QuickBooksOnline wasn’t built for construction. It was built for accounting. But with theright setup, QBO Plus or Advanced can handle basic job costing for smallcontractors — at least until your operation outgrows it.

This guide walks through the exact steps to set up construction job costing in QuickBooks Online: enabling Projects, structuring your chart of accounts, connecting time tracking, and running project profitability reports. We'll also cover where QuickBooks falls short for contractors and when it's time to move to a dedicated tool.

For a broader overview of what job costing is and why it matters, see our complete guide to construction job costing.

Before You Start: Which QBO Plan Do You Need?

Not allQuickBooks Online plans support job costing. You need either QBO Plus ($99/mo)or QBO Advanced ($275/mo). Here’s what matters for contractors:

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Step-by-Step: Construction Job Costing in QuickBooks Online

Step 1: Enable the Projects Feature

The Projectsfeature is what makes job costing possible in QBO. It lets you assign income,expenses, and time to specific jobs — so you can see profitability per projectinstead of just overall.

1. Navigate: Settings (gear icon) → Account andSettings → Advanced.
2. Scroll to: the Projects section.
3. Toggle on: “Organize alljob-related activity in one place"
4. Save: Click Done. You’llnow see a Projects tab in the left navigation.

If you don’tsee the Projects option, your plan doesn’t support it. You’ll need to upgradeto QBO Plus or Advanced.

Step 2: Structure Your Chart of Accounts for Construction

QuickBooksdoesn’t support formal cost codes, but you can simulate them by creatingspecific COGS (Cost of Goods Sold) accounts for each cost category. This is themost important setup step — without a clean chart of accounts, your job costreports will be useless.

Here’s thechart of accounts structure we recommend for contractors:

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To createthese accounts: Settings → Chart of Accounts → New → select “Cost of GoodsSold” as the account type, then pick the relevant detail type. Name eachaccount exactly as shown above so your reports are easy to read.

Step 3: Create Your First Project

Each job getsits own Project in QuickBooks. This is where all income, expenses, and time forthat job live.

1. Go to: Projects (left sidebar) → New Project.
2. Name it: Use a consistentnaming convention. We recommend: [Customer Last Name] – [Address or JobDescription]. Example: “Johnson – 456 Oak St Kitchen Remodel”
3. Assign a customer: Link it to the customer record. If the customer doesn’t exist yet,create them first.
4. Add notes: Optional but useful.Include contract amount, start date, and any key details.

Once the Project exists, every invoice, expense,bill, and time entry for that job should be tagged to it. This is thediscipline that makes job costing work — if even 20% of your costs slip throughuntagged, your profitability reports are unreliable

Step 4: Assign Every Expense to a Project

This is wheremost contractors fail at job costing in QuickBooks. The setup is easy; thehabit is hard. Every time you record a bill, write a check, or use the companycard, you need to assign it to the correct Project and the correct COGSaccount.

• Bills from subs or suppliers: When entering a bill, select the Project in the “Customer/Project”column. Assign it to the right COGS account (e.g., COGS: Subcontractors, COGS:Materials).
• Receipts: Use the QBO mobile app to snap photosof receipts in the field and assign them to a project immediately. Don’t letreceipts pile up — a week-old receipt from Home Depot is a guess, not data.
• Receipts: Use the QBO mobile app to snap photosof receipts in the field and assign them to a project immediately. Don’t letreceipts pile up — a week-old receipt from Home Depot is a guess, not data.

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Step 5: Connect Time Tracking

Labor istypically 40–60% of a contractor’s job cost, which means getting time trackingright is essential. QuickBooks offers two paths:

• QBO Time (formerly TSheets): The preferredoption. Your crew clocks in and out from their phones, assigns time to aproject, and it flows into QBO automatically. Included with Advanced; add-on($20/mo base + $8/user) with Plus.
• Manual time entry: If you’re a solo operator orvery small crew, you can enter time manually in QBO under the Time tab. It works,but it doesn’t scale and relies on someone remembering to log hours accurately.

Whichever method you use, make sure time entriesare assigned to a Project and categorized as the correct service item (e.g.,“Field Labor,” “Project Management”). Without this link, labor hours won’tappear in your project profitability reports.

Step 6: Run Project Profitability Reports

This is thepayoff. Once your projects have income and expenses assigned, you can seeexactly how each job is performing.

• Project Overview: Open any Project to see total income, total costs, and profit at aglance. This is your daily check — is this job still making money?
• Project Profitability report: Go to Reports → search “Project Profitability” → run the report. Thisshows income vs. expenses broken down by your COGS accounts for each project.
• Transaction list by Project: For a deeper dive, run a Transaction List by Project to see everyindividual expense and income line item. Useful for investigating why a job went over budget.

If you’re onQBO Advanced, you also get estimated vs. actual cost tracking — which lets youcompare your original budget to what you’ve actually spent. This is closer totrue job costing and is worth the upgrade if you’re running 5+ jobs at a time.

Where QuickBooks Falls Short (And How to Work Around It)

QuickBooks Online was designed for general small business accounting, not construction. It can handle construction job costing in QuickBooks at a basic level for small operations, but there are real limitations you'll hit as you grow:

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These aren’t just theoretical limitations. If you’re running more than 5–10 active projects, or if your jobs have multiple phases with subs on each, you’ll feel the friction within a few months.

When to Move Beyond QuickBooks

QuickBooks job costing is a starting point, not a destination. Here are the signals that you’ve outgrown it:

• You’re spending more time working around QBO’s limitations than using it. If you’re exporting to Excel every week to get the reports you need, the tool isn’t working for you.
• You need cost codes. Once you want to track labor, materials, and subs separately within each project (not just at the account level), you need a dedicated tool.
• You need change order tracking. If scope changes are eating your margins and you can’t see the impact in QBO, it’s time.
• Your team can’t keep up with the tagging discipline. If expenses regularly go untagged because the process is too cumbersome, your data is unreliable and your reports are fiction.
• You’re doing more than $1–2M annually. At this volume, the cost of a dedicated job costing tool ($50–$150/m) is trivial compared to the margin visibility it provides.

The good news is that dedicated job costing tools like Ontraq are designed to integrate with QuickBooks — so you’re not replacing QBO, you’r eadding a layer on top of it. Your bookkeeper still works in QuickBooks. Your job costing data just lives in a tool that was actually built for it.

For a comparison of the leading options, see our construction job costing software comparison.

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Quick-Start Checklist

Here's the TL;DR. Do these six things and you'll have functional construction job costing in QuickBooks

• Confirm you’re on QBO Plus ($99/m) or Advanced($275/m)
• Enable Projects: Settings → Account and Settings →Advanced → Projects → toggle on
• Create COGS accounts: Labor, Materials, Subcontractors, Equipment, Permits, Overhead
• Create a Project for every active job using a consistent naming convention
• Assign every expense and every time entry to its Project and COGS account within 24 hours
• Run Project Profitability reports weekly to catch problems before they’re unfixable

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→ Download the free job costing template

→ Compare job costing software options

→ Read the complete guide to construction job costing

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