Using Projects in QuickBooks Online to Track Income and Expenses

Managing multiple jobs, clients, or projects can be challenging for small business owners. Without clear tracking, it's easy to lose sight of profitability, costs, and progress. Fortunately, QuickBooks Online (QBO) offers a Projects feature that helps businesses track income, expenses, and profitability for specific projects – all in one place.

In this post, we’ll explore how to set up and use Projects in QBO, common mistakes to avoid, and how this feature can benefit your business.

Why Use Projects in QuickBooks Online?

• Clear Profitability Tracking – See how much money you’re making (or losing) on a specific project.

• Organized Income & Expenses – Keep all related transactions in one place.

• Better Job Costing – Track labor, materials, and expenses for each project.

• Easier Invoicing – Convert project-related time and costs into invoices.

• Accurate Reporting – Get a detailed breakdown of each project’s performance.

If your business works on client-based projects, construction jobs, consulting services, or contract-based work, using Projects in QBO can help you stay organized and profitable.

How to Enable Projects in QuickBooks Online

Before you can use Projects, make sure the feature is enabled:

1. Click Gear Icon (⚙️) > Account and Settings.

2. Go to the Advanced tab.

3. Find the Projects section and turn it ON.

4. Click Save, then Done.

Once enabled, you’ll see a Projects tab in the left menu.

Step-by-Step Guide to Using Projects in QuickBooks Online

Step 1: Create a New Project

1. Click Projects in the left menu.

2. Click Start a Project (or New Project).

3. Enter a Project Name and select the Customer associated with the project.

4. Click Save.

💡 Tip: Projects in QBO are always linked to a customer. If your work isn’t tied to a specific customer, consider using Classes or Locations instead.

Step 2: Assign Income and Expenses to the Project

Once a project is created, you can assign transactions (such as invoices, expenses, or payments) to it.

Recording Income for a Project

• When creating an Invoice or Sales Receipt, select the Project name instead of the general customer’s name.

Recording Expenses for a Project

• When entering Bills, Checks, or Expenses, assign them to the appropriate Project under the Customer/Project field.

💡 Tip: You can also track billable expenses for a project and later invoice the customer.

Step 3: Track Time for a Project

If you pay employees or contractors based on hours worked, you can track billable time for projects:

1. Click + New > Single time activity.

2. Assign the hours to the correct Project.

3. Mark it as billable if you plan to invoice the client.

4. Click Save and Close.

💡 Tip: If you’re using QuickBooks Time (TSheets), tracked time can be synced to QBO for easy project billing.

Step 4: Invoice Customers for a Project

When you’re ready to bill a customer for project-related work:

1. Click + New > Invoice.

2. Select the Project (not just the customer).

3. Click Add all billable expenses and time to pull in costs assigned to the project.

4. Review, save and send the invoice.

This ensures all related costs are included in the invoice, preventing revenue loss.

Step 5: Run Project Reports to Check Profitability

To see if a project is profitable, run Project Reports in QBO:

• Project Profitability Summary Report – Shows income vs. expenses for each project.

• Unbilled Charges (Unbilled Time) Report – Lists billable costs not yet invoiced.

• Time Activities by Employee or Expenses by Vendor Report – Breaks down labor costs by person.

💡 Tip: Regularly reviewing these reports helps identify cost overruns and ensure projects stay profitable.

Common Mistakes to Avoid

1. Not Assigning Transactions to a Project

• If transactions aren’t linked to a project, reports will be inaccurate. Always select the Project when entering income or expenses.

2. Mixing Up Customers and Projects

• Projects must be linked to a customer, but transactions should be assigned to the project, not just the customer. Check that invoices, expenses, and payments are assigned to the correct project.

3. Forgetting to Invoice Billable Expenses

• If billable expenses aren’t invoiced, you could lose revenue. Run the Unbilled Charges Report regularly.

How We Can Help

Tracking project income and expenses properly in QuickBooks Online ensures you always know which jobs are profitable. Our bookkeeping experts help businesses with setting up and organizing Projects in QBO, ensuring income and expenses are correctly assigned, and optimizing invoicing and reporting to track project profitability. Contact us today!