions and Billings and we're going to notice that we're currently on the plus version of QuickBooks online so everything I showed you so far it's available in this plus Edition I'm going to show you some additional features that are only available in the advanced Edition so I'm going to upgrade my plan here my sample file and we're going to be in advanced Edition once we are in advanced Edition now we can talk about the additional features that Advance has which is really powerful which you're about to see so the first major feature is called cost estimates if I click on the new button here on the left hand side and then go into my regular estimates we're still on the regular estimates mode it doesn't say cost estimate here and it is kind of tricky because there's a very specific place you can get to cost estimates from so we're going to x out of that and we're going to go into projects and in projects let's create a brand new project just for this specific case so we're going to type new project here and let's do a new project for Joe Mitchell we're going to call this uh master bathro remodel so we got master bathroom remodel and then we'll put uh start date let's put uh June 1st and end date we will put here July 31st we'll leave it here in progress and then click on save so now we got a brand new project which is a master bathroom remodel I'm going to click back to all projects so you can see that we are running three projects at the moment so now now you're in once you're inside the project so we're going to click in there and you're in this particular page and this is the only uh page that you can create the cost estimate from we're going to click here on the top right where it says add to project we're going to click on the dropdown menu and then we're going to click on where it says project estimate also uh known as a cost estimate so a project estimate or a cost estimate is one that looks just like an estimate but also keeps a little tracker here in the top of the estimated cost so you're actually going to track two pieces of information one how much you think all the components of the job are going to cost you and to how much you want to charge for so you keep uh tabs of that profit margin or projected estimated profit margin on the entire job so we're going to scroll down here I'm going to go ahead and close this uh right uh drawer and then I'm going to use this uh project cost bundle that we created earlier that actually contains the three items here equipment materials and labor and again some projects will have a lot more items a lot more details but for now we just we just stick to these three for the example so let's say for equipment charges let's say and it says right here your rate hidden letting you know that your customer will not see this so your rate let's say I'm going to pay $150 per hour and I'm going to rent the machine for 4 and a half hours so we'll put here 150 and we'll put here uh back ho rental okay um apparently back ho is the only equipment I know about so uh so there we go go and then we're going to put here the markup so how much money are we going to make how much money do we plan to make on this so let's say we plan to make about 40% on that so we'll type 40 and then this will figure out what the customer rate is and then what the customer total should be so that's a individual piece of the job that's $945 of Revenue now we got materials and equipment so let's say for this we're estimating about uh $112,000 500 in materials and we want to make let's say a 60% mark up that so it tells you here how much you should be charging for that customer rate and let's say that's 20,000 and then we have our labor so let's say we're going to subcontract this and it's about 46 hours worth of work and we're paying $75 an hour for the labor and let's say for the labor we want to mark it up uh 25% so here's my three numbers 25 I mean 945 20, 4312 the total here is 25257 if I go all all the way here at the top which is really the important piece we get our estimated cost 16,000 is how much we're going to pay for the job materials equipment labor we got the estimated income for 25,000 how much we're going to charge our customer and then what the estimated profit margin is so this particular uh project estimate or cost estimate again only available in the advanced edition of QuickBooks Online we're going to leave these here as at billable although we're actually not going to be billing them we'll leave that in there um for now we're going to click on Save and then now we have created our project estimate we can do the same thing we did with the with the uh progress invoicing where we can convert this to an accepted estimate so our customer agreed to do this project we can actually put here who accepted it so Hector accepted it and then the accept acceptance date was let's say uh May 16th and then we can convert this into an invoice do the conversion into an invoice that will save the current estimate and then uh open up the new uh invoice screen with whatever percentage we want to put let's say we want to do 10% that's how much uh we uh required to get the job started we'll go to create invoice uh QuickBooks will now create the the invoice from the estimate using 10% sometimes it needs to approximate because of the rounding it needs to approximate so approximately 10% I could put manually 10 here if I want to you know fix it and then I can fix the rounding so sometimes you is a little bit tricky with the rounding just trying to get to that exact percentage for the for the grand total so down here in the invoice we see 2500 25.75 notice that there's no information about cost or margin estimates don't carry that information only sorry the invoices don't carry that information only estimates do after I save the invoice you're going to see up here in the top where it says invoice there's a little link that says link transactions if I click on that then I get to see what are all the transactions that are linked to it I