The services of accountants and bookkeepers are highly sought after all over the world. This means that you must have some knowledge of how to write a bookkeeping engagement letter if you are a practitioner.
By the end of this article, you will have an idea of what should be in an engagement letter for bookkeeping services, an accounting engagement letter, an engagement letter for accounting and tax services, a CPA engagement letter, a payroll engagement letter, and many more.
If you are someone that loves to practice or intends to develop a business in the area of engagement letters, this article will also equip you with basic knowledge of how to construct engagement letter samples and templates (to help your traffic, lead generation, and conversion efforts).
These include creating a sample bookkeeping engagement letter, a free bookkeeping engagement letter template, an engagement letter template for accountants, a sample engagement letter for accounting services, a tax agent engagement letter template, and an audit engagement letter sample, among others.
A bookkeeping engagement letter is a written document or letter that, among other components, captures the scope of services that a bookkeeper intends to provide to a new or old client. Though not exactly a contract, a bookkeeping engagement letter (and all other engagement letters) is often a legally binding document that both parties have to sign to formalize or legalize their agreement. Bookkeepers who have taken up professional liability insurance coverage are also expected to abide by the terms of a bookkeeping engagement letter.
Accounting and bookkeeping are words that are often used interchangeably so an accounting engagement letter is very similar to an engagement letter for bookkeeping services. An accounting engagement letter is a letter or simple accounting services agreement that provides essential information (including the nature and extent of service offering, etc.) about an accountant and his or her client. It is also signed by both parties and is legally binding.
Since tax matters are within the purview of bookkeeping and accounting, a tax preparation engagement letter should resemble the two letters described above. As such, it is not unusual to see an engagement letter for accounting and tax services. However, if the service to be provided is strictly about tax preparation, then the engagement letter should have a narrow focus on matters of taxation, unlike bookkeeping and accounting engagement letters, which may be broader.
Like other engagement letters, an engagement letter for tax preparation is legally binding and must be signed by both the CPA or tax company and the client.
Ideally, it is recommended that engagement letters be used for all engagements. It is possible to utilize a single format for several identical services and different formats for services that are not identical. For lengthy projects, be sure to review and update the engagement letter quarterly, bi-annually, or annually.
Engagement letters differ, but here are some contents that should be included in a bookkeeping engagement letter.
It is necessary to clearly identify the intended recipient of your engagement letter. For instance, is it a company or an individual? This should be taken care of in the section meant for the name and address of the client as well as in your introduction.
Example:
Name and address of the client
Bold Fabrik Inc
60 Airforce Avenue, Arlington Texas
Greetings,
This letter is meant to confirm the terms and conditions of the engagement between Bold Fabrik and Calculus Bookkeeping Company.
A clear specification of the scope of services to be provided to the client is one of the most important components of a bookkeeping engagement letter, an engagement letter for accounting and tax services, and the many other letters of engagement. It helps prevent the above-mentioned scope creep in addition to helping with planning and resource allocation.
Professional service providers often have specific timelines for each project to which they adhere strictly. It follows, therefore, that your letter of engagement must include a timeline for the commencement and completion of the project.
This is another very essential aspect of an engagement letter. Your client must be informed of the cost of your service and the structure of the payments. For instance:
All this information is necessary to ensure the client is financially prepared to undertake the project. They will also serve as evidence should the client default on any of the payment terms.
This section has to do with the roles you expect the client to play for the successful completion of the project. For instance, documents and other records you want them to provide, and individuals you want to interview, among others.
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.
This is yet another very important component of an engagement letter and the part that makes it legally binding. This is because it is in this section that both the accountant or bookkeeper and the client append their signatures, indicating their understanding and acceptance of the business and legal implications of the document’s content.
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