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QuickBooks Construction Contractor Tips
Construction contractors generally bid for contracts and successfully manage awarded contracts by having timely and accurate financial information about all contracts in progress at a given time. QuickBooks Pro or higher have an estimating feature and allows users to bill customers/owners and pay employees based on accumulated time and expenses. Additionally, reports can be generated on billable and unbilled time. (Estimating and time tracking features are available in the Pro, Premier, Premier-Accountant, and Premier-Contractor 1 versions of QuickBooks.)
Company Setup
The "EasyStep Interview" will guide users through the process of creating a company in QuickBooks and offer setup hints for the type of business selected. In addition, to tailor QuickBooks to specifically handle a construction contractor, consider enabling the following preferences:
Classes. Construction contractors frequently wish to view reports of income and expenses by construction division, type of construction, project manager, size of contract, or other meaningful grouping. Classes should be used for only one purpose. To accomplish that, be sure to enable the QuickBooks preference by selecting "Edit," "Preferences" from the menu, then choosing the "Accounting" icon from the list of icons that appears on the left side of the "Preferences" window, and checking "Use class tracking" in the "Company Preferences" tab. QuickBooks also allows users to require a class to be entered before a transaction is recorded.
Inventory. Construction contractors may need to track inventory if they keep a stock of products like doors, sinks, and cabinets. To turn on inventory preferences, answer "Yes" during the "EasyStep Interview" to the question "Do you want to track inventory?" Inventory also can be enabled by selecting "Preferences" from the "Edit" menu, choosing the "Items & Inventory" icon from the list of icons that appears on the left side of the "Preferences" window, and checking the "Inventory and purchase orders are active" checkbox in the "Company Preferences" tab. Other products may be set up as noninventory parts.
Sales Tax. Construction contractors may need to collect sales tax if products are sold. Sales tax preferences are enabled in QuickBooks during the "EasyStep Interview" by answering "Yes" to the question "Do you charge sales tax?" Sales tax preferences can also be enabled by selecting "Preferences" from the "Edit" menu, and then by choosing the "Sales Tax" icon from the list of icons that appears on the left side of the "Preferences" window. On the "Company Preferences" tab, answer "Yes" to the question "Do You Charge Sales Tax?" Even if the sales tax feature is turned on in the "EasyStep Interview," additional information should still be entered in the "Preferences" window (for example, when sales tax is paid, when sales tax is owed, most common sales tax, and whether to mark taxable amounts with "T" when printing).
Tax: 1099. Construction contractors must send Form 1099-MISC to unincorporated subcontractors for amounts above the IRS threshold. To enable Form 1099 tracking, select "Preferences" from the "Edit" menu. Then select "Tax: 1099" from the "Preferences" scroll box and answer "Yes" to the question, "Do you file 1099-MISC forms?" on the "Company Preferences" tab.
Time Tracking (QuickBooks Pro, Premier, Premier-Accountant, and Premier-Contractor). Construction contractors may need to track time by employee or subcontractor for specific jobs. To use time tracking, enable the QuickBooks preference during the "EasyStep Interview" by answering "Yes" to the question "Do you want to track time in QuickBooks?" Time tracking also can be enabled by selecting "Preferences" from the "Edit" menu. Select the "Time & Expenses" icon and the "Company Preferences" tab. Answer "Yes" to the question "Do you Track Time?" The user also should enter the first day of the work week in this screen.
Jobs and Estimates (QuickBooks Pro, Premier, Premier-Accountant, and Premier-Contractor). Construction contractors may wish to use estimates and progress bill their customers/owners. If the contractor will use estimates and progress billings in QuickBooks, enable the preferences during the "EasyStep Interview" by answering "Yes" to the questions "Do you want to create estimates in QuickBooks?" and "Do you want to use progress invoicing?" Estimates and progress billings also can be enabled by choosing the "Jobs & Estimates" icon from the list of icons that appears on the left side of the "Preferences" window and, on the "Company Preferences" tab, answering "Yes" to the questions "Do You Create Estimates?" and "Do You Do Progress Invoicing?" If the contractor bills from an estimate in stages rather than the full estimate, mark "Yes" to the question "Do You Do Progress Invoicing?"
Customer Setup Each of the contractor’s customers/owners should be entered in the "Customer:Job List" so that information about contracts can be tracked. To set up customers/owners, go to the "Customer Center" by clicking on the "Customer Center" icon. Click the "New Customer & Job" button and enter the customer/owner data. The "Add/Edit Multiple List Entries" window can be used to add and/or edit multiple customers/owners. Notes can be kept on each customer/owner and are entered on the "Edit Customer" window. (Click the button on the right side labeled "Notes." If a note is added for a customer/owner, the "Customer:Job List" will display an icon indicating notes are available.) Custom fields may be added in the "Additional Info" tab to track birthday, spouse, administrative assistant, fiscal year end, or any other meaningful data. Keep in mind, however, that an individual list is limited to seven custom fields with a maximum of 15 custom fields for all lists. The same field (e.g., birthday) that applies to customers/owners, vendors, and employees counts as one field.
