Agencies are weird businesses. Project revenue is lumpy. Retainers cross months. Ad-spend pass-through messes with the top line. The contractor bench is huge and multi-state. And the exit math is wildly different from a typical service business. We've built an agency-specific tax + books practice because the standard "service business" template loses agencies real money every year.
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Agency owners come to us in three flavors: solo founders who finally crossed the $200K threshold and realize they should have S-corp'd two years ago; multi-partner shops with messy books that don't reflect the real economics; and growing agencies hitting their first multi-state and contractor-management problems.
"We hit $1.2M in revenue last year. Our CPA filed our LLC as a sole prop. I'm pretty sure we should have been an S-corp for the last two years. Nobody mentioned it."
Digital agency · solo founder · $1.2M rev · Apr 2026
"Our books look like a disaster. Ad spend pass-through, contractor payments, retainers paid in advance, project deliverables crossing months. Our bookkeeper just dumps everything into 'service revenue.'"
Performance agency · 4 partners · $2.4M rev · Mar 2026
"I have 18 contractors. Half of them are in different states. None of them know what to give me at year-end. I'm dreading 1099 season."
Creative agency · 18 contractors · $1.6M rev · Feb 2026
Most agency engagements start with S-corp election (if applicable) + revenue recognition cleanup + contractor 1099 management. Multi-state nexus + exit-planning work layer in for agencies that need them.
Agency owners clearing $100K+ net almost always benefit from S-corp election. For a $400K-net founder, the typical S-corp savings is $12K–$22K/yr. We model reasonable comp against agency-industry benchmarks (founder-led delivery vs. operator-only), document the rationale, and file the election (often retroactive via late-election remedy).
Project-based agencies often book revenue when the invoice is sent — but the tax-correct method is usually at delivery / milestone. This matters for retainers paid in advance (deferred revenue) and for multi-month projects. We rebuild the books in Kick with proper revenue recognition so the P&L actually reflects the business, not the cash-flow calendar.
Performance agencies that pass-through ad spend often book it as revenue + expense, which inflates the top line and creates an audit-flag mess. We restructure as a reimbursable pass-through (excluded from revenue, tracked separately) so the agency's real revenue and margin show up clean.
Agencies live on 1099 contractors. Most agency books are a mess at 1099 time: missing W-9s, wrong addresses, contractors who hit $600 threshold but were never tracked. We set up Gusto contractor management at engagement — W-9s collected on first invoice, year-end 1099-NEC filings automated.
Agencies with clients in 5+ states often have sales-tax nexus they don't realize. Different states have different rules for services (some tax marketing services, some don't). We map your client list against state nexus thresholds and surface any state where you should be registered. Catching this before a state audit is a 10× cost difference.
If you're 18–36 months from a potential acquihire or asset sale, the structure decisions you make now drive the after-tax outcome at exit. QSBS Section 1202 exclusion, asset vs. stock sale structuring, allocation of purchase price between goodwill / personal goodwill / non-compete / fixed assets — we model these before the LOI lands, not after.
Anonymized. Numbers are year-one savings + operational risk eliminated from recent agency engagements.
Late S-corp election filed (retroactive to January), reasonable comp set at $135K, Solo 401(k) profit-share opened, accountable plan built. Year-one S-corp savings $17.8K, plus the entity structure makes a future acquihire much cleaner.
Ad spend pass-through restructured (top line dropped 40%, true revenue + margin emerged), partner draws documented properly, multi-state nexus analyzed (registered in 2 additional states proactively). Combined first-year tax + audit-risk reduction worth $32K.
Gusto contractor management deployed mid-year. W-9s captured retroactively for all 18, year-end 1099-NECs generated and filed automatically. Multi-state contractor compliance handled. First clean 1099 season the agency has had in 4 years.
Multi-state clients + contractor pool + entity restructure work + retainer scope put most agencies above Standard. Solo agencies under $500K revenue often start at Standard.
3-year scope · entity + S-corp analysis · revenue recognition cleanup · ad-spend pass-through restructure · contractor 1099 management setup · multi-state nexus analysis · partner-draw structuring · ranked next-step list.
Solo agencies under $500K rev: Standard ($2.5K). Agencies actively running a sale process or planning one in 24 months: Strategic ($10K) — exit planning + Tax Defense Plan included.
Yes. About half our agency clients are based outside Texas. We handle multi-state filings, state nexus analysis, and federal compliance regardless of where the agency is headquartered. Everything runs through Basecamp, so geography doesn't matter operationally.
Yes. Retainers, project fees, performance-based fees, productized services, ad-spend pass-through, white-label arrangements, affiliate commissions, partner profit-share. We've seen every agency revenue model that exists. The accounting treatment varies meaningfully across them — getting it right matters for both taxes and exit valuation.
Some agency activities qualify for the Section 41 R&D credit (proprietary measurement methodologies, custom analytics dashboards, internal tooling development). Most don't. We screen for it during the Tax Analysis and only pursue it where the dollar amount + audit-defensibility math actually wins. Most agencies that claim it shouldn't have.
Yes. Multi-partner agency Discovery calls usually run 30–45 minutes (longer than the standard 15) because we're aligning multiple owners. Tier-2+ retainers include partner-aligned advisory baked in.
Solo agency owners clearing $200K+ net: Standard ($2.5K). Multi-partner agencies or solo agencies with $1M+ revenue + multi-state clients: Comprehensive ($5K). Agencies actively running a sale process or considering one in 12-24 months: Strategic ($10K) — the Tax Defense Plan and exit-planning work is included.
Bring your revenue range, partner count, contractor pool size, and client-state spread. We'll quote the right tier and timeline before any work begins. If you have a sale process opening in 24 months, we'll route to Strategic.
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