Frequently Asked Questions: Track Project Profitability in QuickBooks Online
Many businesses complete projects, send invoices, and assume they are profitable. Then margins tighten and it is not clear where the money went.
That leads to a key question:
- How can I tell which projects are actually profitable in QuickBooks Online?
You need visibility into income and costs at the project level. Use Projects in QuickBooks Online to track income, labor, and expenses by job. This shows you true project profitability instead of blending everything together.
What is QBO Projects?
Projects in QuickBooks Online allows you to group all financial activity related to a specific job or engagement.
Within each project, you can track:
- Income tied to that project
- Expenses and materials
- Labor and subcontractor costs
This creates a clear view of revenue, costs, and margin for each project.
Why project level tracking matters
Without project tracking, costs often sit in general expense accounts. That makes it hard to answer simple questions like:
- Which jobs are actually making money?
- Where are we underpricing?
- Are labor costs aligned with what we bill?
Blended reporting hides these answers. Project level tracking brings them to the surface.
Use your Profit and Loss as a guide
Your Profit and Loss report can help identify where simplification is needed.
Look for:
- Accounts with very low activity
- Multiple accounts serving the same purpose
- Categories that do not influence decisions
If a line on your report does not drive action, it may not need to be its own account.
How job costing improves decision making
Job costing is the process of assigning all relevant costs to a specific project. When done correctly, it helps you:
- Set more accurate pricing n- Improve billing consistency
- Identify projects with shrinking margins
- Plan staffing and resource allocation more effectively
As outlined in our blog, Accounting That Keeps Trades Profitable and in Control, strong job costing gives business owners better control over profitability by tying costs directly to the work being performed.
How to handle labor costs
Labor is often the highest and most overlooked cost in project profitability.
Even if you are not using QuickBooks Payroll, you can still assign labor costs using a burden rate. This applies a standard cost for time spent on a project so margins reflect the true cost of delivery.
Common mistakes to avoid
When setting up project tracking, watch for:
- Expenses not assigned to a project
- Labor costs left out of job costing
- Inconsistent use of project tracking across the team
- Relying only on revenue without considering costs
When to get help
If your projects look profitable but cash flow does not reflect it, or reporting feels unclear, your job costing setup may need adjustment. One 8 Solutions helps businesses set up QBO Projects and job costing so decisions are based on accurate, project level data.
Want clearer insight into project profitability?
If you want to understand which projects drive profit and which need adjustment, we can help you set up project tracking that reflects how your business operates. Schedule a meeting today!
