Creative Studio Bookkeeper Sydney: Know Your Project Margin

Updated: November 2026

To have this handled on a fixed monthly fee, see creative studio bookkeeping on a fixed fee.

A creative studio bookkeeper in Sydney has one main job beyond compliance: showing you which projects actually make money. Design, branding, video, content and digital studios tend to have healthy-looking revenue and thin, unpredictable margins, because pass-through costs, contractor time and revisions are buried in a single profit and loss. This guide covers how to set up Xero so project margin is visible, and the payroll and GST points studios most often get wrong.

If you run a larger agency, our agency bookkeeper Sydney and agency bookkeeping cost guides go further. For film and video, see our production company bookkeeper guide.

Why can't most studios see project margin?

Three habits hide it:

Pass-through costs counted as revenue. Printing, media buys, stock footage, talent and freelancer costs recharged to clients inflate revenue. If a $40,000 invoice includes $25,000 of pass-through costs, the studio earned $15,000 of fee income, not $40,000. Treat recharged costs consistently so your gross margin reflects your own work.
No project tracking. Without tracking categories or projects in Xero, every invoice and bill lands in one bucket.
Time not tied to cost. Staff and contractor time is the main cost, and if it is not allocated to projects, the profit and loss cannot tell a profitable rebrand from a loss-making video job.

How should Xero be set up for a creative studio?

A simple, durable setup looks like this:

Separate income accounts for fee income and recharged costs, so pass-through revenue is visible on its own line.
A matching cost of sales account for recharged costs, so they net off.
Tracking categories for service line (brand, digital, video, content) and either Xero Projects or a second tracking category for major clients.
Contractor bills coded to project and service line on entry, not tidied up at quarter end.
A month-end step that pulls hours from your time tracking tool to allocate staff cost by project, even approximately.

How should retainers and milestone billing be recorded?

Studios usually bill in one of three ways, and each needs a consistent treatment:

Retainers invoiced in advance for a set period. Record the service period on the invoice so income sits in the right month.
Milestone billing such as 50% upfront and 50% on delivery. Between milestones, work done but not yet billed is work in progress. A month-end WIP estimate gives a truer monthly result. Ask your accountant how this should be treated for tax.
Time and materials billed monthly in arrears. Invoice on a fixed day so cash flow is predictable.

Are freelancers employees for super?

This is the biggest compliance risk for most studios. The ATO treats independent contractors who are paid mainly for their labour as employees for super guarantee purposes. A designer or editor who works mostly on their own time, using their own skills, on an hourly or day rate, may fall into that category even with an ABN and an invoice.

Check each regular freelancer against the ATO's employee or contractor guidance.
Where super applies, it is 12% of qualifying earnings from 1 July 2026, and it must reach the fund within 7 business days after each payday under Payday Super.
Keep written agreements and invoices on file. Business records generally need to be kept for 5 years.

Our payroll service covers employed staff and contractor super where it applies.

Does a creative studio need to lodge a TPAR?

Usually not for design or creative work alone. The taxable payments reporting system covers building and construction, cleaning, courier and road freight, information technology, and security services. If your studio also provides IT services, such as web development, and pays contractors to deliver them, check the 10% income test on the ATO's TPAR page.

What GST points matter for studios?

Recharged costs should carry the same GST treatment each time, and your tax invoice should show them clearly.
Tax invoices of $1,000 or more must show the buyer's identity or ABN.
Overseas clients may be treated differently for GST. Confirm the treatment with your accountant before invoicing.
Subscriptions to overseas software often have GST handled differently from local bills, so code them carefully.

What should a studio's monthly report show?

Fee income separate from recharged costs.
Gross margin by service line and by major client.
Contractor spend as a share of fee income.
Debtors over 30 days.
Cash against the next eight weeks of payroll, super, BAS and contractor bills.

That is what our monthly reporting includes, with a few sentences explaining what changed.

What do most studios miss?

Revisions. A project quoted at a healthy margin can lose money after two extra rounds of changes, and nobody notices because the invoice amount did not change. If time is allocated to projects, margin by project shows the problem within a month, which gives you the evidence to change your scope and revision terms.

How do you price the next project using your own numbers?

Once margin by project is visible for a few months, use it when you quote:

Look at the actual hours and contractor costs on similar past projects, not the original estimate.
Add the average number of revision rounds those projects needed.
Separate recharged costs on the quote so the client sees your fee and the pass-through costs clearly.
Set a clear revision limit and a rate for extra rounds.

This turns bookkeeping from a compliance task into a pricing tool, which is where studios usually see the biggest benefit.

Related reading: what a creative studio bookkeeper costs.

FAQ

Should pass-through costs be shown as revenue?

Many studios record recharged costs as income and the matching expense as cost of sales. What matters is consistency and keeping fee income visible on its own line so your margin is not overstated.

Do I pay super for freelancers?

If a freelancer is paid mainly for their labour, they may be an employee for super guarantee purposes. Check the ATO employee or contractor guidance for each arrangement.

What is the best way to track project profit in Xero?

Use tracking categories or Xero Projects, code bills to projects on entry, and allocate staff time at month end.

Can you work with our time tracking tool?

Yes. Most studios already track time. We use those exports to allocate cost so project margin is visible.

Want to see which projects actually make money?

We set up Xero for creative studios so fee income, recharged costs and project margin are visible every month.

Next step: send us a message and a real person replies within a few working hours, or book a free Xero Roast, a 15-minute plain-English review of your file with a fixed quote at the end. Our fixed monthly packs include a 4-hour reply guarantee, no lock-in and a 30-day money-back guarantee.

About Sydney Bookkeeper

Sydney Bookkeeper is the modern, fixed-price Sydney bookkeeper for businesses with staff that are tired of slow, hourly, jargon-spouting incumbents. We work with professional services firms, construction and property businesses, agencies, tech and ecommerce companies, hospitality groups, and health practices across Sydney. Monthly bookkeeping, BAS lodgement, payroll, and Xero file cleanups, all on fixed monthly pricing, no lock-in.

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The team uses a registered BAS Agent for all BAS and IAS lodgement services. Full registration details, agent particulars, and copies of the Tax Practitioners Board (TPB) Code of Professional Conduct, the TPB complaints process, and any conditions on the agent's registration are available on request by emailing hello@sydneybookkeeper.com. This content is general information only, written for Australian small and mid-market businesses. It does not constitute tax, financial product, or legal advice and should not be relied on as such. Tax obligations depend on your individual circumstances. For advice specific to your business, contact the team directly or consult a registered tax agent or licensed financial adviser. Sydney Bookkeeper is not a licensed tax agent or licensed financial adviser. Information was current at the time of publication and may change without notice. We review and update guides periodically.

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