Typically thought of as a feature for contractors, Estimates in QuickBooks are near-necessary forms for any company that is project oriented.
Estimates are non-posting, just like sales orders. The QuickBooks user can create as many as they like and the accounting numbers are unaffected. They can also be edited and deleted/voided without concern for financial reports.
Most often, estimates are thought merely as a way for a contractor to convey the cost of a project to a customer. In QuickBooks, they are far more than that.
First, be sure the use of estimates is enabled in your QuickBooks company file.
In the screenshot, you can see the setting to activate estimates. A companion setting is progress invoicing. If your company sometimes invoices more than once for a single job or project, you will want to select both of these settings.
What makes the estimate so important to companies tracking costs and revenues by project is that it serves as a simple project budget. The pieces of the project that need to be tracked are done by using service type items for each piece. Be sure each of those items is setup as a two-sided item, utilizing both a purchase and a sales side to the item.
It is important to remember to use an income type of account for the Income Account field, and a COGS or expense type of account for the Expense Account field. For job expenses, a COGS type account is usually the best choice.
The example estimate in the above screenshot is from one of the QuickBooks sample files. The items are two-sided as discussed. Cost as well as revenue for each item are included in the appropriate columns.
When actual income (invoice) and expense (bills & checks) are recorded in QuickBooks using items and coding to this specific job, a detailed report of the ongoing results of the job can be selected right off the Reports menu.
The actual amounts for cost and revenue come from actual transactions recorded in QuickBooks. The estimated numbers all come from the Estimate form created.
Hector Garcia, CPA
Certified Advanced QuickBooks ProAdvisor
12401 Orange Drive #136
Davie, FL 33330