How to Start a Digital Marketing Agency

Choose a Business Structure

Most digital marketing agencies start as an LLC rather than a sole proprietorship, given that agency work often involves contracts, ad spend handled on a client's behalf, and the kind of liability exposure that comes with managing a client's public-facing marketing. An LLC separates your personal assets from a client dispute or business debt. Weigh the formation and ongoing cost against that protection for your specific situation.

Get an EIN and Set Up Business Banking

Apply for a free Employer Identification Number from the IRS once your structure is set. You'll need it to open a business bank account, which matters even more for an agency that may be handling client ad spend or retainer payments that need to stay clearly separated from personal funds.

Check Local Licensing

A digital marketing agency generally isn't a licensed profession, so no industry-specific license is typically required. Check your city or county for any general business license requirement, which applies to most businesses regardless of industry.

Understand CAN-SPAM Before You Send a Single Email

If your agency will run email marketing for clients, the FTC's CAN-SPAM Act sets requirements every commercial email must meet: accurate "From," "To," and routing information, a subject line that doesn't mislead, clear identification that the message is an ad, a valid physical postal address, and a working opt-out mechanism, with opt-out requests honored within 10 business days. Critically, the FTC states that hiring another company to handle email marketing doesn't let a business contract away its legal responsibility to comply, and both the business promoting the product and the company sending the message can be held liable. Build compliant templates and processes into your agency's standard workflow from day one rather than treating this as a client-by-client afterthought.

Build Endorsement Disclosure Into Campaigns You Manage

If your agency manages influencer partnerships, testimonials, or reviews for clients, the FTC's Endorsement Guides require a clear and conspicuous disclosure whenever there's a connection, like free products, payment, or a discount, that a reader wouldn't otherwise expect between the endorser and the brand. Build a disclosure checklist into your campaign process so it's handled consistently across every client, not left to each influencer or reviewer to decide on their own.

Put Clear Contracts in Place With Every Client

An agency contract should spell out scope of services, deliverables, reporting cadence, payment terms, who owns ad accounts and creative assets, and how either party can end the engagement. Because agencies often manage client ad spend directly, be explicit about who pays the ad platform, how spend is tracked, and what happens with unused budget.

Get Business Insurance

The SBA recommends general liability insurance for any business and professional liability insurance for service businesses, which protects against financial loss from errors or negligence claims, relevant for an agency managing a client's public campaigns and ad budgets.

Decide on Your Service Model

Agencies commonly structure around specific services, SEO, paid ads, social media, email, or around full-service retainers covering several of these at once. Starting narrower lets you build deep expertise and a track record faster than trying to offer every service from day one.

Compliance Responsibility Doesn't Transfer to the Client

Even with a contract saying the client is responsible for compliance, the FTC can still hold the agency liable for CAN-SPAM or endorsement violations in campaigns it actually runs. Put compliance process in your own hands rather than relying on a contract clause to shift legal risk.

Managing Client Ad Spend Adds Financial Complexity

If clients fund ad spend through your agency rather than paying platforms directly, keep that money clearly tracked and separated from your agency's own revenue, since mixing the two creates both accounting and trust problems.

Platforms Have Their Own Rules, Separate From the Law

Advertising and social platforms each have their own advertising policies and enforcement, independent of FTC rules. Meeting FTC requirements doesn't guarantee compliance with every platform's specific policies, so check both.

This Is Not Legal Advice

How CAN-SPAM and endorsement disclosure rules apply to a specific campaign depend on its details. Talk to an attorney familiar with advertising law if your agency runs large-scale email or influencer campaigns.

Keep Records of Compliance Decisions

Document how your agency handles disclosure and opt-out requests for each campaign. If a client or the FTC ever questions a specific campaign, having a clear record of your process is far better than reconstructing it after the fact.