Agency accounting that gets gross-vs-net right and shows what you actually earn.

Agencies layer multiple complications onto generic service-business bookkeeping. The biggest single issue is the gross-vs-net revenue question for pass-through media spend, third-party production costs, and reimbursable expenses — agencies that buy $1M of media for a client typically present revenue net of the media ($150K fee), not gross ($1.15M), under ASC 606’s principal-vs-agent analysis. Most generic bookkeepers get this wrong, distorting revenue by an order of magnitude. Beyond gross-vs-net, agencies need retainer revenue recognized ratably over the service period, project profitability tracked by engagement and client with separation between billable hours and reimbursable costs, agency gross income (revenue net of pass-throughs) calculated as the primary size and growth metric, and freelancer and 1099 contractor management at agency scale. Multi-currency exposure for international clients and freelancers adds another layer. Generic bookkeeping handles maybe two of these; agency-specialist accounting handles all of them.

ASC 606 requires entities to determine whether they’re the principal (controlling the goods or services before transferring them to the customer) or the agent (arranging for another party to provide them). Principals report revenue gross (the full amount billed). Agents report revenue net (only the fee or commission earned). For agencies, the determining factors include: does the agency take inventory risk on media or production purchases (typically no), does the agency have discretion in pricing (typically limited), does the agency control the media or service before delivery (typically no, the inventory or service belongs to the supplier until placed). The conclusion for most agencies on pass-through media spend, third-party production costs, and reimbursable expenses: net presentation. The agency’s revenue is the fee or commission, not the gross spend. Getting this wrong overstates revenue by 5–10× for media-heavy agencies, breaks every margin and benchmark calculation, and creates real issues during fundraising or M&A due diligence. We perform the ASC 606 principal-vs-agent analysis at engagement onboarding and configure the books to match.

Yes. Monthly retainers are recognized ratably over the service period — cash collected this month for this month’s services becomes revenue this month. Annual retainers paid upfront (common for high-trust client relationships) create deferred revenue liabilities recognized monthly over the contract term, similar to SaaS subscription accounting. Project-based engagements within retainer structures require careful tracking of which work is covered by retainer fee versus additional billable hours. We configure retainer accounting in QuickBooks alongside the agency’s project management or time-tracking system (Harvest, Productive, Mavenlink, Float, Forecast), produce monthly retainer-vs-overage reporting, and ensure retainer revenue is recognized correctly under ASC 606 for any agency producing GAAP financials (required for fundraising, audit, or acquisition).

Pass-through costs (media spend, third-party production, reimbursable expenses) are tracked separately from agency revenue in the chart of accounts. When the agency pays the supplier and bills the client, both sides flow through pass-through accounts rather than revenue and COGS — the agency neither earns revenue on the pass-through nor incurs an expense from it (assuming net presentation under ASC 606). What the agency earns is the markup, agency fee, or commission, which is the only piece that hits revenue. This structure surfaces the real economics: agency gross income (revenue net of pass-throughs), gross margin on agency services, and the labor multiplier (revenue divided by direct labor cost). For agencies that operate as principals on some engagements and agents on others, the chart of accounts handles both correctly with clear separation.

Agency gross income (AGI) is revenue net of pass-through costs — the agency’s actual economic contribution. For a media-heavy agency, AGI might be 10–20% of gross billings; for a pure consulting or strategy agency with no pass-throughs, AGI equals revenue. AGI is the industry-standard size and growth metric used by industry research (Adweek, AdAge, RECMA, COMvergence), benchmarking services (Society of Digital Agencies, 4A’s, PRSA), M&A advisors, and investors. AGI per FTE (full-time equivalent employee) is the primary productivity metric — healthy agencies operate in the $150K–$300K AGI per FTE range depending on agency type and seniority mix. Reporting on gross billings inflates apparent size and makes the agency look less productive than it actually is; reporting on AGI shows the real economic engine. We configure the books so AGI is the headline number monthly, alongside gross billings as a secondary metric.

Agencies routinely manage $500K to $5M+ annually in freelancer and contractor spend across designers, copywriters, developers, photographers, videographers, voiceover talent, and specialty consultants. Done right: every freelancer onboarded with a current W-9 (or W-8 for international contractors), project-coded so freelancer spend allocates to client and engagement P&L, paid through Bill.com, Ramp, or direct payment with proper reconciliation, and 1099-NEC issued at year-end to every U.S. contractor paid $600 or more. Done wrong (and we see this constantly): freelancer payments scattered across credit cards, personal payment apps, and direct deposits without project coding, missing W-9s, and a January scramble to issue 1099s. We configure the freelancer payment workflow, maintain the W-9 library, allocate spend to projects, and coordinate with payroll provider for 1099-NEC generation at year-end.

Yes. International clients paying in EUR, GBP, CAD, AUD, or other currencies create multi-currency receivables; international freelancers paid in local currency create multi-currency payables. We configure QuickBooks for multi-currency (available in QuickBooks Online Essentials and above, and QuickBooks Desktop), set up the relevant foreign currency accounts, post invoices and bills in the original transaction currency, and recognize FX gain/loss as exchange rates move between transaction date and settlement date. For agencies with significant international exposure, we recommend pairing QuickBooks with Wise (formerly TransferWise), Payoneer, or Mercury for actual international payments — these handle FX conversion with much better rates than traditional bank wires and integrate cleanly with QuickBooks. Coordination with your CPA on any international tax treatment (transfer pricing for sister entities, foreign tax credits, sales tax in jurisdictions like UK VAT) remains your CPA’s scope.