Why Job Costing is important, especially as your business grows

Job Costing

Why Job Costing is important, especially as your business grows

As a small business, you may be familiar with Job Costing or have heard the term used in accounting. Job Costing, a.k.a. project-based accounting, is a method of tracking materials, labor costs, and overhead in order to more accurately assess current and future jobs, estimates, and to maximize profitability. It is a much more detailed system of accounting and prevents overruns on future jobs.


Many industries and businesses can benefit from this method, from construction and manufacturing to medical services and law firms. All of the industries that utilize this method, have one thing in common; each job varies. Each client or customer requires different labor, materials, and overhead. When you accurately account for each portion of the job, instead of the large picture, you can make detailed decisions regarding current and future jobs, as well as look at past jobs to identify patterns and trends.


Job Costing can help your business in 5 major ways:

  • Tighten cost control on current and ongoing jobs
  • Create a cost history for estimating future jobs more accurately
  • Prevent overruns on current and future jobs
  • Allows you to assess productivity
  • Helps your new company set a budget


Job Costing is incredibly important for new businesses because it gives you a magnifying glass when looking at your books. It also gives you a lot of room to grow, as it is beneficial to companies small and large. With Job Costing, you can drill down to see which services are driving the most profit and adjust accordingly. With a growing business, this insight gives you the ultimate power when it comes to turning a profit. The sooner this method is implemented, your vision of future jobs becomes much clearer.


The three major accounts to be tracked for accurate Job Costing are:

Direct Labor Costs: These are the costs for employees to get one job done. This doesn’t include behind-the-scenes work, such as accounting.

Direct Material Costs: Refer to the actual materials used to complete one job.

Overhead Costs: Include the behind-the-scenes costs such as gas and vehicle maintenance, insurance and tools.


At Moose Creek Bookkeeping, we see many new and small businesses shy away from the Job Costing method of accounting because it can seem daunting as it does require more accurate record keeping.


We can help, whether you want us to hold your hand along the way or take the reins completely. This method can have a steep learning curve but the benefits (profit!) are well worth the time and effort to set it up. If you are already familiar with Intuit QuickBooks, we have extensive knowledge on how to phase into the Job Costing method. We highly encourage any new business that deals with variable costs of jobs and estimates to start with Job Costing from the get-go and we are happy to help implement this method for your growing business.


Please reach out to us with any accounting questions you might have……