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An accounting engagement letter template like ours will help you make sure that you have all the bases covered so you can avoid unpleasant situations in the future. 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.

This helps set expectations for both you and your clients – after all, nobody wants their work dragging on forever! If there are any delays with the project, send your clients an update to know what’s going on. You can also add what will happen if the client requests extra services outside the scope of the current engagement.

Identification of the parties

But this is exactly the kind of big step forward that moves you toward a scalable accounting firm. It will also help you build a good relationship with your client and avoid unpleasantness by eliminating confusion and clearly stating expectations. Yes, it is advisable that you send an engagement letter to every client you will be working with.

  • Each service you render should be included in the scope of work with as much detail as possible.
  • But the benefits you’ll receive make that work worthwhile, many times over.
  • As a fully-featured document editor, it provides the flexibility to design and customize your accounting and bookkeeping services engagement letters according to preferences before client distribution.
  • This blog post will discuss what an engagement letter is, why it’s essential, and the top things to include in your engagement letter.
  • Clearly define the compensation agreed upon and what work that covers.

For the bookkeeper, it provides a documented understanding of the scope of the work, serving as a bulwark against any potential misunderstanding or conflict. 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. An engagement letter is a good safeguard to help you avoid confusion, anger, and ultimately, a lawsuit.

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. We are thrilled you have chosen our firm to provide quarterly compilation services for your business and an annual review.

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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? 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.

Sign an Engagement Letter

On your invoice, be sure to let the client know what happens if the invoice is not paid on time. You’ll have your Profit and Loss Statement, Balance Sheet, and Cash Flow Statement ready for analysis each month so you and your business partners can make better business decisions. Accounting is a global service, and each geographic area has its own regulations, specific structures, and other differences.

Sample Engagement Letters (

This may include clauses such as requiring 30 days notice from either party to terminate the agreement or a statement clarifying the contract can be terminated by either party without notice. This one might seem obvious, but if you’re starting with a template, make sure you update the template to include both parties’ names and addresses. This is especially important if the engagement goes what is schedule c on form 1040 awry and you need to prove you had a valid contract in court. Once the bookkeeper has commenced work, it’s often too late to try to define the scope of the project. By establishing boundaries prior to the engagement, each party knows the full scope of the relationship and potential cost. In addition, each party has been given the opportunity to walk away while knowing the full picture.

I will depend on you to provide the information I need to prepare complete and accurate returns. I may ask you to clarify some items but will not audit or otherwise verify the data you submit. I may or may not provide a checklist to help you collect the data required for your return, and will help you avoid overlooking important information. This letter is to confirm our mutual understanding of the terms of our engagement to provide bookkeeping services for your firm. Though a bookkeeper cannot avoid liability for negligent work, this language can help if the contract ends under less than ideal circumstances. However, in the event a client sues you for non-performance, having an engagement letter can help you make your case.

Is a bookkeeping engagement letter legally binding?

In addition to ensuring a structured business relationship, these documents play a crucial role in the applicable civil justice system. Once you and your client have had a verbal agreement to work together, the next step is for you to send them an engagement letter to make things official. You must exhibit these qualities in all your interactions with your clients, whether it’s an in-person meeting, a phone call, or an engagement letter. 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.

The engagement letter should include the terms for canceling the contract and provide ways for either party to end the engagement. Including standard terms such as requiring 30 days notice to end the contract allow both parties to know they won’t be abandoned in the middle of a project. At Financial Cents, we understand the importance of a first impression, and we’re here to help.

Include both parties’ names and addresses so that it can serve as an official employment agreement in lieu of an employment contract in case of any dispute. 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. The short answer is yes, you should have an engagement letter at the beginning of every engagement and have a signed agreement prior to commencing work. It could be the serial refinancers who need updated financial statements every couple of weeks as they chase down the best rate.

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