The foundation is using your accounting software’s project tracking feature. In QuickBooks Online, the Projects tool lets you tag income and expenses to specific jobs so you get a running view of what each project costs versus what you billed. Every transaction that relates to a client project gets assigned there when it’s recorded, not later.

Start by identifying the cost categories that matter for your business. For most service businesses, there are three main areas to watch per project. Labor hours, subcontractor or freelancer payments, and direct expenses like travel, software, or materials. Each one needs to flow into the correct project at the time of entry.

Labor is usually the biggest cost and the hardest to track accurately. If your team logs hours by project, that time data needs to connect to your financial records. Tools like Toggl, Clockify, or the built-in QuickBooks time tracker can capture hours per project. Without reliable time tracking, you’re guessing at how much a project actually cost in labor and your profitability numbers won’t mean much.

Subcontractor and freelancer payments should be coded to the specific project when you pay the bill. If a freelancer works on three different client projects in one month, split that payment across the projects accordingly. Dumping everything into a generic “subcontractor” expense line means you lose per-project visibility entirely.

Direct expenses like travel, printing, project-specific software, or other out-of-pocket costs need the same treatment. Assign them to the project when you enter them. Waiting until the end of the month to sort expenses by project leads to guesswork and misallocated costs that make your reports unreliable.

Run project profitability reports at least monthly. QuickBooks can show you revenue minus direct costs for each active project so you can see which clients and project types actually make you money. Creative services businesses like agencies and design firms often discover that their highest-revenue client is also their least profitable once all the hours and subcontractor costs are properly tracked.

One thing many service businesses overlook is overhead. Rent, insurance, and admin time don’t belong to a single project, but they still eat into your margins. Knowing your total monthly overhead helps you price future projects in a way that covers all your costs, not just the direct ones.

The system only works if you use it consistently. Assign costs to projects in real time rather than reconstructing things at the end of a quarter. A bookkeeper in Long Beach who understands project-based businesses can configure this in QuickBooks and keep it running smoothly so you always have accurate, project-level financial data to guide your pricing and planning decisions.