What expenses should contractors track for each job?
Every expense that touches a specific job needs to be coded to that job. The goal is knowing exactly what each project cost you, so you can see real margins and bid future work accurately.
Labor is usually the biggest category to track. Hours your crew spends on each job, including regular time and overtime. Don’t just track total payroll. Break it down by job so you know whether that custom home addition ate up more labor than you budgeted. Include the full cost of labor too, meaning wages plus payroll taxes plus workers’ comp. The hourly wage alone understates what that labor actually costs you.
Materials are straightforward but easy to let slip. Everything purchased for a job should be coded to that job. Lumber, concrete, fixtures, hardware, paint. When your crew picks up supplies at the hardware store, that receipt needs a job number before anyone forgets which project it was for. Materials pulled from your shop inventory count too. If you have a stock of common supplies, track when they move to a job site.
Subcontractor invoices need job coding before you pay them. Subs often represent a huge portion of total job cost. A bookkeeper for small business owners can help you set up a system where coding happens before payment, not as an afterthought. If those invoices just hit a general subcontractor expense account, your job costing tells you nothing useful. Every invoice from a plumber, electrician, or any other trade goes to the specific job.
Equipment costs belong on jobs too. Rental equipment is obvious. The excavator you rented for site prep goes on that job. What most contractors miss is allocating owned equipment. Your truck, trailer, and tools have a real cost even if you’re not writing checks for them. Depreciation, maintenance, and fuel should be spread across the jobs that use them.
Permits and fees are direct job costs. Building permits, inspection fees, plan review costs. These are specific to a project and should be tracked there.
Job-site overhead is different from general overhead. Dumpster rentals, portable toilets, temporary power, site security. These serve a specific project and belong on that project’s cost sheet. Your office rent and general liability insurance don’t get allocated to individual jobs.
The discipline of coding everything to jobs is what makes job costing work. Miss a few material receipts here, forget to log some labor hours there, and your job cost reports become fiction. You’ll think you made 15% on a project that actually lost money. When everything aligns and gets tracked consistently, you can compare actual costs to your estimate and see exactly where jobs come in over or under budget.
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