Items vs Expense for Job Costing

I’ve been discussing how to setup and use Items in QuickBooks.   What I’ve seen is many really don’t understand how Items work in QuickBooks, from bookkeepers to accountants to QuickBooks consultants. I will admit that for many years, I was guilty of this, too – but I thought I understood them (just as many others do)!

Items let you see detail in your business instead of having to put all the detail in your Chart of Accounts (which is often what I see).  On an Invoice, you have no choice but to use an Item.  However, that’s not the case for a bill (or check or credit card charge).  You have a choice of using either the Expense tab or the Items tab. Most people use the Expense tab and select an expense or Cost of Goods account (like Job Materials).  But for contractors who want to job cost in QuickBooks, I recommend using the Items tab.

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While the Expense or Cost of Goods account may be the correct account for that expense, several of your reports will be incomplete.  How often have you run a Job Profitability report and then needed to double-click on “No Item” to get your detail?  So you end up running/printing 2 reports instead of one.  In the above example, that expense will be a part of that “No Item” number on a Job Profitability Detail report.  “No Item” simply means you did not use an Item when you entered the expense. (The numbers get even more confusing if you did not have an expense or Cost of Goods associated with the Item, as shown in our article on Item Setup).

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So when do you use which tab?   A good rule of thumb is to use the Items tab when it’s for a customer job/project and the Expense tab for Overhead. When you use the Items tab, you can then select the appropriate Item from your Items List.

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So here’s that same expense only now as an Item and notice the change in the report. Also note how much easier it is to review your labor and materials detail here instead of having to look in two places.

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So for those of you who work with projects or jobs, take a look at your Job Profitability Detail Report or your Estimated vs Actual Detail and see if you have many “No item”.  That “little” change can make a big difference in your reporting.

Once you start using this new system, your reports will start to be more meaningful and take less time to create, and use less paper!

Contact our office if you have questions or need any assistance.

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9 Responses to Items vs Expense for Job Costing

  1. Adam Scheffler says:

    hello. i use a 3rd party company for payroll and i make a general journal entry for job costing the gross labor per job. The gross labor is listed as “no item” in my job prof reports because the journal entry doesn’t work with items. Its not the worst problem in the world because the only thing in “no item” is the gross labor. however, i would love it if there was a way to have the gross labor listed in the report as an item. is that possible??

  2. Catie Ziessler says:

    If I input all of my Bills as an item rather than an expense, will they still show up in our P&L Report?

  3. Yes. When you set up an item, you specify where on the chart of accounts you want it to post

  4. There are a couple ways to get the labor to show – use a work around for job costing or bring payroll in-house (either with Intuit’s Enhanced Payroll or Assisted Payroll) and I can get you discounts on both products.

  5. Sheila Lake says:

    WE use QB Enterprise 2018. In the job cost detail report my sales staff used to be able to run the report and get the “No Items” line in the report.
    Now they no longer get that line when they run the report. I have not changed any of their permissions, but apparently some upgrade that QB did took away the permissions for that line to be on their report.
    Also if they go into Filter, they do not have access to change to “All Accounts.”
    Any thoughts?

  6. That line has nothing to do w/permissions
    You don’t want “no item” showing in the job cost report – you want to use the items and know what they are so you don’t have to drill down to find out.

  7. Sheila Lake says:

    The no item line on a job cost report DOES have to do with what permissions a user has. I currently enter my employees work hours through journal entries so that I can apply their time to specific jobs. We outsource our payroll and need to get there time into the system and this is the way I was told to do that.

    Previous to the 2018 upgrade the employee could run the report for job profit detail and those journal entries would show up on the no item line because they had specific jobs applied to them. Now they do not, which leads me to believe the upgrade changed somehow and they lost the permissions needed to see journal entries.

    I was hoping as an expert you could tell me what permissions a user needs to have in order to see journal entries that are linked to a specific job that needs to be in the job cost detail report. I don’t care if it shows up as No Item I just want the employee to see ALL costs associated to their jobs so they know what to expect. Currently I have to run the reports for them in order for them to see all costs. But I do not want to give full permissions, they don’t need to see bank information and/or other employee information. Just information that has billable time and/or has a job attached to it.
    Thank you.

  8. Monica says:

    Sheila – You can’t give employees access to some jobs and not others in QB.
    Intuit tightened the payroll permissions and unfortunately, since job cost reports can include labor costs (which it should) and those are a result of payroll, Intuit put a lock on that. If you are in Pro or Premier, I don’t think you have any good option. If you are in Enterprise then email me and we can discuss

  9. Sheila Lake says:

    Hi Monica,
    I never could figure out why my employees can no longer see journal entries included in the No Item line in the Job Cost Detail Report. It definitely has something to do with going from QB 2015 to QB 2018 and the access their “sales” title allows to “View” in reports.

    But that now is on the back burner and I have a more timely question regarding sales tax liability report. Do you know much about that? Our company uses the Desktop version of Enterprise 18.0. In summary, the sales tax laws are changing in Colorado and they are tightening up what we need to charge, collect and pay with regards to sales tax. So I applied and received several new sales tax licences for “Home Rule” cities across Colorado. A home rule city collects their own sales tax, it is not collected through the Department of Revenue. Most of these cities we need to file and pay on a quarterly basis, which is coming up on April 20th, for the period 1/1/19 – 3/31/19. The problem is we have not created invoices for the majority of these cities, therefore have not charged and/or collected sales tax. So my Sales Tax Liability Report does not include these cities on the report, but we are required to file $0 (zero) returns. I don’t do these returns, my accountant does so it would be much easier to have them included on my report so she can see all the Tax Agencies that she needs to file returns for. Any suggestions on how I can get all these agencies to show up on the report, even those without any activity. I have tried Filters – Vendor Type – Tax Agency, that does not work. Thank you I appreciate your feedback.

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