Job Costing Bookkeeping in Teaneck

Helping business owners gain financial clarity, improve cash flow, and increase profitability.

What's Covered on This Page

• Why Project-Based Businesses Lose Money Without Job-Level Tracking
• 3 Components of Costs You Must Track on a Job
• What the Process Looks Like from Day One
• The Impact of Job Costing on Estimating and Expansion
• New Jersey Regulations That Can Make Job Costing Critical for Regional Contractors
• How does job costing bookkeeping help Teaneck contractors bid more accurately?
• What happens if I have jobs running at the same time — can costs still be tracked separately?
• Do Teaneck home service businesses really need overhead factored into each job?
• How long does the initial setup take before I start seeing job cost reports?
• What if I have change orders that happen in the field — how do those get tracked?
• Can job costing bookkeeping show me which types of jobs I should stop taking in Teaneck?

Need job costing bookkeeping?

973-453-5052

Book A Free Consultation. Call Capgro Bookkeeping Services LLC now.

Why Project-Based Businesses Lose Money Without Job-Level Tracking

I see this almost every week: a contractor in Teaneck completes a job, assumes they made solid money on it, the invoice gets paid, the crew moves on to the next project. And there wasn't anyone who sat down and compared the actual costs to what they billed.

That's where they get hurt.

Without job costing bookkeeping, your books may show you total revenue and total expenses. You get the big picture, but you don't know which jobs were profitable and which ones were leaking your profits. We work with contractors who were booked all year, had healthy revenue figures and were still barely breaking even. The reason is always the same. They had several unprofitable jobs, they just didn't know it.

Where the Money Goes

Often it's not one major expense, but a combination of minor ones compounding across several projects:

• The materials purchased for one job were used on another, so the actual cost never shows up in the correct project
• Labor hours aren't tracked per job, so they show up in a large payroll expense
• Change orders occur in the field, but never get billed
• Subcontractor invoices are received later and then applied to the wrong job

The same thing happens over and over. Everything looks good, but a close look at the specific jobs shows two or three that pulled down the bottom line. A roofing contractor near Glenpointe may have six jobs active in a month. Four were profitable, two were not. With job-level tracking, the two bad jobs go unnoticed inside your total.

Here is the danger of this scenario: you keep taking on this type of unprofitable work because there is nothing in the accounting that suggests you stop doing it.

Poor job cost tracking is one of the main reasons small construction companies fail within five years, according to the Construction Financial Management Association. This mirrors everything we see when home service providers. Those that track by job make smarter decisions. They bid better. They identify problems mid-project rather than after the work is complete and they receive payment.

You don't need more revenue. You need to know where your revenue is going.

3 Components of Costs You Must Track on a Job

Every job has three components of costs, if you miss any one of them, your profit will not be right. We see this with contractors in Teaneck on a weekly basis. They think they made money on a job and didn't, they did not. Our home service business bookkeeping services Our home service business bookkeeping services

These are what job costing bookkeeping breaks down for you:

• Materials. Lumber, pipe, wire, shingles, paint. The supplies you use on the job. The ones that are currently sitting in the bed of your truck, that you've been working with from last month, don't get included. You only include what's going in that specific project.
• Labor. This refers to the time your crew will dedicate to that job. It covers the pay rate you pay them, along with payroll taxes and workers' compensation, all relative to those hours. A two-day bathroom renovation in Glenpointe, for example, will entail a much higher level of labor versus a roof tear-off that took an entire week to complete.
• Overhead. This is the one most contractors forget. This includes your payment on the truck, insurance policies, fuel expenses, equipment purchases, and your cell phone. These are not just costs for one job. They get divided up between all of your jobs following a formula set up in QuickBooks.

This overhead is where things get complicated. And where most errors creep in.

Say for instance that you run a plumbing company located in Teaneck and you're bidding on a water heater project costing you $2,800. Materials will cost you $900. And the labor will cost you $700. That would leave you with a profit of $1,200, right? But, once you add in a portion of your overhead for that one job, say $400, your profit falls even further to $800. Not a terrible deal, but what if you're not properly accounting for your fuel expenses, and other overhead costs aren't as easily tracked? Then, you don't actually know what the profit really is on that job.

With over 20 years of accounting experience, our bookkeeping system will make sure nothing goes unnoticed. We make sure every cent is categorized correctly and each job cost report comes out exactly how it should, giving an accurate picture, not a "good enough" estimate. An actual estimate.

Want to take a look at your current finances? Give us a call.

But why does this matter for your next bid? Because once you know the true cost of your next project, you won't have to just guess the bid price. When you work with our bookkeeping for home service business, you can see what other jobs have cost you in QuickBooks, and you'll have data to back you up. That's how contractors who utilize our bookkeeping services bid projects more accurately, and ultimately take on the best jobs.

What the Process Looks Like from Day One

Many Teaneck contractors shy away from job costing bookkeeping services because they believe the setup process is going to be a huge task. But actually, the setup phase is the hardest of all, and the majority of it falls on you.

Here is what will happen when you decide to work with us:

1. We will meet for a free consulting session to go over your books, your QuickBooks file, and your current job tracking processes. Sometimes the file is in great shape. Sometimes it's a shoebox filled with receipts. We're used to seeing both.
2. We'll structure your chart of accounts to fit your business model. No generic templates. We'll set up your cost categories based on how you run your job, whether that's materials, subcontractors, labor, and permits, and more.
3. We'll set up each active job as a project in QuickBooks Online so every cent spent gets attributed to a specific address or contract.
4. We'll connect your business banking accounts, and you can add your credit cards. You then create automated transaction rules to properly categorize your vendors.
5. We'll go through your initial batch of transactions side by side, so you understand how the tracking system operates.

