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. Especially where financials are concerned, you must execute an official confidentiality agreement. This outlines the intent of the bookkeeper to maintain the confidentiality of their books and finances. It also includes the responsibility of the client to secure and protect other avenues of access to all the accounts.

If a client balks at the introduction of an engagement letter, rationally draw comparisons to the client’s business or life. Would a contractor client ever start a project without a signed proposal in hand? Would an individual client ever agree to have their car fixed without first understanding and approving the work to be done? In today’s business climate, having a mutual understanding between the parties to a service is expected.

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 5 things you absolutely need to know as a business owner on yelp which these documents will be destroyed. If your tax return is selected for audit by the IRS or by the state tax authorities, I am available to represent you or to prepare materials in response to correspondence. However, these are additional expenses not included in my tax preparation fees and I will render additional invoices for the time and expense incurred.

The Accountant/Bookkeeper, shall in the course of performing the Services hereunder, may gain access to certain confidential or proprietary information of the Client. The obligations under this section shall survive the termination or expiration of this Letter. An engagement letter can be an effective and easy way to protect your firm.

An engagement letter can cover any type and scope of work depending on how you define and delineate obligations, performance criteria, timelines, warranties of performance, and the like. 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. 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. Before we get to sample engagement letter template sections and how to create your own, there’s the subject of actually sending your letter.

It’s possible you will end up having several agreements in effect for a single client. An accounting engagement letter should be signed and accepted by each party to signify acceptance of the contract and understanding of the services to be rendered and at what price. In addition, it should include language for billing practices of additional services that might be outside the scope of the initial project. An accountant / bookkeeping engagement letter outlines the scope of work that a professional will provide for a client and typically includes details about compensation and the project timeline.

It outlines all billing terms from the outset

For example, will you handle all bookkeeping tasks for the client or just specific ones? Will you provide monthly reports, or only at the end of the year? First and foremost, your bookkeeping engagement letter should provide the date of the agreement. Engagement letters should be used by any accountant performing client work to protect themselves and establish a good business relationship based on transparency. This document ensures everyone is on the same page with what is expected and protected from potential future disputes.

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 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. If you enter into a relationship (professional or otherwise) with mismatched expectations between you and the other party, it’s a recipe for disaster.

• I’m an entrepreneurial CPA that founded Xen Accounting, a 100% cloud-based accounting firm, in 2013.
• For long-term engagements, you should update the engagement letter each year to ensure the terms are still correct and the included services cover the entire scope of the client’s requests.
• IN WITNESS WHEREOF the parties have duly executed this Letter as of the date first written.
• The law imposes penalties when taxpayers underestimate their tax liability.

To avoid this type of scenario, it’s best to lay out clear expectations in your engagement letter. An engagement letter is a document defining the relationship between a professional firm, such as your accounting firm, and a client. Engagement letters are a powerful tool in fighting an accounting malpractice case, but despite this, many accountants don’t bother to distribute them. Should you send engagement letters as part of your professional accounting practice? A good engagement letter is important because it will help you create the perfect one for your needs. You need to have this template ready to review with anyone you work with before any official hiring.

Period of Engagement Template/Example

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For instance, if your client conducts business in multiple provinces, you must note this information on their federal return. If they have corporate activities in one of the provinces that requires a standalone corporate return, such as Alberta or Ontario, you must complete these returns separately. An engagement letter is a crucial piece of any new bookkeeping project. Define your boundaries and expectations early so you don’t risk big losses later on. This section of a sample bookkeeping engagement letter doesn’t usually need much tweaking.

If you are using a sample bookkeeping engagement letter template, do not forget to add in any missing sections. Most engagement letters are a two-edged sword, communicating your terms to clients while simultaneously giving your firm a way to quickly identify clients who aren’t the best for your business. Content Snare allows for a clear client dashboard that outlines precisely what documentation the client needs to provide and when. It also allows clients to ask questions right in the system and sends automatic reminders for documents outstanding in helping with your engagements.

Engagement letters are legally binding agreements, but keep in mind that this post is for information only. All information regarding engagement letters is for general informational purposes only. You should also include an engagement letter section about the client’s responsibilities in the engagement letter. This could include providing you with all necessary paperwork and information or letting you know of any changes that occur within the company. By having this information spelled out up front, you and your client can avoid any misunderstandings later.

The “pricing and services” section describes what’s included in the mandate and the definition of what’s included can be found in the Service Terms section. For reference the pricing and services described are the “scope” of [Insert firm name] mandate. Should a need arise that falls out of scope, [Insert firm name] will contact [Insert client name], assess the need, and quote an upfront price for ABC Inc. to either accept or decline.

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While seemingly convenient, the use of evergreen letters potentially removes an important statute-of-limitation defense, thus permitting a claim to be asserted several years after the services were rendered. Accounting is a global service, and each geographic area has its own regulations, specific structures, and other differences. There are also a number of fantastic resources available, showing nuances in their engagement letter templates. Does your firm use an accounting engagement letter when signing on a new client?

• You have a new bookkeeping client, and you’re ready to get to work.
• 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.
• We also encourage you to add what you believe is important, depending on the specific role.
• First and foremost, your bookkeeping engagement letter should provide the date of the agreement.

This will let your clients know exactly how much they will pay for your services. To add to the objective, it is crucial to be specific in this section of the letter, so there are no misunderstandings between you and your clients. This is where you outline what you will and will not do as part of the bookkeeping services you’re providing. This can help avoid any confusion or misunderstandings down the road. With any client relationship, there’s a chance the situation might go sour.

The Components of a Bookkeeping Engagement Letter

Such kinds of letters establish a good impression in front of your clients as they demonstrate your professionalism and the way you run the business. If you’re looking for simple workflow templates, which includes a bookkeeping client onboarding checklist, access our collection of 32 customizable accounting workflow templates and checklists here. This free resource includes a ton of the most popular accounting templates including monthly bookkeeping, weekly accounting analysis, client onboarding procedures, and common tax return forms.

Besides the scope of services, it also includes the fee structure and the duration of the service. Bookkeepers usually get them signed by the clients before they commence their work as an acknowledgment for the accounting services provided within a specified duration. For these engagements, consider unilateral engagement letters, also referred to as “negative assurance” engagement letters. As one CPA in the program notes, “They’re called clients, not friends, for a reason.” And another notes, “When people lose money, CPAs get sued.” Both sentiments have proved to be true based on CNA’s claims experience.

At the conclusion of our audit, we will request certain written representations from you about the financial statements and matters related thereto. 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.

Engagement letters should include a provision for how the contract can be ended by either party. 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. Occasionally there is additional software, platform subscriptions, or other expenses which may crop up in an engagement. The engagement letter should include wording for who is responsible for these additional expenses. Along with the scope and timeline, compensation should be clearly defined in the letter.