Setting up your items
Items are the building blocks of your QuickBooks company. They represent things that you buy, sell, and/or resell in your contracting business. Minimally, you should create a service item for each type of work you do for customers. When you record an invoice to a customer or a purchase from a vendor, you use items from your Item List to fill out the QuickBooks form.
For a contractor, items are used for estimating, invoicing, and tracking job costs. The way you set up your items depends on multiple factors, primarily your estimating strategy and the way you would like to view your job cost reports.
When creating items for job phases, remember that the level of detail in your Item List determines the level of detail in your job cost reports, (specifically, your Estimates vs. Actuals reports and the Job Profitability Detail report). More detail gives you more information on reports, but keep in mind that you may not want to create items for such things as 2x4's and 16 penny nails. If you do, then the person who enters the lumber supplier or hardware bills will have to break each item on the bill down in that fashion, which could become an extremely time-consuming task with a high margin for error. You might want to keep categories as generic as possible, keeping in mind that you can type special notes into the item description field of the estimate.
You will typically create items for job phases. You might also use subitems, inventory items, or group items.
For examples of how to set up items, choose how you generate estimates:
I generate estimates in QuickBooks
I generate estimates outside of QuickBooks
Setting up items if you generate estimates in QuickBooks
If you plan to use QuickBooks to create job estimates then you should enter a standard set of items that you will be using on a routine basis. For example, let's say you want to set up an estimate template in QuickBooks and you want that template to remind you to capture all the costs of fees and permits. You might then want the first section of your Item List to look something like this:
01 FEES & PERMITS01.10 Fees
01.11 Fee – City License
01.12 Fee – Plan check (general)
01.13 Fee – School district
01.14 Fee – Sewer assessment
01.15 Fee – Miscellaneous
01.16 Fee – Environmental health
01.17 Fee – Parking
01.18 Fee – Utilities tie-in
01.20 Permits
01.21 Permit – Building
01.22 Permit – Demolition
01.23 Permit – Miscellaneous
01.24 Permit – Electric
By listing every fee or permit cost that might happen on a project, you are helping yourself (or the estimator) to capture all of the costs of a project. In other words, you are helping to insure that costs don't slip through the cracks.
In the example above, you would create both Items (01 Fees & Permits) and two levels of subitems (01.10 Fees and 01.11 Fee – City License).
Setting up items if you generate estimates outside of QuickBooks
If you plan to use an outside estimating program or spreadsheet for detail estimates and to then bring a summary estimate into QuickBooks, you should set up your Item List to reflect your standard list of summary estimate phases. For example, if you use an estimating program that uses the 16 CSI (Construction Specifications Institute) phases to break down a project into small segments, then you would set your Item List to reflect those 16 phases.
One example of a partial Item List for a remodeling contractor might look like this:
01 Fees & Permits
02 Site Work
03 Excavation
04 Concrete
05 Masonry
06 Framing
07 Exterior Trim
08 Siding
09 Doors
10 Windows
11 Plumbing
...
The partial list above represents a typical list of standard phases for a remodeling contractor. (Other list items would include HVAC, Electrical, Insulation, Floors, Painting, Cleanup, Landscaping, Supervision, Finance, Moisture Protection/Roofing, and so on.) The detail for each of the line items above are not going to be brought over into QuickBooks, but instead will stay in the estimate that was created outside of QuickBooks.
You can also have subitems below each item in the list, as shown in the section on setting up items if you generate estimates in QuickBooks. Your Item List should represent the level of detail you want to bring into QuickBooks estimates, which should be the same level of detail you want to see in your job cost reports.
To create items, use one of these methods
Related topics