Interior designer bookkeeping: design fees, furnishings, and margin on every project

One studio, two businesses

Design fees and procurement obey different economics, and blending them into one income line hides how the studio actually earns. Fees — hourly, flat, or per-room — are service revenue with almost no direct cost beyond your team's time. Procurement is resale: you buy at trade price, sell at your markup, and carry deposits, freight, damage, and lead-time risk in between. We build the chart of accounts around that split, so the income statement shows fee revenue, product revenue, and product cost as their own lines instead of one blur.

The tooling follows the same logic. Proposals and purchase orders live in Studio Designer or Houzz Pro; the accounting spine is QuickBooks Online with every transaction tagged to a project; supplier invoices flow in through Dext. What matters is that the procurement system and the ledger agree — a PO issued in one and never reconciled in the other is how furnishings margin evaporates unnoticed.

Deposits move in both directions, and neither direction is profit

Clients typically pay a large share of furnishings up front, and you in turn put deposits down with vendors and workrooms — so at any moment the studio is holding client money it has not earned and vendor money it has not recovered. The client's payment is a liability until the piece is delivered; your vendor deposit is an asset until the vendor performs. Net the two together and the balance sheet stops answering the one question that matters in a supply-chain delay: how much client money are we holding against goods we do not yet control?

GST/HST timing rides on the paperwork. A true deposit is generally not taxed until it is applied against the sale, while an invoiced prepayment triggers HST when invoiced — we set the invoicing convention deliberately rather than discovering it during a CRA review.

Trade discounts and markups need honest inside numbers

Whatever pricing the client sees — cost-plus, retail, or a blended fee — the books must carry both the true landed cost and the true selling price of every item. That is the only way the procurement side of the studio can be judged on its own performance:

• Landed cost per item — the trade price plus freight, crating, duties, and receiving-warehouse charges, all coded to the project it belongs to;
• Markup as a visible margin — the spread between landed cost and sell price, reported by project, not buried in a blended revenue line;
• Damage and returns — repairs, replacements, and restocking fees charged against the item's margin, so a problem vendor shows up in the numbers.

The HST mechanics reward the same discipline: input tax credits on what you buy, HST charged on the full amount you sell it for. Studios that watch only the design-fee line often discover the procurement operation has been quietly subsidizing underpriced fees — or the reverse.

Profit per project, and the US project wrinkle

Because every hour and every item carries a project code, each project closes with a real P&L: fee revenue against team time at cost, plus procurement margin net of the freight and fix-it costs that belong to it. Set a few closed projects side by side and pricing decisions get easy — whether full-service work out-earns consult-only engagements, which client profile is worth pursuing, and where your minimum project size actually sits.

US projects — a Toronto client's Florida condo, a cross-border relocation — add USD purchase orders, exchange rates on deposits paid months before delivery, and state sales tax on goods installed in the US. We keep the USD trail clean by project; the tax layer, including withholding on design fees, is covered in our cross-border tax guide for interior designers. For what a monthly engagement with us includes, see our bookkeeping services page.