What does a job really cost?
Everything you spent to deliver it, plus a fair share of what it costs to keep the business open. Price minus that total is what the job made. The easy shortcut is to stop at materials and wages, and the gap between that number and the real one is how a busy year ends up a thin one.
Project work makes this harder to see. A deposit arrives before anyone starts, materials get bought weeks ahead, and one big job can land in a month that's otherwise quiet. Read month by month, the books swing between boom and bust, and neither picture tells you whether the jobs themselves are worth taking.
What goes into the cost of a job?
Five kinds of direct cost, each with a place it usually goes missing.
| Cost | What counts | Where it usually goes missing |
|---|---|---|
| Materials | Everything bought for the job, delivery included | Bought early and coded to general supplies |
| Employee labour | Hours on the job times the wage, plus employer taxes | The wage is counted and the employer taxes are not |
| Subcontractors | What you paid others for work on this job | Paid on a card and never tagged to the job |
| Equipment and vehicles | Rental, fuel and running costs for the days on site | Left in overhead with everything else |
| Job-specific fees | Permits, disposal or other fees this job alone caused | Paid after the job closed and never matched back |
Why is an hour of labour more than the wage?
Because employing someone carries taxes on top of their pay. The IRS page on contractors and employees says that for an employee you generally withhold income tax, Social Security and Medicare from wages, and you also pay the matching employer portion of Social Security and Medicare as well as unemployment tax. Florida adds its own reemployment tax, and the Florida Department of Revenue's reemployment tax page says only the first $7,000 of wages paid to each employee in a calendar year is taxable. Your actual rate depends on your account, so take it from your own filings rather than a rule of thumb.
The same IRS page says you generally don't withhold or pay those taxes on payments to independent contractors. So when you compare a subcontractor's invoice with an employee, compare it with the full cost of the employee's hour, not the wage alone. If you're unsure which side of that line a worker falls on, our post on contractors and employees goes through the tests.
How do you give each job its share of overhead?
Add up a period's overhead and divide it by the labour hours worked on jobs in that period. That gives a rate per hour, and each job carries that rate times its own hours. Overhead is whatever you'd pay in a month with no jobs at all: insurance, the phone, software, the vehicle you'd keep anyway, and the yearly receipts.
In Titusville there's more than one receipt to pay for. The City of Titusville business tax receipt page says the Planning Department can confirm a business fits the zoning and land use rules, that any state licence your trade needs comes before the city receipt, and that the Brevard County receipt follows the city one. None of that belongs to a single job, so it sits in overhead and reaches each job through the hourly rate.
Here's how the pieces add up on one made-up job. Your figures will differ, and the real mix depends on your trade and how you price.
| Line | Amount ($) |
|---|---|
| Price the customer paid | 12,000 |
| Materials | 4,200 |
| Employee labour including employer taxes | 3,100 |
| Subcontractor | 1,500 |
| Equipment and fuel | 400 |
| Overhead share, 40 hours at a 40 per hour rate | 1,600 |
| What the job made | 1,200 |
Price minus materials and labour would have suggested this job made about 4,700. Counted fully it made 1,200, and that's the number a quote for the next similar job should be built on.
Not sure which of your jobs actually pay?
Call JE Ledger on (305) 748-1367, send an email or a WhatsApp, or use the contact form.
What about the deposit that came in before the work?
For the books, it usually hasn't been earned yet. IRS Publication 538 says that under the accrual method you generally report income in the tax year you earn it, regardless of when payment is received. In accrual books, a deposit for unstarted work is commonly held as a liability, meaning work still owed to the customer, until the work is done; how an advance payment is treated on your tax return is a separate question for your own tax professional. If you keep cash-basis books, the deposit still belongs to the job, so judge the job when it's finished rather than the month the money landed. Our post on cash and accrual explains the difference.
How do you get a per-job report out of your books?
Tag everything to a job as it happens. Most bookkeeping software has a project, job or class field; put every materials receipt, timesheet, subcontractor bill and permit fee against the job it belongs to. Once that habit holds, a profit report by job is a few clicks rather than a weekend with a spreadsheet.
Our page on bookkeeping for Titusville businesses is about recording project money so it follows the jobs. If you'd like help reading what your job numbers say about pricing, ask about financial consultation, or start with the contact page.
