What's the best way for a contractor to track profitability on each job?
The short answer is job costing. Every dollar you spend on a project needs to be assigned to that specific project in your accounting software. Without that discipline, your profit and loss statement only tells you whether the business made money overall. It won’t tell you which jobs made money and which ones quietly lost it.
Start by creating a project or job in QuickBooks Online for every contract you take on. Include the estimated revenue and your budgeted costs if possible. Then every expense that touches that job gets coded to it. Materials from the supply house, fuel for deliveries to that site, permit fees, equipment rentals. All of it goes to the job, not just to a general “materials” or “job expenses” category.
Break your costs into three buckets for each job: labor, materials, and subcontractors. These are the big three that determine whether a project is profitable. Labor is the one most contractors undertrack. If your crew works across multiple jobs in a week, you need time tracking by job so you can allocate their wages accurately. Guessing at labor hours after the fact will give you numbers you can’t trust.
Subcontractor costs are usually easier to track because you get invoices. Just make sure every sub invoice gets coded to the right job when it’s entered. Materials require the same attention. Buy lumber for three different projects in one trip and you need to split that receipt across all three jobs, not dump it all on one.
Don’t wait until the job is done to check profitability. Review your actual costs against your estimate at regular intervals during the project. If materials are running 20% over budget halfway through, you need to know that now so you can adjust, not discover it after the final walkthrough.
Overhead is the piece most contractors skip. Your truck payment, insurance, office rent, and bookkeeping fees are real costs that eat into profit even though they don’t tie to one specific job. Some contractors allocate a percentage of overhead to each project based on revenue or labor hours. Others just track direct job costs and make sure their markup covers overhead plus profit. Either approach works as long as you’re consistent and honest about what it actually costs to run the business.
The tool matters less than the process, but proper construction job costing setup in your accounting software makes this dramatically easier. When your chart of accounts, project tracking, and cost categories are configured for how contractors actually work, the reporting becomes useful instead of overwhelming.
Most contractors who feel like they’re busy but not making enough money have a job costing problem. They’re winning some profitable jobs and losing money on others without knowing which is which. A small business bookkeeping service that understands construction can set up the systems, maintain the data, and give you reports that show exactly where your margins are strong and where they’re slipping. That visibility is what turns job costing from an accounting exercise into something that actually helps you bid smarter and earn more on every project.
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