Bookkeeping for marketing agencies

Marketing agencies in the UK operate in a competitive environment, where deadlines, client demands and creative projects require close attention. Keeping accurate financial records may feel like another task on an already busy schedule, yet sound bookkeeping underpins steady growth and clearer decision-making. We specialise in bookkeeping for marketing agencies, and we see how the right approach strengthens both profitability and client satisfaction.

Below, we explain the core practices in bookkeeping for marketing agencies. We focus on the 2025/26 tax year, highlighting the figures and rules that small and medium-sized businesses need to remember. These methods help you stay compliant, forecast cashflow and boost your agency’s financial health.

Know the 2025/26 tax basics

A strong financial foundation starts with knowing the latest tax thresholds. For the 2025/26 tax year, the following figures apply for many businesses in the UK.

• VAT-registration threshold: If you expect to exceed £90,000  in turnover in a 12-month period, you must register for VAT. HMRC’s official page provides more information on registration and your responsibilities.
• Corporation tax: If you operate as a limited company, the main rate is up to 25%, depending on profit levels. Companies below a certain threshold may qualify for a lower effective rate. Check government guidance for updates on company filings and deadlines.

Staying up to date with these figures allows you to avoid penalties and plan your agency’s finances more effectively. Our team keeps track of any adjustments to tax rates, and we share timely advice so you can focus on running your campaigns and creative projects.

Emphasise project-based budgeting

Marketing agencies often handle multiple projects at once, each with different scopes and timelines. Project-based budgeting helps you separate income and costs for each campaign. When you track direct expenses (such as design software subscriptions or paid advertising) and allocate staff time accurately, you gain a better view of a project’s profitability.

1. Create a dedicated job code for every project. This can appear on invoices, expense records and timesheets.
2. Record actual costs against each job code. If you notice that actual costs exceed the original forecast, you can act early, rather than discovering the issue at the end of the month.
3. Monitor direct vs indirect costs. Direct costs (advertising spend or client-specific software) should be split from indirect costs (general office expenses).

When you carry out project-based budgeting, you make pricing decisions with more certainty. Your account managers can see what is and isn’t covered in project fees and suggest adjustments when needed.

Manage client invoices promptly

Late or missed invoices reduce your agency’s cashflow. By sending accurate invoices on time, you improve the likelihood of timely payments. Here are a few tips we share with the marketing agencies we advise.

• Use automated invoicing software. Many cloud-based platforms create recurring invoices for retainers and reminders for overdue payments.
• Match payment dates to project milestones. For longer campaigns, you might split the invoice into staged bills that match key deliverables.
• Set up a robust credit-control process. Clear credit terms and a polite reminder schedule will keep your clients aware of their obligations without damaging your relationship.

Proactive invoicing supports strong cashflow, which gives your agency the resources to pay suppliers, invest in staff development and handle unexpected costs with less stress.

Track billable hours accurately

Marketing agencies often bill clients based on hours spent. Even if your billing structure is project-based, it’s still useful to track staff time. This approach shows whether you have enough resources for each client or if the workload has grown beyond what your current fees cover.

Tracking billable hours in a time management tool also helps you see:

• which services take more time than planned
• whether staff workloads are balanced or stretched
• how to allocate resources based on accurate data.

You can then revise your proposals or retainer agreements to reflect the true value of the services you offer.

Separate and categorise your expenses

Marketing agencies encounter a wide range of expenses, from software subscriptions to travel costs for client meetings. Detailed expense categorisation gives you a clearer view of where money goes each month. When you separate your outgoings properly, you can also claim the right tax deductions at year end and avoid confusion about allowable expenses.

1. Use consistent headings for each category, such as software, travel, advertising and training.
2. Capture receipts and documentation in a central system. Many digital tools let you scan or snap a photo of receipts, then link them to the correct category.
3. Review monthly to spot overspending. You might find that some online services no longer bring value.

Accurate expense categorisation helps you identify savings, which you can reinvest into new campaigns, software or staff training.

Maintain VAT compliance

Marketing agencies that exceed the VAT threshold must register for VAT and file returns on schedule. Since agencies often pay VAT on subcontractors or creative tools, you need to stay organised to reclaim any VAT you’re entitled to. Here’s how you can stay on top of things.

• Check the £90,000 threshold each month. If you suspect you’ll exceed it in a rolling 12-month period, start the registration process right away.
• Keep digital VAT records. With Making Tax Digital, all VAT-registered businesses need to maintain digital records and submit returns through compatible software.
• Review your VAT scheme. Depending on your turnover and business model, you might consider the flat rate scheme, but you should compare it against standard VAT accounting.

A structured VAT process reduces errors and penalties. We often work with marketing agencies on adjustments or queries from HMRC, and we know that proper record-keeping smooths out many potential problems.

Forecast your cashflow regularly

Growth can be exciting, but sudden increases in project costs or late client payments strain your agency’s cashflow. Regular cashflow forecasting helps you prepare for these moments. A typical approach includes:

• projecting income based on your pipeline of new deals and recurring client retainers
• identifying periods where expenses might spike, such as taking on a major client campaign
• setting aside reserves to cover tax liabilities, especially corporation tax and VAT.

By forecasting cashflow, you gain the confidence to plan staff hiring or invest in new software at the right time. You also reduce the risk of scrambling for funds when a payment is delayed.

How accurate bookkeeping for marketing agencies supports growth

Clear financial records do more than meet HMRC’s requirements. When you have a reliable snapshot of your agency’s income and expenses, you can do the following.

• Make data-led decisions. For example, if a service line underperforms, you can see whether to adjust prices or repackage your offering.
• Justify additional resources. A consistent record of profitable projects might show that you can bring in more staff or invest in better technology.
• Enhance client trust. Well-organised financial records let you offer transparent invoicing, which fosters stronger client relationships and boosts your reputation.

If you’re exploring ways to refine your agency’s financial processes, visit our bookkeeping page for more details on how we can help you build an efficient system.

We can help you stay on track

We specialise in supporting marketing agencies with modern bookkeeping solutions that save time and reduce stress. We’ll help you implement cloud-based accounting, clarify your VAT obligations and create the financial reports you need. Our work goes beyond compliance – we want your agency to feel confident about each project and each invoice. Get in touch with us to see how we can help you achieve sustainable growth.

Ready for support that saves you time and worries? We are here to streamline your finances with our bookkeeping for marketing agencies services, so you can focus on creating impact for your clients. Speak to us today.