Marketing agency payroll: one team, half employees, half invoices

The freelancer bench: a classification risk that grows with tenure

A freelancer who serves several agencies, uses their own kit, and bills by deliverable is exactly what they appear to be — pay the invoice, issue a T4A with box 048 at year-end, and claim back the HST they charge as an input tax credit. The risk is drift. The motion designer who started on overflow work two years ago now has an agency email address, attends Monday standups, works your core hours, and takes work from no one else. On CRA's factors — control, tools, ability to subcontract, chance of profit and risk of loss — that person has become an employee, and a reassessment collects both shares of CPP and EI retroactively with penalties on top.

We audit the bench once a year by tenure and exclusivity, then either convert the embedded people to payroll or genuinely restructure the relationship — fewer set hours, deliverable-based billing, room for other clients. Renaming the contract fixes nothing; the working reality is what gets tested.

Commission and bonus plans payroll can actually run

New-business commissions, retainer-renewal bonuses, and account-growth incentives are all wages: CPP, EI, and income tax come off through payroll, and in Ontario vacation pay accrues on commissions just as it does on salary — a liability agencies routinely under-book. Use the bonus method of withholding so a large one-off payment is not taxed as if it repeated every month, and put draw-against-commission arrangements in writing so a departing account director's negative balance is not a surprise fight.

The design test we apply: finance must be able to compute every plan from numbers the books already produce — signed retainer value, collected revenue, account margin. A plan that needs a spreadsheet argument each quarter creates payroll errors and morale costs no incentive is worth.

Hiring in the US: an EOR or your own registration

The first US hire forces a structural choice. An employer of record such as Deel or Remote employs the person for you and runs state-compliant payroll from day one; registering yourself means a FEIN, state withholding and unemployment accounts, workers' compensation cover, and a US payroll platform — more setup, lower ongoing cost per head, full control.

Neither route makes the tax questions disappear: people on the ground in a state can create nexus and permanent-establishment issues for the agency itself, whoever signs the pay stub. We map that exposure — alongside zero-rated US client billings and W-9 collection from US freelancers — in our cross-border tax guide for agencies.

Stat-holiday math for a hybrid, multi-province team

Ontario's public-holiday formula is mercifully mechanical: regular wages earned in the four work weeks before the week of the holiday, divided by twenty. It self-adjusts for part-timers and commission earners, which suits agency comp — but it is an Ontario formula. Hire a designer in BC or an account manager in Alberta and their province sets both the holiday list and the calculation, so a distributed team celebrates different days with differently sized pay. Each remote employee's province of employment also drives their tax tables, so payroll settings have to follow the person, not head office.

This is where hybrid teams get stat pay wrong in both directions — shorting commission staff whose four-week lookback included a big payout, or paying head-office rules provincewide. We configure the province logic once in the payroll system and let the formula do its job.

Source: Ontario — Employment Standards Act guide, public holidays.