How to Write an Accounting Engagement Letter + 5 Free Templates

bookkeeping engagement letter

This article should not be viewed as a substitute for recommendations of a retained professional. Such consultation is recommended in applying this material in any particular factual situations. Late payments will incur a fee of [$X] for each [number] days past the due date. On your invoice, be sure to let the client know what happens if the invoice is not paid on time. The bookkeeper also receives security that their work and efforts won’t go to waste, and they will be compensated according to what’s mentioned in the letter.

Fee structure and payment terms

Our FREE bookkeeping engagement letter template will help you craft a professional accounting engagement letter that impresses your clients instead of confusing them. Thank you for choosing [Your Business Name] to provide bookkeeping services. This engagement letter outlines the terms of our agreement and the services we will provide. It is essential to renew your engagement letters regularly, preferably annually. Renewing annually gives you a chance to review your prices and if the scope needs to change.

Date of agreement

This example engagement letter from the AICPA, although general, encompasses all the aspects discussed above. It provides a practical starting point for US-based accounting professionals. Different types of clients require different styles of engagement letters.

bookkeeping engagement letter

A Free Bookkeeping Engagement Letter Template

In the instance that you or your client wish to terminate the engagement, lay out the grounds under which termination can occur. Another important element to include is the fee structure and billing arrangement for the engagement period. This not only sets a predictable payment structure that allows you to track and bill for income but also helps you determine if you’re adequately compensated for the services you’re providing. For example, clients have a responsibility to provide prompt, accurate documents and financial information, which will allow you to meet your responsibilities.

Best Practices for Writing an Accounting Engagement Letter

You should also include an engagement letter section about the client’s responsibilities in the engagement letter. This could include providing you with all necessary paperwork and information or letting you know of any changes that occur within the company. By having this information spelled out up front, you and your client can avoid any misunderstandings later. 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.

  1. Needless to say, it is important to maintain a high level of professionalism while writing this letter but don’t just stop there.
  2. Kick start your client relationships with an effective engagement letter.
  3. Outline what information the client should provide and which tasks they are responsible for, including deadlines where applicable.
  4. In the event of termination, any outstanding fees for services rendered will be due immediately.

bookkeeping engagement letter

If you can’t perform the services you’re engaged for because your client hasn’t provided the information you need, you can refer back to your engagement letter. 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. This letter is to confirm our mutual understanding of the terms of our engagement to provide bookkeeping services for your firm.

bookkeeping engagement letter

The letter will need to specify how much the accountant will be paid and when. Compensation may be an hourly rate, flat fee, or a combination of the two. Payment may be scheduled on a particular date, upon the completion of the services, or on a recurring basis. Once in your dashboard, all you need to do is navigate to a specific client task, request a signature, upload the relevant engagement letter, and select the name of the person that’ll be signing. The essence of this letter isn’t to impress your client with your accounting knowledge or verbose grammar. It’s to help them understand in the simplest of terms what the terms of your relationship will look like.

The quarterly services will be completed by the last day of the month following the end of the quarter. Only certified public accountants (CPAs) can prepare financial statements for submission to Securities and Exchange Commission (SEC). Structure your letter to follow a cohesive outline that is common with such agreements. Needless to say, it is important to maintain a high level of professionalism while writing this letter but don’t just stop there.

The examples provide explanations as to which aspects to include for various service types. Bad billing practices can result in expensive losses and lessons, so it’s far better to take the appropriate caution from the beginning. In general, the letter can serve to preempt any issues for you when working with high-risk clients. Include a confirmation of these terms by asking for your client’s signature so they formally understand the agreement they’re entering into.

Here is a comprehensive list of the top free templates every accounting firm should have. It tells them exactly what they’re paying for, giving them the right to question your services if there are needs not being met. Not only does it protect the interests blank endorsement: definition & example of your firm and your clients, it also ensures clarity across every aspect of the engagement. You will want to provide two original copies of the engagement letter. You and your client will each sign both copies of the engagement letter.

With any client relationship, there’s a chance the situation might go sour. If the engagement doesn’t work out or one party’s expectations are not met, it’s possible you will need liability protection. Having an engagement letter in place outlining your obligations can help protect you in the event a client tries to sue you for nonperformance, assuming you fulfilled your responsibilities. For long-term engagements, you should update the engagement letter each year to ensure the terms are still correct and the included services cover the entire scope of the client’s requests.

First off, identifying both parties in the accounting engagement letter ensures everyone involved understands who they are working with and the nature of the professional relationship. Templates aren’t limited to engagement letters and onboarding, either. Almost every bookkeeping and accounting process can be expedited by using templates. The Karbon Template Library has hundreds of workflow templates, ready for you to add to your Karbon account with one click or download as Excel spreadsheets. An engagement letter should detail exactly what accounting, bookkeeping or other advisory professional services you will provide for a client.

Would an individual client ever agree to have their car fixed without first understanding and approving the work to be done? In today’s business climate, having a mutual understanding between the parties to a service is expected. A clear, explicit engagement letter is your first line of defense when it comes to avoiding legal trouble. An engagement letter is not a binding agreement like a contract, but it’s a written paper that states your terms and conditions and eliminates confusion.

You can automate the creation of detailed engagement letters through Ignition. Consolidating all related aspects into a single online proposal is possible, which allows for streamlined client communication and agreement. If you’re reading this far, you likely have an idea about what each component of the contents of engagement letters, as a legally binding document, usually have.

The most common accountant and bookkeeper licenses are listed below. No need for abbreviations, slang, or technical terms with varied meanings. For instance, there may be situations where confidentiality is overridden, such as legal requirements to report fraud or comply with court orders. Karbon is the one system that everyone opens every morning, and our go-to for all information about clients and work that needs to be done.

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