Bookkeeping for agencies

Effective bookkeeping for agencies involves a specialized chart of accounts to track client billings, revenue, and costs, ensuring client-level profitability. Revenue recognition for retainers should differentiate between earned and unearned revenue, while project fees are recognized as work is delivered.

Standardized invoicing, diligent collections, and proper classification of workers as 1099 contractors or W-2 employees are crucial for compliance. Agencies must manage federal and state payroll tax obligations, including withholding, FICA, and unemployment taxes, with careful attention to multi-state employee rules.

Sales tax treatment for agency services varies by state, and understanding nexus and pass-through charges is vital. Adhering to record retention guidelines (typically 3-7 years) and utilizing integrated software like QuickBooks Online or Xero with project management tools is recommended.

Regular month-end closes, including bank reconciliations and AR/AP reviews, along with strong internal controls, help prevent common mistakes such as mixing funds, poor AR management, and misclassifying workers.

Effective bookkeeping for agencies involves a specialized chart of accounts to track client billings, revenue, and costs, ensuring client-level profitability. Revenue recognition for retainers should differentiate between earned and unearned revenue, while project fees are recognized as work is delivered.

Standardized invoicing, diligent collections, and proper classification of workers as 1099 contractors or W-2 employees are crucial for compliance. Agencies must manage federal and state payroll tax obligations, including withholding, FICA, and unemployment taxes, with careful attention to multi-state employee rules.

Sales tax treatment for agency services varies by state, and understanding nexus and pass-through charges is vital. Adhering to record retention guidelines (typically 3-7 years) and utilizing integrated software like QuickBooks Online or Xero with project management tools is recommended.

Regular month-end closes, including bank reconciliations and AR/AP reviews, along with strong internal controls, help prevent common mistakes such as mixing funds, poor AR management, and misclassifying workers.