Smooth Sailing: Perfecting Bookkeeping Partnerships with Engagement Letters Medium

Remember, clarity and transparency are the building blocks of any fruitful professional engagement. Scope creep, or continuous and uncontrolled growth or changes in a service’s scope, at any point after the service inventory days formula begins. A client you may initially have signed on for just end-of-the-year tax return preparation could suddenly start demanding your time for financial planning or advisory services at the same rate.

One of the most important sections to cover in your accounting engagement letter is the period of engagement. This section should provide clear dates for both the start and end of the agreed-upon services. You can also provide an option to extend the period of engagement here, but make sure that you state it clearly as an option, not an automatic continuance. 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.

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? I’m an entrepreneurial CPA that founded Xen Accounting, a
100% cloud-based accounting firm, in 2013.

  • An engagement letter is a good safeguard to help you avoid confusion, anger, and ultimately, a lawsuit.
  • After signing, each of you will keep one fully-executed copy of the letter.
  • 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.

The Accountant/Bookkeeper shall have no rights to assign any of their rights under this Letter or delegate the performance of any of the obligations or duties hereunder, without the prior written consent of the Client. Any attempt by the Accountant/Bookkeeper to assign, transfer, or subcontract any rights, duties, or obligations arising hereunder shall be void and of no effect. The aforementioned selections shall be referred to as the “Services”. The Accountant/Bookkeeper shall conduct the Services within the specifications and guidelines set by the Client. 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.

A Clear & Simple Bookkeeping Engagement Letter – Template

There are also a number of fantastic resources available, showing nuances in their accounting and bookkeeping engagement letter template. Below, I’ve included a couple of sample engagement letters for several countries. A good bookkeeping engagement letter lets your client know exactly what services they can expect to receive from you, what you expect them to pay for it, and other terms and conditions. If your engagement letter plainly outlines this information, it helps remove potential confusion and forgetfulness, saving you time, stress, and potentially from an upset client.

  • 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.
  • If circumstances preclude us from issuing an unqualified opinion, we will discuss the reasons with you in advance.
  • An engagement letter should include a clause stating that the bookkeeper will not disclose any confidential information received during the course of the engagement, except where required by law or with the client’s permission.
  • Join the thousands of other bookkeepers our collection of 32 customizable accounting workflow templates and checklists here.

Accounting engagement letters should include terms which limit the firm’s liability as much as possible. Statements such as “we will rely on the information provided by the client” or “we will not audit or verify the information” are often included to show the scope of the project does not include auditing services. In addition, it’s wise to include resolution terms such as requiring use of mediation to resolve any future disputes with the client. Start by clearly stating that this is a bookkeeping engagement letter. Include the names and addresses of both parties, as well as the date of the agreement.

Can I use the same bookkeeping engagement letter for multiple clients?

That written agreement will set the expectation for your client, give you a resource to point them back to whenever anything is unclear, and provide a clear look into the type of client you want to attract in your business. But the benefits you’ll receive make that work worthwhile, many times over. 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.

What Your Bookkeeping Engagement Letter Should Include

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. This letter is to confirm our mutual understanding of the terms of our engagement to provide bookkeeping services for your firm. This part of the engagement letter is included to protect the client and assure them you want to maintain the confidentiality of their books and finances. Though this part does not directly benefit the bookkeeper, it’s important to state you intend to protect the client’s data. CocoSign represents a wide collection of legal templates covering all types of leases, contracts and agreements for personal and commercial use.

This Accountant/Bookkeeping Engagement Letter (“Letter”) confirms the services of _______________________ (“Accountant/Bookkeeper”) requested by _______________________ (“Client”) on this date of _______________________, 20____. Collective does not make any representation or warranty that the Bookkeeping TSA Services will be appropriate for your needs or suitable for your business. Collective does not guarantee and expressly disclaims any particular results. SINCE THE BOOKKEEPING TSA SERVICES ARE BASED ON THE INFORMATION YOU PROVIDE, Collective does not warrant that the BOOKKEEPING TSA SERVICES will be timely, accurate, current or complete. 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.

How is it different from other professional letters?

Skilled in managing audits and leading teams to deliver exceptional services. 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. You should also include an engagement letter section about the client’s responsibilities in the engagement letter.

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Explain what your company does and why you’re writing the letter while clearly stating what bookkeeping services you will provide. This helps organize your engagement letter in a more professional way. Doesn’t have to take up too much space, make sure to stay in only one paragraph for this section.

Have you ever come across a sample bookkeeping engagement letter template? We think these are amazing tools for anyone who is entering a new professional relationship. It’s an amazing feeling when a client and a contractor express the same vision and values!

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. In the event of any future disagreements, both parties agree to resolve the issues through mediation. Any cost for mediation services will be split equally between both parties. As an accountant, having an engagement letter helps you determine how much of your resources to allocate to the project and calculate the profitability of each engagement. You will want to provide two original copies of the engagement letter.