every agency, every service business has its own way of breaking down finances. here is the rule of thumb i follow.
i take up every client and every project upfront. imagine a dashboard of all your clients — say four clients, two projects each. for each project you see how much you are being paid and how much you are spending on it. that spend is your cogs — the cost of the goods and services you are producing. that shows you your gross profit. out of that, remove all salaries. now that is the accurate amount you are left with as a business.
this helps you evaluate which projects weren't working for you, which clients weren't working for you, and which employees aren't working for you. the moment you start seeing which employee is costing you how much, it becomes a shit ton simpler to analyze which one to keep and which one to remove.
i built our own internal accounting tool to do exactly this, because no off-the-shelf tool showed me project-level truth. that single view has changed more decisions than any advice i have ever received.