What Is A Bookkeeping Engagement Letter? W Free Templates

bookkeeping engagement letter

Kathryn is a Chartered Professional Accountant with over 7 years of experience in both public practice and industry accounting. She has had the opportunity to work with a wide variety of individuals and companies, which gives her a unique perspective on what it takes to be successful in the industry. 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. Outline what information the client should provide and which tasks they are responsible for, including deadlines where applicable.

  • The bookkeeping engagement letter will clarify the responsibilities of each party in the engagement and is critical when things don’t go as planned.
  • Thank you for choosing our firm, [NAME OF FIRM/ACCOUNTANT] (“Accountant”) to assist you with your tax returns.
  • This document protects both parties by setting clear expectations from the start of the relationship.
  • By having this information spelled out up front, you and your client can avoid any misunderstandings later.

We’ve designed a bookkeeping engagement letter template below, which you can use as a starting point. You believe the client is ultimately responsible for handling matters directly with their bank. Though you can’t cover every possible situation in your engagement letter, outlining who is responsible for dealing with third-parties should be included. Other examples of responsibilities which should be defined include gathering statements, interacting with the client’s CPA, and handling financial matters. While each of these items is relatively small and doesn’t take a lot of additional time, you need to consider the long-term implications for how much additional time it will take you each month or year. By defining which services are included from the outset, you give yourself a contractual out for respectfully saying “no” to work outside the scope of your project.

Let your clients know if they will be billed by the hour or if you charge a fixed monthly fee, so they can plan for that. Will you send an invoice or automatically deduct the costs from a bank account? On your invoice, be sure to let the client know what happens if the invoice is not paid on time. List the services your firm will provide and how often you’ll provide them. Be specific as possible such as how many bank and credit card accounts will be reconciled each month.

Firm of the Future

Accordingly, our engagement should not be relied upon to disclose errors, fraud, or other illegal acts, though it may be necessary for you to clarify some of the information you submit. I will, of course, inform you of any material errors, fraud, or other illegal acts I discover. The law imposes penalties when taxpayers underestimate their tax liability. This is yet another very important component of an engagement letter and the part that makes it legally binding. We’ve created a sample accounting engagement letter template below, which you can use as a starting point. You should always consult a legal professional before finalizing your letter.

  • If you intend to publish or otherwise reproduce the financial statements and make reference to our firm, you agree to provide us with printers’ proofs or masters for our review and approval before printing.
  • 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.
  • Define your boundaries and expectations early so you don’t risk big losses later on.

The difference is that engagement letters are shorter and more simple. Most companies offering services like finance consulting, tax preparation, financial audits, legal advice, bookkeeping and accounting require engagement letters. A bookkeeping engagement letter, for example, is useful when a client and contractor are not willing to get involved in a heavily detailed contractual arrangement. This is commonly the case with short-term or outsourced per-project work. Engagement letters are important because they outline the expectations and responsibilities of both the bookkeeper and the client.

Engagement for QuickBooks Services (Letter Templates)*

Knowing your bookkeeping is in good hands is an important step in ensuring the success of your business.

No matter how you put together your discovery process, how well you limit their choices, and how clear your services are defined in the proposal—sometimes clients aren’t a fit. Here, we’re going to adequately define how an engagement letter works so that there’s no misunderstanding about the work to be performed. This blog post will discuss what an engagement letter is, why it’s essential, and the top things to include in your engagement letter. By doing so, you can be sure that both you and your client are on the same page. Bookkeeping Services Agreement – For a bookkeeper to provide general services related to organizing and submitting financial records.

bookkeeping engagement letter

Such types of letters depict the details of the contract between your firm and your clients. Business engagements are governed by both domestic and international professional standards. So, while crafting your engagement letter, be sure to formalize it with the inclusion of relevant standards that govern various aspects of business, e.g., privacy, confidentiality, best practices, etc. It is necessary to clearly identify the intended recipient of your engagement letter.

