Free Bookkeeping Engagement Letter Template

bookkeeping engagement letter

The letter is a commitment to professionalism and a formalization of the standards that you hold yourself to. It’s a promise to honor deadlines, conduct business professionally, and hold your client’s best interests at heart. Scope creep is a constant battle for every accountant but having a detailed written reference of what has been agreed to helps prevent it.

bookkeeping engagement letter

Set expectations for responsibilities

Kathryn loves all things business and productivity and has been able to combine her love for creating content into writing for accounting firms looking to improve their businesses. Fees & Billing ArrangementsOur fees for the services outlined above are [$X per month]. This agreement is between [Your Business Name] («Bookkeeper») and [Client’s Business Name] («Client»). Our services will begin on [Start Date] and are expected to continue until [End Date] or until terminated by either party as outlined below.

A Clear & Simple Bookkeeping Engagement Letter – Template

Without these, it isn’t a valid or effective accounting engagement letter. I’m an entrepreneurial CPA that founded Xen Accounting, a100% cloud-based accounting firm, in 2013. Following its acquisition in 2018,I started Future Firm to help accountants fast-track the growth of a modern, scalable accounting firm of their own. 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).

bookkeeping engagement letter

Practice Management for a more connected accounting firm

bookkeeping engagement letter

Almost anyone can use a bookkeeping or accounting engagement letter to hire a professional. Whether you’re an individual person looking for better financial management and services, or a full-fledged enterprise, you can use the letter. It is not an impolite gesture but an appreciative effort to streamline the entire course of services. The engagement letter also covers any scope of additional work an accountant or bookkeeper might have to conduct. As financials are private for an enterprise (hiring party), the engagement letter can also work as a non-disclosure or a contract to ensure privacy and safety.

bookkeeping engagement letter

Does your firm use an accounting engagement letter when signing on a new client? Each service you render should be included in the scope of work with as much detail as possible. For example, does your engagement include follow up calls to the IRS, audit support, or document storage? activity-based cost systems allocate costs by focusing on If not, you need to clearly state the engagement is limited to the preparation of a tax return and any additional support needed is outside the scope of the initial engagement. To combat this, many have turned to technology to expedite the electronic signing of documents.

Can I use ‘negative assurance’ engagement letters or multiyear engagement letters?

A proper engagement letter will outline when the client will be billed, payment terms, and even how much additional services will cost. The cost for additional services (since you won’t know what they are until you’re asked to do them) are often billed at normal hourly rates. If a client balks at the introduction of an engagement letter, rationally draw comparisons to the client’s business or life. Would a contractor client ever start a project without a signed proposal in hand?

The engagement letter can outline a timeline for long-term projects,serving as a blueprint to guide how the work will move forward. This outlines each party’s responsibilities and commitments, keeping you accountable to your client, and your client accountable to you. It outlines a clear path to address what to do if  parts of the agreement aren’t being upheld.

  1. This is a set of standard, firmwide terms and conditions that are updated periodically and attached as an addendum to every engagement letter issued by the firm.
  2. 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.
  3. Also, you can outline the process for dispute resolution whether negotiation, mediation, arbitration, or litigation, depending on the terms you and your client agree upon.

Billing has been mentioned a few times already because its importance is paramount. If you have not outlined the cost of the project, it hampers your ability to go after the client in the event they refuse to pay all or part of your bill. Taking the guesswork out of which responsibilities belong to your firm and which belong to the client lets you focus on the work. For example, if you are handling account receivables for a client, who is responsible for reaching out to delinquent accounts?

In what instances will you decline to offer your professional services? This could be fraud, omission, or the commission of criminal acts. Aside from that, many professional liability insurance policies for accountants require accountants to produce engagement letters with proper client identification. It’s a formal agreement that spells out what you will do, how much it’ll cost, and what your responsibilities as an accountant are to your client. It’s a win-win for both sides to have an accounting engagement letter to keep things clear and avoid any confusion that might lead to possible disputes. Every client relationship is unique and has the potential to change and develop as time progresses.

Compensation can be based on milestones, regular retainers, or hourly rates. The final structure of the compensation will be the result of a negotiation between the bookkeeper and the client. This article and our template can serve as a good starting point for bookkeeping firms and accountants, but they are not intended to constitute legal advice. Your engagement letter should clearly outline the services you will provide, in this case, bookkeeping, payroll, or any related service.

Certification requirements vary depending on the jurisdiction, and generally include work experience, training, and a bachelor’s degree. Although a license isn’t required to work as a professional bookkeeper, there are nationally-recognized certifications that may help improve employment opportunities. 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. You want your client to have complete clarity and not be confused as to what their responsibilities are or what the grounds for termination are.

Though a bookkeeper cannot avoid liability for negligent work, this language can help if the contract ends under less than ideal circumstances. The important thing is to define your billing practices in advance. Each service can be included as a separate line item or all the services can be lumped together under a single charge. Hourly rates for different professionals should be included, if relevant.

This refers to the start  date and other key dates throughout the engagement period. 1) A client’s first impression of your business can make or break a deal. This article provides information, rather than advice or opinion. It is accurate to the best of the author’s knowledge as of the article date.

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