Accounting software for an agency that needs profit per client and per project

For an agency, project profitability and client profitability are related but not the same: you need to capture labor time and cost, outside expenses, and revenue against each project, then roll the results up by client. A general ledger alone may not give you that view.

Shortlist

• Productive — My first pick if agency operations are the main problem. It combines project budgets, time, resourcing, and profitability reporting by project and client, and connects to accounting systems such as QuickBooks and Xero. Keep a separate accounting system as your financial books. (productive.io)
• Scoro — Consider it if you want a broader system for projects, resourcing, billing, and financial reporting. It can show profit after labor and external costs, group projects by client, and sync with QuickBooks or Xero; Scoro says it doesn’t replace your accounting software. (scoro.com)
• QuickBooks Online Plus or Advanced — A reasonable simpler choice if you already use QuickBooks and your project needs are straightforward. Its Projects feature tracks project income and costs and provides profitability reports; labor-cost detail depends on how you capture time and payroll. (quickbooks.intuit.com)
• Xero with Projects — A good accounting-first option if your needs center on tracking project time, expenses, invoices, and margins. Xero Projects includes project profitability reporting, but check whether its reporting depth and workflow fit your agency’s client-level rollups. (xero.com)

Practical default: Pair Productive or Scoro with QuickBooks or Xero if you need meaningful agency-level margin reporting plus full accounting. Choose QuickBooks or Xero alone if you have a small team and relatively simple project costing.

Before choosing, test a real project and confirm the system can include loaded employee labor cost—not just billable hours—along with contractor costs and project expenses. Otherwise, the “profit” number may overstate your actual margin.

Short answer: Most agencies do best with two tools: a general ledger for bookkeeping and tax, and a project-profitability tool that tracks time, cost, and revenue by client and project. Some all-in-one options can do both, but they're weaker at the accounting side.

Layer 1: the ledger

• QuickBooks Online is the usual default in North America. One guide notes that its Projects feature, on the Plus tier, lets you group income, expenses, and time under specific client projects. The Projects feature in QuickBooks Online Plus enables agencies to organize income, expenses, and time entries under specific client projects.
• Xero is the usual choice outside North America. One buyer's guide calls it the default if you're outside North America. Xero — strong in the UK/AU/NZ, cleaner UI, similar feature depth to QBO. Default if you're outside North America.
• Sage Intacct is for larger firms. The same guide says it only makes sense at $20M+ revenue with multi-entity needs, and real cost (license + implementation) is $40k–$120k year one.

Layer 2: project and client profitability

• Productive: strong all-rounder. Project setup, billable rate cards by role and client, true cost per hour, profitability by project/client/service line. It posts to QBO/Xero cleanly. It starts around $10/user/month per one source.
• Scoro: broader feature set and a longer rollout. One guide says it suits agencies with mixed retainer, project, and product revenue, and that it has longer onboarding (8–12 weeks). It starts at about $19.90/user/month.
• Harvest: the simplest option. You set billable and cost rates, your team logs time with genuinely easy timers, and profitability reporting shows margin by client, project, task, or team. It plays nicely with QuickBooks, Xero, and Stripe.
• BigTime: strong on cost rates tied to billing. One source says it attaches a real per-person cost rate to every entry from the moment it is logged.
• Teamwork.com: a good fit for retainer-based client services. It offers profitability tracking that helps agencies avoid losing money on miscalculated budgets.

If you want one tool

• FreshBooks combines invoicing, time, and accounting. It assigns internal hourly costs to team members for project profitability calculations.
• Zoho Books is an accounting-first option with project and time modules, and it has a free plan.

Setup details that decide whether the numbers are right

• Use true labor cost, not salary alone. One guide recommends true hourly cost per employee (salary + payroll tax + benefits + overhead) divided by productive hours, not 2,080.
• Measure profit on recognized revenue, not invoices, especially for retainers and fixed fees. The same guide defines project gross profit as project revenue (recognized, not invoiced) minus true cost.
• Confirm the integration syncs to your ledger before you commit.
• Check the tier. Some tools put project profitability behind a higher plan, and pricing changes often, so confirm current prices on each vendor's site.