can remove the linking and in some cases you're going to see a link here so you can actually click and go to that transaction I don't know why my screen is not showing here but here on the right hand side um I can see it so if I click on that little icon okay that little uh link icon that's there that would actually take me into a new uh page a new tab where I can see the actual estimate so there is a way for you to sort of go back and forth and open up the invoice I got the invoice on one tab I got the estimate on the other tab once I'm in the estimate itself you actually get to see um here where it says uh linked invoices so I can click on that and then I can click on see that one the link is working here I can open so there's multip there's ways for you to sort of get back and forth but we really we went ahead and we invoiced this project so we can actually save and close get out of there uh we can close the other tab let's go back into the Project screen and let's go back into our master bathroom remodel now what kind of information we're seeing here we're seeing the income that 10% that we invoice for that project so we're seeing the 25 25 of income there's no cost so far okay no uh no time cost no no uh no cost to contr sool no equipment we haven't entered any of this stuff this is why it says 100% profit margin but this is the profit margin of what we've actually have invoice and we have actually paid for and created bills for the real job profit margin is actually sitting here here where it says estimate um the estimate revenue and the estimate uh cost now unfortunately you don't get to see that that profit margin here you would have to click on transactions and open up that estimate and you would see it inside the estimate so you can always have to go back into the estimate to be able to see uh that um that estimated profit margin so we'll uh save and close go back into our project screen and now we're going to start entering some some bills some some time some expenses against this job I can go into the new button and create my expenses straight from here or interesting enough I can click on add to project here on the top right and then I can create my expenses from there as well it's going to be the same thing regardless so let's go to expense and then we'll go ahead and go to Garcia Plumbing one of our sub contractors and let's say we're going to use our labor line here and let's say they're charging us for uh 25 hours and it was $75 an hour and this is our cost this is what we're going to pay what we are going to pay um uh our contractors and we just make sure that our customer job is attached to it kind of the nice part about um creating an expense from that add to project button is that it will automatically add every single line to that project which is really nice so let's say we also have some materials they're going to charge us for here and let's say that's $500 so you get to see it um it's supposed to be in both sides not sure why it's acting so tricky here but it should be there let's click on Save and let's just make sure that saves yep that's saved in there beautiful so both my uh expenses are assigned to this project there's a little billable link here if you want to see the billable transaction we're not going to build our Customer because we're already invoicing from the EST so let's click on save save and close and now let's enter another uh expense against this project we're going to click on add to project one more time and then we're going to click on bill so let's say we're going to get a bill for let's say equipment depo and here's my equipment information U QuickBook tends to try to guess what your next move is so it puts a description in there and a misspelled back hole there um and then so I can put here whatever it happens to be so let's say it's 2 hours at $1150 per hour uh that we're going to rent this particular equipment for we'll click on Save we ex out of that and let's enter let's say some hours so we're going to add to project let's enter some time and let's say we have one of our internal employees uh Carlos here that's going to work on this project so Carlos spent eight hours on this project and we'll put here the project was Joe Mitchell master bathroom and the service here was just lab and I have to make it avilable uh in order for it to show up in the cost so we're going to click on done and save so now we have little bit of everything we got our our bills our expenses our equipment let's add one more contractor here let's do a check which I can do through ad project for some reason so we're going to go to new and do check and let's say we have another contractor here let's just create a new contractor here let's do uh John contractor so we'll create a new vendor here called John contractor let's spell John correctly here click on Save and um we're going to pick an item again we'll do labor and let's say he's charging us uh $1,200 and he's going to um uh build the uh Furniture something like that okay so we can have all sorts of details in here and because I use a new button and at the add to project button I have to remember to make sure that I assign the customer project I'm going to Mark billable so it shows up in my cost screen and now we get to see all the information so we see the total income that we have charged so far that's the 10% of the invoice we see our hourly um time cost for Carlos we see our cost of goods sold uh and then we can actually expand that to see specifically what it was so we had some direct labor some equipment rental some supplies and materials all that information is in there and then we get to see what is are operating profit so far now this is the tricky part of construction accounting where uh the transactions that you have put on the system are not necessarily what you have earned on the job because remember the job originally had a 35% profit margin if I again I go back to transactions and I go back into my original estimate I'm supposed to have pos