With average profit margins of between 55% and 65%, custom framing can be lucrative, but tracking only gross revenue can give you a false sense of success. You might see strong daily sales totals while earning far less than expected if you’re not accounting for labor, waste, overhead, and project-specific costs.
Without solid frame shop accounting, these gaps make it harder to understand how much money your shop actually keeps. For accurate numbers, you need the right systems and tools to break down income and expenses by project, record actual material usage, and capture financial data.
Here’s how to avoid common pitfalls and bolster your shop’s financial management.
Understand Common Frame Shop Accounting Mistakes
Many frame store owners encounter profitability issues not due to weak sales, but because a few basic accounting mistakes distort their financial numbers. When these oversights become part of daily routines, it can make it harder to see how your business is performing.
Your frame shop may run into trouble if you:
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Confuse gross revenue with profit: Count all sales as earnings instead of subtracting labor, materials, and overhead to calculate actual profit.
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Fail to track all material costs: Miss how waste, shipping fees, and vendor price increases raise the cost of each job.
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Ignore seasonal cash flow patterns: Overlook slow periods that require saved cash to cover fixed expenses.
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Combine personal and business expenses: Mix personal and business purchases, and you open the door to denied tax deductions and bookkeeping errors.
Once you tighten up your accounting, it becomes clear which projects boost your bottom line, and which ones chip away at it.
Be Aware of Accounting Challenges for Frame Shops
Financial management for frame shops differs from that of typical retail businesses. You deal with timing issues related to customer deposits, equipment use, consignment artwork, and the delay between purchasing materials and delivering finished pieces.
Your shop needs to:
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Handle work-in-progress inventory: Hold customer deposits in a separate liability account so they don’t show up as income until the frame is complete.
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Record consignment items: Log customer-owned artwork separately to track what’s in the shop without inflating your inventory value.
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Calculate equipment depreciation: Spread the cost of tools, such as jointing machines and mat cutters, over their useful life, providing a realistic book value each year.
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Follow sales tax rules: Apply your state’s sales tax rules to frames, glass, and other materials, and list labor separately when required to keep charges aligned.
Managing these details keeps your books accurate and eliminates year-end surprises. For example, a $1,500 mat cutter with a five-year life would depreciate at $300 per year (initial cost ÷ useful life), helping you understand what it’s still worth and when it’s time to budget for a new one.
Cash vs. Accrual Accounting Considerations
Cash basis and accrual accounting recognize income differently: Cash records revenue when you’re paid, while accrual records it when the work is complete. That choice changes how your reports reflect deposits, vendor bills, and seasonal slowdowns.
Here’s what each frame shop accounting method lets you do:
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Handle customer deposits: Treat deposits as immediate income under the cash basis and hold them as liabilities under the accrual basis until the job is complete.
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Adjust vendor payments: Pay invoices immediately when you place the order, rather than using net-30 terms under accrual, which allows payments to be sent after the customer settles their balance.
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Reflect seasonal slowdowns: See immediate revenue fluctuations with cash basis, or show steadier results under accrual as income from holiday framing projects carries into later periods.
You can use either strategy, but accrual generally provides frame shops with a more realistic picture of how their business performs from month to month.
Track the Right Accounting Categories for Reliable Reporting
Frame shops need more than basic income and expense tracking. Breaking costs into the right categories helps you understand job profitability and long-term operating needs.
Start with these steps:
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Track COGS by project: Record the cost of goods sold — moulding, mat board, glazing, hardware, and labor — for each job so you can see which projects earn the strongest margins.
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Allocate overhead thoughtfully: Distribute fixed costs, such as rent, utilities, insurance, and software fees, across both busy and slow periods to avoid cash flow bottlenecks.
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Separate capital expenses from repairs: Classify major equipment purchases as assets and record maintenance or small fixes as regular expenses to distinguish long-term investments from everyday costs.
For example, a $420 shadow box job with $165 total COGS gives you a 60.7% margin — if waste and labor are fully captured. Tracking these numbers becomes much easier with software that automatically captures material usage.
Understand Crucial Tax Implications
Frame shops are eligible for several tax deductions related to equipment, workspace, travel, and training. Tracking these areas properly ensures accurate tax filings and reduces your overall financial burden.
Take advantage of these tax benefits:
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Deduct equipment purchases: Use Section 179 or bonus depreciation when eligible to write off the cost of major tools in the year you buy them.
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Apply the home office deduction (if applicable): Use a dedicated, work-only space to qualify for a percentage of rent, utilities, and internet costs.
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Document vehicle use: Track mileage for vendor trips, deliveries, and on-site consultations to support business-related deductions.
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Write off professional development: Deduct framing courses, industry events, and certification programs that support your shop’s operations.
Handle these tax categories correctly, and you stay compliant while capturing every deduction you’re entitled to.
Maintain Strong Record-Keeping To Support Clean Books
Thorough records protect your business, back up your tax filings, and identify which projects generate the most profit. Good documentation also prevents misunderstandings and improves customer interactions.
Take these steps:
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Document customer artwork: Create intake records that include photographs, condition notes, and signatures, ensuring you know exactly what you’re storing and how it arrived.
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Store vendor receipts: Save invoices for materials, shipping, and supplies in an organized system to support expense tracking and audit needs.
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Track project profitability: Use your point of sale (POS) system to review material usage, labor hours, and final margins for each job so you can identify high-value work and spot pricing issues early.
Consistent record-keeping strengthens every part of your frame shop accounting system.
Master Frame Shop Accounting With LifeSaver
Custom framing relies on skill and attention to detail, but maintaining a healthy business also depends on accounting processes that support consistent and sustainable growth.
LifeSaver gives you the tools to manage projects, control costs, and keep your numbers organized. This framing shop software solution:
- Automates expense categorization
- Tracks project profitability
- Calculates sales tax
- Manages customer deposits
- Schedules vendor payments
QuickBooks integration syncs daily activity with your bookkeeping software, eliminating manual entry and ensuring everything remains up to date.
Simplify your frame shop accounting. Explore plans and pricing today to discover how LifeSaver helps keep your finances organized and grow your bottom line.