Expect this process to take a week, perhaps a bit longer if your books require additional attention. It's a common experience among contractors in the Glenpointe vicinity, and beyond, to hear: "It really doesn't seem like it could be." Indeed, a significant number of professionals have been operating through the more challenging route, manually organizing receipt data or categorizing all expenses indiscriminately. When everything falls into place, the continuous process becomes more efficient.

With our background, we've been practicing accounting for over two decades prior to establishing our company., we consider the long-term viability of our setups, not just the immediate results. Each configuration we establish initially is aimed at providing accurate reporting in the future, rather than merely addressing a current requirement.

Curious about what your configuration might resemble? We invite you to and we can discuss the specifics.

Need help with job costing bookkeeping?

973-453-5052

Book A Free Consultation. Capgro Bookkeeping Services LLC is ready to help.

The Impact of Job Costing on Estimating and Expansion

This is where the actual advantages become apparent. Every completed job offers an opportunity to learn, but only if you're capable of interpreting the data.

Job cost reports detail the actual outcome of a specific project, not what you expected or assumed. We generate these reports in QuickBooks and make them available for any project at any time for the duration of our records.

What difference does that make?

Precise Future Estimates

It's not uncommon for contractors to submit quotes based on intuition and perhaps a spreadsheet. Until now.

A single inaccurate quote for a kitchen renovation project can wipe out your earnings for an entire month. When you have access to job cost reports for your previous 10 analogous projects, you've moved beyond guesswork.

You're aware of your average material expenditure per square foot, and how many man-hours that particular project consumes. Your quotations become more refined and and start to earn you contracts at rates that you can comfortably sustain.

Identifying Issues Before They Intensify

We've encountered this scenario repeatedly, as well.

A builder detects that their profitability is waning, without being able to discern the reason. It may seem evident from the job cost reports, however.

Perhaps there is a specific crew that frequently takes longer than planned to finish a job, or perhaps there has been a 15% price escalation by one supplier, over the past six months. If you lack a report, you might not be able to notice these things immediately.

You can utilize job cost reports to determine what kinds of work to pursue and which to eliminate.

• Is renovating bathrooms more profitable to our team than constructing the entire structure?
• Does urgent work command higher rates than scheduled projects?
• Which tasks consume the most of our time compared to how much we actually get paid?

We already have the information you need. We simply present it to you clearly.

And expansion shouldn't always mean shooting in the dark. Sometimes, it just means knowing exactly how your figures add up so you can grow the business with confidence rather than with hope. Job costing bookkeeping can provide that clarity. Solid data behind your business decisions. If you would like to see what your numbers could actually look like,.

New Jersey Regulations That Can Make Job Costing Critical for Regional Contractors

New Jersey doesn't make it for contractors. In fact, it has some of the tightest labor and tax laws, and if you are not tracking jobs correctly in your financial software, you are likely walking through compliance season with your eyes closed.

To start, consider prevailing wage rules. If you work on any public works projects in Teaneck and Bergen County, you are required to pay wages that are mandated by the NJ Department of Labor. These wages are determined for each trade and each contract. Unless you are using job costing bookkeeping to record each contract, you cannot document paying the appropriate wages on the appropriate contract. That can cause headaches come audit time.

The Intersection of NJ Tax Rules and Job Costing

Sales tax on materials is another sticky point. Whether materials are taxable and whether a contractor has to pay the sales tax depends on the type of contract and how the material was utilized. Take the case of a roofer in the Glenpointe area. He might buy the same roofing material for two projects in two locations, but might only pay sales tax on one. When he does a sales tax return, a roofer who utilizes job costing is able to tag these materials to their correct projects so that a sales tax filing will be accurate.

Job costing helps us keep contractors compliant with the following New Jersey regulations:

• Reporting of prevailing wage for Bergen County contracts
• Correct classification of sales tax on materials based on each project
• Reporting for New Jersey contractors on their workers' comp records that requires labor cost detail by project
• Renewal of contractor registration in New Jersey, which requires accurate financials
• Correctly issuing 1099's for individual jobs to subcontractors

We see this constantly. A contractor receives a letter in the mail and is forced to go back through his bank statements to get answers from the state. You are spending real dollars paying accountants to help you untangle a mess caused by the lack of job costing bookkeeping.

Then there are the workers comp audits. An insurance company may ask how many labor hours were charged to each individual project on file. If you cannot show them a clear breakdown of that information, they will guess their way through the math for you. And guess what? Guess work is almost always more than the actual number. This results in a contractor paying more money than they need to on their workers comp policy.

With more than 20 years in accounting, how to create a QuickBooks program where your labor and overhead costs, revenue and expenses, are tagged to each individual job right from the start, meaning that you will be ready to answer any question from a state agency. No guesses. No receipts in shoeboxes. Proper and clean records.

Does your contractor bookkeeping system pass the NJ audit test? Call us today.

Frequently Asked Questions

Common questions about job costing bookkeeping services in Teaneck

Ready to Get Started?

Book A Free Consultation. Call 973-453-5052 today.