If you intend to publish or otherwise reproduce the financial statements and make reference to our firm, you agree to provide us with printers’ proofs or masters for our review and approval before printing. You also agree to provide us with a the best payroll integration for quickbooks copy of the final reproduced material for our approval before it is distributed. Our procedures will include obtaining an understanding of the company’s internal control structure and testing those controls to the extent we believe necessary.

Why Sending a Letter at The Beginning of Each Engagement is Important

We are also not responsible for delays caused by delays in receiving information from your firm. Let’s say you notice a check cleared the bank for the wrong amount. You’ve brought this to the attention of the client who says you are responsible for calling the bank to resolve the matter (assuming the bank will talk to you as an authorized representative). IN WITNESS WHEREOF the parties have duly executed this Letter as of the date first written. Unless the Accountant/Bookkeeper has not performed the Services in accordance with this Letter, the Client shall pay the Accountant/Bookkeeper, in-full, for any remaining balance owed following the termination of Services. Expert advice and resources for today’s accounting professionals.

They also help protect both parties in case of any disputes or misunderstandings, especially involving the scope of work to be completed. Many problems can be avoided if everyone is on the same page with an engagement letter from the start. Many professional liability insurance providers require engagement letters outlining service terms as they are the first line of defence in protecting yourself as a service provider. Sources of sample engagement letters and sample terms and conditions include a CPA’s professional liability carrier, the AICPA (particularly the Tax Section), paid providers, and alliance networks. Leverage samples to help create engagement letter templates that are best for your firm, services, clients, and risk tolerance. Remember to have an attorney familiar with the laws in your jurisdiction review your templates for enforceability.

A Free Bookkeeping Engagement Letter Template

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. We’ll begin with an example “Service Terms” section of the engagement letter, with a bit of explanation, followed by a few extra template examples. If you’re already using a proposal tool, see if it also has the ability to generate an engagement letter to send with the proposal. This will help avoid disagreements with your client but it will also help protect your margins. Billing has been mentioned a few times already because its importance is paramount.

It is also crucial for the client to know what happens when they do not fulfill their obligations promptly. If you are covering the cost of the software package, be sure to outline how much of the monthly fee is covering that. Outline what the engagement is and when it will begin and end, and expected delivery dates of the work performed. This can be simply stating the date range of the engagement, or you can include a detailed breakdown of deadlines for both you and your client to keep the project on track. The annual review will be completed within 6 weeks of receiving your financial information. The quarterly services will be completed by the last day of the month following the end of the quarter.

Our fee is $[AMOUNT] / hour for the aforementioned services performed by our Firm. I restrict access to your information and maintain physical, electronic and procedural safeguards to protect your information. This Agreement is fully and voluntarily entered into by the Parties.

Who handles the accuracy of any information provided to complete the accounting engagement? Is the scope limited to a compilation service or is the client looking for a full audit? Knowing who is responsible for providing and processing information gets everyone to be on the same page and creates a smoother workflow. This bookkeeping engagement letter (the “Letter”) sets forth the terms and conditions of the bookkeeping services to be provided by ______________________________ (“Bookkeeper”) to ______________________________ (“Client”).

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. You might decide to charge 50% upfront and 50% upon completion or break it down into monthly payments, but whatever your terms are, make sure they are apparent in the engagement letter.

Tips for Writing a Bookkeeping Engagement Letter for Your Business

First of all, remember that one sample engagement letter will have specific elements that not all other templates include. We also encourage you to add what you believe is important, depending on the specific role. Examples are for illustrative purposes only and not intended to establish any standards of care, serve as legal advice, or acknowledge any given factual situation is covered under any CNA insurance policy. The relevant insurance policy provides actual terms, coverages, amounts, conditions, and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice.

While CPA firms can help out with any of these requests, you also need to safeguard your time and get compensated for additional services. To protect yourself from time drains, minimize your professional liability, and maintain your firm’s profitability, you need to ensure you have an engagement agreement in place for each project. I will perform accounting services only as needed to prepare your tax returns. My work will not include procedures to find defalcations or other irregularities.

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