How to Write an Accounting Engagement Letter + 5 Free Templates

It outlines the expectations, services, and terms of the relationship. The bookkeeping engagement letter should be reviewed and signed by both parties before any work begins. This document serves as a binding contract and can be used in the event of any disputes. An accounting engagement letter should be signed and accepted by each party to signify acceptance of the contract and understanding of the services to be rendered and at what price. In addition, it should include language for billing practices of additional services that might be outside the scope of the initial project.

The engagement letter should define the pricing structure as clearly as possible. You can break down each of the services you’re providing along with their respective fees, or if you’re providing a service package, you can outline exactly what’s included. And an iron-clad accounting engagement letter is crucial in setting up each client relationship for success.

Fee structure and payment terms

Their hesitation may be due to a misunderstanding of the letter’s purpose. Include information on the client’s business structure, too – sole proprietorship, partnership, LLC, corporation, etc. This will help the bookkeeper determine the client’s tax implications and reporting requirements. The short answer is yes, you should have an engagement letter at the beginning of every engagement and have a signed agreement prior to commencing work. It could be the serial refinancers who need updated financial statements every couple of weeks as they chase down the best rate. Or the business client who comes across some unique investment idea requiring thorough tax projections and hours of research.

Billing practices

Remember, consulting with a lawyer is a good idea to ensure the legal aspects reporting contingent liabilities and gaap compliance of the letter are sound, particularly regarding limitations of liability. Review the letter together and see if there’s room for negotiation on specific areas they find unfavorable. Be willing to adjust the document within reason so you can reach an agreement. The letter can briefly mention the bookkeeper’s responsibility to follow generally accepted accounting principles (GAAP) or relevant industry standards. When you hire a bookkeeper, you will also want to clarify things like how you want them to communicate with you.

1. If negotiations don’t work, consider offering a simplified service agreement.
2. It drastically increases the chances you will be paid for your services.
3. All these steps contribute to a significant delay in onboarding new clients which not only slows down the start of the engagement but also creates a frustrating experience for clients.
4. The examples provide explanations as to which aspects to include for various service types.

To do this, you’ll need a Financial Cents account – If you don’t already have one, this is as good as any time to get one. Needless to say, it is important to maintain a high level of professionalism while writing this letter but don’t just stop there. Furthermore, include the security measures that you will undertake to protect client data. This could include password-protected files, encryption, restricted access, and secure data storage.

This will let your clients know exactly how much they will pay for your services. If you offer your bookkeeping services under your business name, use that. Engagement letters are important because they outline the expectations and responsibilities of both the bookkeeper and the client. They also help protect both parties in case of any disputes or misunderstandings, especially involving the scope of work to be completed. A clear, confident accounting engagement letter helps assure potential clients that you are capable and will do a good job. Promptly sending a solid letter of engagement will also let your client know that your accounting business is well run and organized.

Client responsibilities

List the services your firm will provide and how often you’ll provide them. Be as specific as possible such as how many bank and credit card accounts bookkeeper job in alexandria at apartments will be reconciled each month. If you perform one-time services, like a cleanup, specify what the completed job looks like. Your engagement letter should clearly outline the services you will provide, in this case, bookkeeping, payroll, or any related service. To combat this, many have turned to technology to expedite the electronic signing of documents.

It lays out the bookkeeping services that will be provided, how much you will charge for your services, and the payment structure and due dates. This document protects preparing a trial balance both parties by setting clear expectations from the start of the relationship. It outlines the terms and conditions of a professional relationship between a bookkeeper and a client. As such, it aims to set clear expectations for both parties around the scope and responsibilities of the role.

We are thrilled you have chosen our firm to provide quarterly compilation services for your business and an annual review. You may or may not need to include every member of your team who will be working on the engagement (although some government and quasi-government clients will want this information). This might seem obvious, but for the contract to be official, you can’t have the client sign a generic letter and expect it to hold up.