Accounting for Interior Designers: Why It’s Not One-Size-Fits-All
Accounting might not seem like the most exciting part of running a business, but it’s essential for keeping a small business on track and profitable. And if you’re an interior designer, your books rarely look like those of a typical small business.
Interior design bookkeeping and accounting involves a maze of retainers, vendor deposits, product markups, surprise shipping charges (and the occasional blunder), plus a level of client service that demands quick thinking and a solid audit trail. Without a deep understanding of how these moving parts should flow through your financials, it’s easy to get lost.
What Makes Interior Design Accounting So Unique?
Job Costing
In interior design, every project comes with its own financial fingerprint. Materials, subcontractors, freight, and markups all need to be properly tracked and allocated. That’s where job costing comes in. It’s not just about your bottom line at the end of the month — it’s about understanding whether each project actually turned a profit, so you can refine what’s working and rethink what’s not.
Timing
Interior design comes with its own unique cash flow rhythm. Retainers are collected upfront. Vendors often get paid before clients ever see a product, and funds may be held in trust. Invoicing typically happens in stages, based on project milestones, purchases, or progress. Understanding the nuances of industry-specific accounting—like when to recognize income, how to handle deposits, and what to do when a product is returned (with a 20% restocking fee, of course)—can help keep your books clean, accurate, and audit-ready.
Software
Navigating interior design software can be tricky. Platforms like Studio Designer, Ivy, Houzz Pro, DesignFiles, and QuickBooks Online can all help manage your books, but each comes with its own unique nuances. Understanding how these systems work and choosing the one that aligns best with your workflow is essential to keeping your financials running smoothly.
Product Markups and Profit Margins
Interior designers don’t just bill for their time, they earn income on products too. That means carefully tracking costs versus markups, handling sales tax correctly, and ensuring the books reflect true profit. The catch is that even a small mistake can lead to misreported income or paying more in taxes than necessary.
Why You Need an Accountant Who Gets It
Interior Design has its own language, and your bookkeeper and accountant should speak it fluently! From knowing the difference between a proposal and an invoice, to understanding why your profit margin might be slipping, it takes someone who truly understands how the design business flows.
A great project may turn heads, but a profitable one keeps the business thriving!