Job Setup QuickBooks supports up to five levels of jobs or projects for each customer/owner on the "Customer:Job List." Jobs may be added to customers/owners by displaying the "Customer:Job List" in the "Customer Center," selecting the customer/owner, and choosing "Add Job" from the "New Customer & Job" button. The "Add/Edit Multiple List Entries" window can be used to add and/or edit multiple jobs. Each contract should be set up as a job rather than as another customer/owner to prevent inputting customer/owner information twice. Regardless, each contract should be set up as a separate job. Each construction contract represents a separate profit center; therefore, costs and revenues generally are accumulated measured on a contract-by-contract basis. For example, if a contractor has one contract to remodel a kitchen and make bathroom repairs, the contract could be set up as a job with subjobs for the remodel and repair. If two separate contracts exist for the remodel and the repair, each project should be set up as a separate job. (Users can drag jobs and subjobs between sublevels and customers/owners if they are incorrectly set up.) Custom fields may be used by job to track contract number, contract amount, or any other meaningful data. Furthermore, notes may be kept on each job and are entered from the "Edit Job" window. (Click the button on the right side labeled "Notes." If a note has been added, the "Customer:Job List" will display an icon indicating notes are available.)
Setting up Customers/Owners by Type Construction contractors may find it useful to track and report customers/owners by type. Some useful customer types for a contractor might be type of customer/owner (e.g., commercial, industrial, or residential) or customer referrals (e.g., customer name, yellow pages, or other referral). Customer types should be used for only one purpose and may have up to five levels of subtypes. Subtypes further define customers/owners. For example, a residential customer/owner could be further divided by single home and apartment building. Reports, labels, and summary statements may print by customer type.
To group customers/owners by type, first create the customer type by selecting "Customer & Vendor Profile Lists" and then "Customer Type List" from the "Lists" menu. Click the "Customer Type" menu button on the screen that appears, and select "New." Once customer types have been created, assign customers/owners to the types by double-clicking each customer/owner name on the "Customer:Job List," selecting the "Additional Info" tab, and choosing the appropriate type from the drop-down list under "Type."
Note: Customer types can be added "on the fly" as customer/owner information is entered. Simply choose "<Add New>" from the drop-down list of customer types on the "Additional Info" tab.
Grouping Projects by Type (QuickBooks Pro, Premier, Premier-Accountant, and Premier-Contractor) Construction contractors may find it useful to view reports by job type. For example, construction contractors may want to view P&L for remodeling, repairs, or other types of projects. Up to five levels of subtypes may be used to further detail job types. For example, kitchen and bathroom could further define remodeling projects, or if decks were a job type, wood and stone could further define decks as subtypes. A contractor may use job types to track types of contracts (e.g., fixed price, cost-plus, or time and materials).
To group projects by type, first create the job types by selecting "Customer & Vendor Profile Lists" and then "Customer Type List" from the "Lists" menu. Click the "Job Type" menu button on the screen that appears, and select "New." Once job types have been created, assign projects to the types by double-clicking each project on the "Customer:Job List," selecting the "Job Info" tab, and choosing the appropriate type from the drop-down list under "Job Type."
Note: Job types can be added "on the fly" as project information is being entered. Simply choose "<Add New>" from the drop-down list of job types on the "Job Info" tab.
Tracking Owners by Project Manager Construction contractors may find it useful to track customers/owners by a project manager. (Users should note that the customer representative field cannot track individual jobs.) To do that as an alternative to using classes:
Set up Each Project Manager for Which Customers/Owners Will Be Tracked as a Customer Representative. Customer representatives are entered by selecting "Customer & Vendor Profile Lists" and then "Sales Rep List" from the "Lists"menu. Click the "Sales Rep" button on the screen that appears, and select "New." Note that new customer representatives may be selected from the employee, vendor, or other names lists.
Assign a Representative to Each Customer/Owner. Customer representatives are assigned to customers/owners by selecting each customer/owner on the "Customer:Job List," selecting the "Additional Info" tab, and choosing the appropriate representative from the drop-down list under "Rep."
Note: Project managers can be added "on the fly" as customer/owner information is entered. Simply choose "<Add New>" from the drop-down list under "Rep" on the "Additional Info" tab.
1 QuickBooks Premier-Contractor Edition is designed specifically for contractors. It simplifies estimating, invoicing, job costing, and paying bills, and it includes additional contractor-specific reports (for example, additional job-costing reports that show which jobs are profitable). It also includes a "Contractor" menu that gives users instant access to key activities and reports. For more information on QuickBooks Premier-Contractor Edition, refer to http://quickbooks.intuit.com.
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