It provides a practical starting point for us gig economy US-based accounting professionals. The engagement letter signifies the beginning of an accounting relationship and can (and should) be referred to regularly to ensure standards and expectations are met. Kick start your client relationships with an effective engagement letter. You will need the client’s full legal name, address, and contact information. You will also need to have a predetermined set of services you will provide as a bookkeeper for your client, how much you will charge for your services and when the payments will be due. Each service you render should be included in the scope of work with as much detail as possible.
Provides liability protection
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 48 unexpected expenses that will bust your budgetand how to pay for them 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.
The bookkeeping engagement letter should include a timeline for the work included along with who is responsible for meeting each milestone. As the bookkeeper, the deadlines invoice format tips for beginners should be contingent on receiving access to the client’s information and accounting system. For the client, the timelines should include reasonable turnaround times for the finished project once the information has been provided.
- Promptly sending a solid letter of engagement will also let your client know that your accounting business is well run and organized.
- Bad billing practices can result in expensive losses and lessons, so it’s far better to take the appropriate caution from the beginning.
- 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.
- But the benefits you’ll receive make that work worthwhile, many times over.
- 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.
Additionally, mention when you expect to receive payment, how your rates will change if the client requests extra services, and what happens if your payment is late. With our e-signature features, you can easily send your engagement letter to your clients and get them signed electronically in a matter of minutes. This is because clients need access to a printer and scanner, which can be inconvenient or even unavailable when using wet signatures. Also, sending documents back and forth via mail or courier and maintaining secure storage for physical documents adds significant time and expense to the entire process.
Make sure to state in clear language what your duties are to the client, what you expect from them, the services you’ll provide, how you’ll charge them, and the start and end date for the engagement. If there are any limitations to the scope of your services such as investment recommendations, or forensic accounting, it’s good practice to clearly define these limitations in this section. Knowing this engagement period helps your client plan and budget accordingly for your services, while it helps you schedule your workload and distribute effectively among team members of your firm. The second most important element after stating the identification of parties is the engagement period. Specifying the engagement’s start and end points avoids ambiguity and ensures both parties understand the duration of their responsibilities. Access hundreds of free accounting and bookkeeping process workflow templates.
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However, time sensitive projects have greater potential liability due to their rushed nature. This puts greater significance on having the signed agreement ahead of time to outline your liability and responsibility for the project. 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. The primary purpose of a bookkeeping engagement letter is to clearly state the expectations of your agreement. If you don’t state your expectations clearly, you could run into confusion in the future.
Download this free bookkeeping engagement letter template — created to include all the key components listed above. I will prepare your state and federal income tax returns and perform accounting services only as needed to complete this task. My services will not include finding irregularities in your financial records. However, I will inform you of any error, illegal acts, or fraud that I discover. It also streamlines the process of offering and incorporating additional services, allowing firm owners to easily update and amend the template engagement letter to accommodate these changes. In the instance that you or your client wish to terminate the engagement, lay out the grounds under which termination can occur.
Billing practices
To use the template, follow the link and download the document as a Microsoft Word file. You can then edit the template as needed before sending it to your clients as a PDF document. 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. 2) When you appear professional and credible, you’ll leave a good first impression and establish a good working relationship with new clients from the get go. DocFormats.com does not provide any professional, medical or legal advice.
Professional standards
You want your client to have complete clarity and not be confused as to what their responsibilities are or what the grounds for termination are. Needless to say, it is important to maintain a high level of professionalism while writing this letter but don’t just stop there. The essence of this letter isn’t to impress your client with your accounting knowledge or verbose grammar.
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. 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. Despite that, modifying and sending an engagement letter template on a client-by-client basis can become difficult to manage as your business expands.