Cost Associated with Billable Time

Summary

How can you job-cost something you don't actually pay for? For Example copies made for a client? If you record time as "billable", QuickBooks allows you to "pass-through" that time onto an invoice (or sales receipt), and it allows you to pass the time onto a check or paycheck to record the cost via payroll or expenses to a vendor. However, if you don't actully PAY anyone for the expense, the cost is never recorded.

Question

Have an item called "Copy" setup as follows: Service item, Performed by Sub/owner etc. Cost $35.00 Sales Price $70. Expense and Income accounts setup appropriately.

Issue: Enter 10 hrs for an employee and tie the time to a customer/job and the "Copy" item above to be billed on a cust invoice.

Create the invoice and pull in the time entered above and save the invoice. When a P&L by Job report is run the expected revenue ($700.)appears however the cost ($350) does not.

Is it the type of item being used or can QB not capture the cost associated with the sale of this item in this scenario. In other words the cost of an item determined by a time sheet entry associated with a customer job. The time information is not used for payroll calculation due to timing issues, the client does use QB for P/R.

Answer

In order for you to see the cost appear, you need to incur the cost. By entering the hours on a timesheet, you've only said how much time you've spent and you haven't really recorded any cost.

To record a "job-cost" for these copies without actually affecting the general ledger, you could use a "zero-dollar check" instead of a timesheet. If you're using our "Journal Entries" bank account, that would be a good account to write this check on. See the Consultant's Reference Guide for more about using a Journal Entries Bank Account.

On the check, click the Items tab and enter the "Copy" item with "10" units and this would automatically calculate $350 in cost which would debit whatever expense account the item points to. On this line, enter the customer name and make it "billable". Next, click the Expenses Tab and enter the expense account with a negative amount (-$350) so the bill zeros out. Make sure you do NOT enter the customer name on the expenses tab.