Job Costing
Short answer
Job costing is the practice of tracking the income and expenses tied to a specific project or job so a business can see whether each individual job is profitable, not just the business as a whole.
Why it matters
For businesses that work in projects — construction, trades, services with distinct jobs — overall profitability can hide a losing job. Job costing reveals which work actually makes money and which does not.
How it works
Income and expenses are tagged to a specific job or class. Materials, labor, and subcontractor costs are assigned as they occur. At the end of the job, the totals show whether that job was profitable.
A simple example
A contractor runs three jobs in a quarter. Overall the business is profitable, but job costing reveals Job B lost money because material costs were higher than estimated — information that helps price the next bid.
Related terms
Related service
Monthly Bookkeeping
When you may want help
If you work in projects but cannot tell which jobs are profitable, monthly bookkeeping with job or class tracking can break down profitability by job.
Written and reviewed by Rachel Armstrong, owner and bookkeeper at Armstrong Quality Financial Services. QuickBooks Online Level 1 ProAdvisor. This entry explains a general concept and is not individualized tax, legal, or investment advice.
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