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Four Steps to creating Projects and tracking their expenses in QuickBooks Online


A team working together on a project

Are you interested in tracking income and costs related to your projects? With the Plus and Advanced versions of QuickBooks Online, you can easily do all of this and calculate your projects' profitability.


QuickBooks Online can tell you where your money comes from and where it’s going in very detailed, customizable reports. These reports can help you determine, for example, whether you should continue to sell a specific product or whether customers are paying their invoices late. 


There may be times when you want to group income and costs by a specific job or project. The great news is that QuickBooks Online has Project tools that can tally all of that automatically. You can determine whether your project-related income, product and service costs, worker costs, and other expenses warrant taking on certain jobs in the future.  


If you’re using QuickBooks Online Plus or Advanced, you can use these tools to calculate the profitability of projects by assigning relevant sales, time, and expenses to them. Here’s how it works. 


Step 1: Turn the Project feature on in QuickBooks Online.


Before you start working with Projects in QuickBooks Online, you’ll need to make sure you have the feature turned on. Click the gear icon in the upper right and select Account and settings. Click Advanced in the toolbar and scroll down to Projects. If the button there isn’t green, click it, then click Save. Click Done in the lower right to return to the main screen. 


Step 2: Create a project record for the job you'd like to track expenses for in QuickBooks.


To get started, click Projects in the toolbar to open a comprehensive “homepage.” This will eventually display a list of projects you’ve created that you can filter by Status, Customer, and Employee rate. Click New project in the upper right. A panel slides out from the right, where you’ll create a project record by selecting a Customer and entering a Project name. Optional fields here include Start date and End DateStatus (defaults to In progress), and Notes


Click Save when you’re done. Now your project name will appear directly under the customer name when you’re entering transactions. 


Creating a project record in QBO

Before you start assigning transactions, you’ll create a Project record. 


Step 3: How to assign transactions to Projects


 Now that you’ve created a Project record, you can start assigning income and costs to it. There are seven types of transactions that can be assigned to projects:


  • Invoice

  • Receive Payment

  • Estimate

  • Time

  • Expense

  • Bill

  • Purchase order


Where you enter the Project name depends on the form type.  


When you’re creating the first four types of transactions (invoices, receive payment, estimate, and time), you’ll find your project listed under the Customer name at the top.


When you’re spending money on a project in the form of an expense, bill, or purchase order that you will eventually bill a customer for, you’ll choose a Vendor at the top of the form as you document billable purchases. In the table below (where you enter the products and/or services that you’re buying), you’ll select your Customer/Project in a column there. Be sure there’s a checkmark in the Billable column, otherwise, the expense won't automatically appear when it's time to invoice your customer. And make sure you select the name of the project, not just the customer name, when you assign a transaction to a project). 


TIP 1: On Bill and Expense forms, you’ll notice another column in front of Customer/Project labeled Markup %. You can add a percentage to your billables to charge the customer a little extra for your work in obtaining needed materials.


TIP 2: If you're interested in learning more about invoicing customers for billable time and expenses, we have an excellent step-by-step tutorial here.


Step 4: Get familiar with the Project "homepage" in QuickBooks Online Plus and Advanced

 


A project “homepage,” showing its real-time profitability 

A project “homepage,” showing its real-time profitability 


Once you’ve created a project, you can access its relevant “homepage” by clicking it in the list on the main Projects page. Here, you can track each project’s progress, including its real-time profitability.


At the top of this page, you’ll see a line graph like the one pictured above showing your current Income vs. Cost. You’ll also see a number representing your profit margin. There are also links that take you to reports for open and overdue invoices (not shown here).


A button in the upper right opens links that can take you to pages where you can enter project-related transactions. However, like many tasks in QuickBooks Online, there are multiple ways to accomplish the same objective, and you don’t have to be on the Projects page to enter these transactions. You're also able to enter them as you normally would on their own pages and assign them accordingly.


Project “homepages” also contain other types of information. As you can see from the tabs at the bottom of the image above, you can view each project’s: 


●      Overview (A breakdown of income, costs, and profit)

●      Transactions (A list of project transactions that you can filter by Type and Date)

●      Time Activity (A list of billable work completed)

●      Reports (Project profitability, time costs, and unbilled time and expenses)

●      Attachments. A space for uploading documents


Additional perks of QuickBooks Online Advanced: with QBO Advanced, you have the ability to compare a project's income and expenses with what you initially estimated. When creating a project estimate in QuickBooks Online Advanced, you can break each line item down to the product or service you anticipate you'll use.


The mechanics of creating Projects in QuickBooks Online are not difficult, but it does require precise record-keeping to ensure you’re billing your customers for everything you’ve provided and executed. Plus, if everything is recorded accurately, you’ll be able to look at your profit margins and determine whether you need to make any pricing changes in the future. We’re happy to meet with you if you have questions about recording and analyzing project data – or about anything else related to QuickBooks Online.



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