My suggestion: For a small-to-mid agency (roughly $1M–$15M), QuickBooks or Xero plus Productive is the most common pairing. If your team is small and you mainly bill hours, use Harvest with your existing ledger. If you're already on QuickBooks and want the fewest tools, start with FreshBooks and check whether its profitability reports cover your needs.

If you tell me your revenue range, country, team size, and whether you bill mostly hourly, retainers, or fixed fees, I can narrow this to one or two picks.

For an agency, tracking profitability per client and per project requires more than just standard accounting; it requires "project-centric" accounting. You need a system that links your revenue (invoices) and costs (labor, expenses) directly to specific jobs.

Here are the most effective approaches based on your agency's scale:

1. The "Standard" Approach (Best for Small to Growing Agencies)

If your agency has fewer than 50–100 employees, you likely do not need a complex ERP system. The most common and successful strategy is to use industry-standard accounting software combined with disciplined internal processes.

• QuickBooks Online (Plus or Advanced): This is the most widely used choice for small-to-mid-sized agencies.
  • How it works: It includes a "Projects" feature that allows you to tag income and expenses to specific projects.
  • Pro Tip: Use the "Advanced" tier if you need more robust budget-vs-actual reporting.
• Xero: A strong alternative to QuickBooks, especially popular in the UK and Australia. It offers project tracking features that allow you to track time, costs, and profitability per project.

Crucial Note: These tools only work if you have a "discipline problem," not a software problem. You must ensure your team consistently logs time and expenses against the correct client/project tag. If the data entry is messy, no software will give you accurate profitability reports.

2. The "Agency Management" Approach (Best for Efficiency)

If you find that your team hates logging time in accounting software or that your project management is disconnected from your finances, consider a Professional Services Automation (PSA) tool. These tools are built specifically for agencies and often sync data to your accounting system.

• Teamwork.com: Highly rated for services teams. It tracks time and profitability as delivery happens, closing the gap between "doing the work" and "reporting on it".
• Productive.io: A comprehensive platform that combines project management, resource planning, and financial profitability tracking. It integrates with QuickBooks, Xero, and others to handle the actual "bookkeeping" while it handles the "project profitability".
• Accelo / Workamajig: These are specialized "all-in-one" platforms for agencies that manage the entire lifecycle from lead to final invoice, providing deep, real-time visibility into margins.

How to choose the right path

Summary Recommendation

1. Start with the Ledger: If you aren't already, ensure you are using QuickBooks Online Plus/Advanced or Xero.
2. Enforce Time Tracking: Implement a mandatory process where every hour logged by your staff is tied to a client/project tag.
3. Review Monthly: Don't wait for the end of the year. Use the project profitability reports in these tools to review margins at the end of every month. If a project shows a negative margin, you need to see that now so you can adjust your scope or pricing for the next phase.

For an agency that needs profit by both client and project, FreshBooks is the closest match from the options I checked: its Profitability Summary can group results by client or project, and its detailed report breaks project results down by services and expenses. It factors in tracked staff time using team cost rates, as well as expenses. Note that these profitability features require a Premium or Select plan. ⁶¹¹

Xero Projects is another strong option if you want project-level job costing alongside your accounting. It tracks project revenue, time, and expenses, with dashboards and reports for project profit and margins. The sources I found describe this reporting primarily at the project level, so check whether its client-level rollups meet your needs before choosing it. ⁴⁸

Quick recommendation: shortlist FreshBooks if comparing client profitability is essential; shortlist Xero if project costing and estimates-versus-actuals are the priority. In either case, accurate margins depend on consistently assigning time and expenses to the right client and project, and setting staff cost rates. ³⁴