The engagement letter should include wording for who is responsible for these additional expenses. It leaves a bad taste in everyone’s mouth, whether you’re the client who feels like they’re being overcharged or the bookkeeper who feels like they’re being cheated out of well-earned compensation. It’s the cornerstone of a professional and successful bookkeeping relationship, ensuring all parties are well-informed and legally safeguarded. It lays down, in black and white, the scope of the services to be offered, responsibilities of each party, and the financial arrangements. By the end of this guide, you’ll not only understand its importance but also have the tools to craft an engagement letter that stands as a testament to professionalism, transparency, and shared goals.

  • This is because you must have the terms and conditions all laid out explicitly before a legal relationship forms and work begins.
  • The financial statements are the responsibility of the Company management.
  • Clients are required to arrange for reasonable access by us to appropriate individuals and documents, and shall be responsible for both the completeness and accuracy of the information supplied to us.
  • This section ensures that there’s no ambiguity regarding who is bound by the terms of the agreement.

The bookkeeping engagement letter will clarify the responsibilities of each party in the engagement, ensure expectations are set, and make sure you’re protected if things don’t go to plan. I will return your original records to you at the end of this engagement. You should securely store these records, along with all supporting documents, canceled checks, etc., as these items may later be needed to prove accuracy and completeness of a return. I will electronically retain copies of your records and our work papers for your engagement for seven years, after which these documents will be destroyed.

Define your boundaries and expectations early so you don’t risk big losses later on. Any time your agreement changes, you should create and sign an updated engagement letter. We also suggest that you reaffirm your agreement yearly even if the scope of work has not changed. An engagement letter gives both parties a legally binding document without needing to consult a lawyer. However, it must be signed by authorized representatives of both parties first. This section of a sample bookkeeping engagement letter doesn’t usually need much tweaking.

Do I need a lawyer to formalize my bookkeeping engagement letter?

In case of any discrepancies, the clear wording of the letter will set things to rights again. Content Snare allows for a clear client dashboard that outlines precisely what documentation the client needs to provide and when. 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. If additional services are required, this gives you a chance to allocate the proper amount of time and adjust your fees accordingly. The bookkeeping engagement letter should include a timeline for the work included along with who is responsible for meeting each milestone.

  • Many professional liability insurance providers require engagement letters, including the Tax Practitioners Board.
  • This is the deadlines by when each part of the bookkeeping work must be completed.
  • In conclusion, letters of engagement for bookkeepers serve as an essential tool for setting the right expectations and forging a successful working relationship with clients.

It’s a simple clause that limits the amount of money or damages that one party can sue for in case of breach of contract or non-performance. This will outline how either party can end the working relationship, whether due to dissatisfaction with services provided or if one side decides they no longer need assistance. Having this in writing protects both you and your client from any unexpected surprises down the line. By having this in place, you protect yourself from any legal troubles in the future. 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.

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. For these engagements, consider unilateral engagement letters, also referred to as “negative assurance” engagement letters.

Can a bookkeeping engagement letter be used for both ongoing and one-time bookkeeping services?

Firms evolve, as do the services that a bookkeeper might provide to a client. An annual review can ensure that the scope of services, fee structure, and other details still accurately reflect the reality of the engagement. A pension accounting is designed to protect both the client and the firm.

Avoid the Most Common Ecommerce Bookkeeping Mistakes

This letter is to confirm our mutual understanding of the terms of our engagement to provide accounting and review services for your firm. Both parties need to be on the same page as far as the scope of the project and which services are included in the pricing. Clearly outlining these items at the beginning means the discussions about the project and price have happened before you have invested any of your team’s time in the engagement. First of all, remember that one sample engagement letter will have specific elements that not all other templates include.

How to Write Letters of Engagement for Bookkeepers

Once again, our personal favorite is Ignition because it’s easy to use, has engagement letter templates ready to use, and automates the process. If your firm does not have engagement letters for existing client work, the most efficient way to implement would be to prioritize high-risk clients as well as each new client. It is not only the accountant that has responsibilities but the client is also responsible for providing certain information and completing certain tasks.

What is an Engagement Letter?

Be absolutely clear in your bookkeeping engagement letter who owns all the records and documents that the bookkeeper is working on, creating, etc. That person should be the owner of the company, the Chief Executive Officer, or the Chief Financial Officer. Clearly define the compensation agreed upon and what work that covers. Whether you are working with milestone payments, a retainer, or paying hourly, make sure you flesh it out with the bookkeeper.

Set expectations for responsibilities

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. We take monthly bookkeeping off your plate and deliver you your financial statements by the 15th or 20th of each month. As soon as you strike an initial agreement or express interest in moving forward with a project, you should compose an engagement letter. This sets the expectation that you must work on the details before formalizing anything and starting work. Define a provision in the letter for how the agreement can be terminated without repercussions.