Why Most Marketing Agencies Struggle With Profit & How Accounting Fixes It?

In this episode of the Empowering Healthy Business, Cal Wilder is joined by Lindsay Jeros, Director of Cloud Accounting at SmartBooks, to break down accounting best practices specifically for marketing agencies.

Marketing agencies often grow fast—but without the right accounting structure, owners struggle with profitability, hiring decisions, pricing, and cash flow. This episode explains how to build a clean financial foundation that supports smarter decision-making.

In this episode, you’ll learn:

How to structure a chart of accounts for marketing agencies

Why revenue should be segmented by service line (SEO, PPC, media, etc.)

How to separate direct labor vs overhead for real profitability

Contribution margin vs gross profit (and why it matters)

How to use Labor Value Multiple (LVM) for hiring decisions

Gross vs net revenue when reselling third-party media

How to account for client ad spend correctly

When agencies need to move from cash to accrual accounting

How accruals smooth revenue and payroll distortions

Key financial metrics every agency should track

Project-level and client-level profitability analysis

Staffing decisions: W-2 vs contractors vs part-time

Budgeting vs forecasting (and why forecasts matter more)

Why a 12-week rolling cash forecast is so valuable

Proactive tax planning for pass-through agencies

Multi-state payroll and tax compliance considerations

#marketingagency #accounting #cashflow #profitability #BusinessFinance