What is agencies & consultancies?
Retainers vs projects, media pass-through kept out of revenue, and the contractor network’s compliance data captured as you go.
A marketing, creative, or dev agency sells the same thing a law firm or consultancy sells — time and judgment — but layers on a complication those firms don’t have: media spend that passes through the agency’s bank account without ever being the agency’s revenue. A paid-media retainer might invoice a client $50,000 a month, of which $38,000 is Meta and Google spend the agency is fronting or reconciling on the client’s behalf. Booking that $38,000 as revenue overstates the agency’s top line by a factor that makes every other ratio — gross margin, revenue per employee, valuation multiple — meaningless, and it’s the single most common bookkeeping error in the category.
Billing runs on two incompatible models at once inside most agencies. Retainer clients pay a flat monthly fee regardless of hours burned that month — the risk sits with the agency if a client over-consumes. Project clients pay milestone-based fixed fees, with work-in-progress accumulating as an asset until the milestone is invoiced. A shop running both models needs its books to distinguish retainer revenue (recognized ratably over the service period) from project revenue (recognized against delivery), because collapsing them into one undifferentiated services-revenue line hides which type of work is actually profitable.
Who does what
| Your CapEasy team | Agencies & consultancies, the reconciliations and reporting behind it, and the questions list that keeps it honest. |
| Your CPA or enrolled agent | Everything that carries a licence in United States — rendered exactly as written: issue compilation, review or audit reports — those are restricted to licensed cpa firms. |
| You | One conversation with one named person, and the decisions that are genuinely yours. |
Agencies & consultancies in United States
Media pass-through spend is not agency revenue — ASC 606 agent-vs-principal
Whether an agency records media spend gross (as its own revenue, with the media cost as a corresponding expense) or net (only the agency’s fee/commission as revenue) is governed by ASC 606's agent-versus-principal guidance: does the agency control the ad inventory before it’s transferred to the client, or is it merely arranging the purchase on the client’s behalf? Most agency media-buying arrangements land on net/agent treatment, meaning only the markup or service fee is revenue and the pass-through spend is neither revenue nor cost of goods sold. Determining which treatment applies to a specific client contract is the CPA’s judgment call; we book media spend as a pass-through liability by default and flag any contract that reads like the agency is taking principal risk on the media, so the CPA can make the call with the actual contract language in front of them.
Retainer revenue recognition — over time vs on delivery, ASC 606
A flat monthly retainer for ongoing services (a set number of deliverables, or best-efforts availability) generally recognizes ratably over the retainer period as the performance obligation is satisfied over time. A fixed-fee project with a discrete deliverable more often recognizes at a point in time or on a percentage-of-completion basis, depending on how the engagement letter frames the performance obligation. Which method applies to which client contract is the CPA’s determination under ASC 606's five-step model — we tag every retainer and project engagement by type so the recognition schedule is built off clean, pre-classified data rather than reconstructed from invoices after the fact.
Contractor payments and Form 1099-NEC
Any US-based independent contractor or freelance specialist paid $600 or more in a calendar year for services must receive a Form 1099-NEC by January 31, with a copy filed with the IRS. This applies to designers, developers, copywriters, and specialist sub-agencies paid as 1099 contractors, not to payments made to a corporation (with limited exceptions) or to a contractor paid entirely through a third-party payment network that itself issues a 1099-K. We collect a completed Form W-9 before the first payment goes out to any new contractor, and we code every contractor payment against the vendor’s W-9-confirmed classification, so January 31 is a filing date, not a chase.
FX gain/loss on multi-currency client billing
When an agency invoices a client in a foreign currency and collects at a different exchange rate than the invoice date, the difference is a realized foreign-exchange gain or loss — a distinct line from operating revenue, not something that should be netted invisibly into the deposit amount. Whether that gain/loss is treated as ordinary income for tax purposes, and how it interacts with the entity’s overall tax position, is the CPA’s call. We book each multi-currency invoice at the invoice-date rate and record the settlement variance as a separate FX line, so the CPA has a clean, isolated figure rather than a bank-feed discrepancy to untangle.
What your CPA or enrolled agent receives from us
- Revenue booked net of pass-through media spend by default, with any contract that reads as principal-risk flagged separately for the CPA to classify
- Retainer and project revenue tracked as distinct classes, each tagged to its own recognition treatment (ratable vs milestone/percentage-of-completion)
- A monthly retainer-utilization report: hours or deliverables actually consumed against the flat fee, by client, so scope creep on a retainer surfaces before it becomes a write-off decision
- Completed Form W-9 on file before the first payment to any new contractor, with every contractor payment coded against that W-9-confirmed classification
- 1099-NEC-ready contractor payment ledger, reconciled and staged well ahead of the January 31 filing deadline
- Multi-currency invoices booked at the invoice-date rate, with settlement FX gain/loss recorded as its own isolated line, not netted into revenue or the bank feed
