How Subcontractors Can Track Materials and Labor in QuickBooks Online & QuickBooks Time

Dany Ortega
Apr 29
3 min read

Updated: Apr 30

As a subcontractor in the construction industry, keeping tabs on labor hours and material costs can mean the difference between profit and loss. Fortunately, tools like QuickBooks Online (QBO) and QuickBooks Time (formerly TSheets) make it easier than ever to track these expenses and stay on top of your jobs.

Here’s a step-by-step guide to help subcontractors get the most out of these tools—and some bonus tips to tighten up your job costing.

1. Track Labor with QuickBooks Time

QuickBooks Time helps you accurately log labor hours, which is essential for billing and job costing.

Set Up:

Invite your crew to QuickBooks Time and assign them to specific jobs or tasks.
Set up job codes or projects to reflect different clients or phases of a job.

Daily Use:

Employees clock in and out using the mobile app or web interface.
Time entries can be categorized by job, service item, and even location.

Pro Tips:

Use geofencing to remind workers to clock in/out at job sites.
Enable photo capture on clock-in for time and location verification.
Review the “Who’s Working” dashboard for live status of your crew.

Integration with QBO:

Once synced with QuickBooks Online, approved timesheets feed directly into payroll and can be used to assign labor costs to jobs.

2. Track Material Costs in QuickBooks Online

Tracking materials in QBO requires a combination of good bookkeeping practices and a clear workflow.

Method 1: Use Expenses or Bills

When you purchase materials, enter them in QBO as Bills or Expenses.
Assign each line item to a specific Customer/Project.
Use Products & Services to categorize material types (e.g., drywall, concrete).

Method 2: Use Projects (QBO Plus or Advanced)

Create a Project for each job.
Assign all material expenses to that project.
View the Project Profitability Report to track income vs. cost.

Pro Tips:

Attach receipts to each transaction for audit trails.
Use Classes or Locations if working across different job sites or regions.
Track markup and estimated vs. actual costs using the Projects dashboard.

3. Best Practices for Job Costing

Tracking is just one part of the puzzle. These habits can make your tracking more accurate and actionable:

Standardize Data Entry

Ensure your team consistently uses the same job names and service codes.
Train employees to categorize time and expenses properly.

Use Estimates

Build estimates inside QBO and convert them to invoices or projects.
Compare actual costs against estimated costs to identify variances.

Review Reports Weekly

Use the Project Profit & Loss and Time Cost by Employee or Vendor reports.
Analyze which jobs are most profitable and which ones are dragging you down.

Reconcile Regularly

Match purchases and labor hours with what’s been billed.
Avoid underbilling or overpaying by reviewing job costs bi-weekly or monthly.

4. Bonus Tip: Track Equipment Usage

If your subcontracting business uses owned equipment:

Track usage with non-inventory products in QBO.
Allocate costs based on hourly depreciation or rental equivalent.
Add these costs manually to Projects to get a clearer picture of the total job cost.

Final Thoughts

For subcontractors, profitability hinges on accurate tracking of both time and materials. QuickBooks Online and QuickBooks Time provide a powerful combo for capturing costs and staying on top of job performance. With good systems and habits in place, you’ll spend less time chasing numbers and more time growing your business.