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

Agencies run blended teams by design — a salaried core, a freelancer bench, and increasingly a designer or strategist in another province or another country. Payroll risk lives at the seams: the freelancer who quietly became staff, the commission plan nobody modelled for withholding, the US hire made without deciding who the legal employer is. We keep each seam stitched so growth does not turn into reassessments.

By the AnalytIQ Accounting team · Last reviewed: September 12, 2026

Marketing agency team collaborating around a table in a studio office

At a glance · marketing agencies

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GST/HSTMixedBuying media as agent keeps only the fee taxable; as principal, HST applies to the whole invoice.
Key formW-9 or W-8BENFreelancer paperwork sorts Canadian, US and other non-resident talent before the first invoice.
Cross-borderOne US hireA single US-based employee can create state payroll and tax filings no treaty protects against.
Watch forGrossed-up revenueBooking client media spend as agency revenue instead of a pass-through inflates the margin math.

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.

QuestionEOR (Deel, Remote)Register yourself
Speed to first paydayDaysWeeks — FEIN plus state accounts first
Legal employerThe EORYour company
Ongoing cost shapeMonthly fee per seatRegistration upkeep and payroll software
Makes sense whenOne or two hires, testing a marketA durable US team is the plan

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.

What we take off your plate

Payroll for marketing agencies, handled.

  • Freelancer bench T4A’d correctly as tenure and control grow
  • Commission and bonus plans run on the right withholding, not netted
  • Wagepoint or QuickBooks Payroll set up and run on schedule
  • CRA source deductions remitted by the 15th
  • T4s, T4As and ROEs filed without a February scramble
  • WSIB and Ontario EHT tracked alongside payroll

Mistakes we fix

Three things that go wrong for marketing agencies.

  1. Recording client ad spend as agency revenue instead of a pass-through, which inflates margin numbers
  2. Skipping Regulation 105 withholding when a non-resident freelancer does creative work while in Canada
  3. Hiring one US-based employee without checking what state payroll and tax filings it creates

Recognise one? Book a call and we will tell you what it is costing you.

Services for marketing agencies

Six services, one team that knows how marketing agencies run.

Start with one. Add the rest when it makes sense; the books, payroll and tax already talk to each other.

Free proposal

A fixed fee for your payroll, in writing.

  1. Tell us about your business. The form takes about a minute.
  2. A short discovery call. Fifteen minutes to confirm what you need.
  3. A fixed fee in writing. We reply within one business day. No hourly surprises.
  • Canadian and US filings under one roof
  • Cloud-first: QuickBooks Online, Dext, Wagepoint
  • Brampton, Ontario, with clients across Canada and the US

Related answers

Browse all 200 answers.

Common questions.

Our senior freelancer has worked only for us for two years. Is that a problem?

It is a live risk. Exclusivity, set hours, and your direction point to employment on CRA's factors, and reclassification collects both shares of CPP and EI retroactively. Convert them or genuinely restructure the relationship.

Do we owe vacation pay on commissions?

In Ontario, yes — vacation pay is calculated on wages, and commissions are wages. Accrue it as commissions are earned so the liability never surprises you.

Which stat holidays apply to our remote employee in another province?

Their own province's. The province of employment sets the holiday list, the eligibility rules, and the pay formula — not the province where the agency is headquartered.

Related reading

Payroll for a blended team.

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