---
title: "Project accounting"
description: "What project accounting is, how tagging revenue and costs with a project gives profit per project or contract, and practical tips for agencies and contractors."
canonical: https://ledgeriano.com/glossary/project-accounting
language: en
publisher: "Ledgeriano"
updated: 2026-11-06
---

# Project accounting

> What project accounting is, how tagging revenue and costs with a project gives profit per project or contract, and practical tips for agencies and contractors.

Project accounting tracks the revenue and costs of each project, contract or job separately in order to measure its profitability. Instead of opening separate accounts for every project, each entry line carries a project tag, so the income statement can be produced for one project, a group of projects or the whole business from the same books.

Agencies, consultancies, construction firms and software houses rely on it to answer simple but vital questions: which clients are profitable, which fixed-price jobs overran, and how much of the year's profit came from one contract.

Capture costs at the source: tag supplier bills, expense claims and timesheet-based salary allocations with the project when they are booked. Allocating later from memory is unreliable.

Project accounting complements [cost centers](https://ledgeriano.com/glossary/cost-center): a cost center answers "which department spent it", a project answers "what was it spent on". Ledgeriano records both on every line, along with the [party](https://ledgeriano.com/glossary/party).

## Example: profit of one website project

Revenue 24,000 against subcontractor, staff and software costs gives a project margin of 7,500 (31%).

| Line | Project: Client portal |
| --- | --- |
| Revenue | 24,000 |
| Subcontractors | (9,000) |
| Allocated staff costs | (6,500) |
| Software and hosting | (1,000) |
| **Project margin** | **7,500** |

### Do I need separate accounts for each project?

No. Use project tags on the lines. Separate accounts multiply the chart and make cross-project reports harder.

### How are staff costs assigned to projects?

Usually by timesheets: hours per project times an hourly cost rate, posted as an allocation at month end.