When you are hired as a bookkeeper by a new client, it is important to send an “engagement letter” to your client. This document serves as the guide for your relationship, as it outlines the expectations and responsibilities of both parties during the bookkeeping process. Included is a template letter to use as a guide when you offer your services to a new client.
What is an Engagement Letter and Why Do You Need One?
An engagement letter is a contract between you and your client. It lays out the bookkeeping services that will be provided, how much you will charge for your services, and the payment structure and due dates. This document protects both parties by setting clear expectations from the start of the relationship.
The Components of a Bookkeeping Engagement Letter
There are a few key components that should be included in your bookkeeping engagement letter.
Names of the Parties: You and your client should both sign and date the letter. Make sure to include your full legal company name and address, as well as your client’s name and address.
Term of the Agreement: The term of your Agreement indicates the length of your relationship. Typically, a term is agreed to be month-to-month or for a period of one to two years in length. You will also want to state whether bookkeeping services will be submitted to your client on a monthly, quarterly or yearly basis, or as requested by your client.
Services to Be Provided: Outline the scope of the bookkeeping services that will be performed. This might include monthly bookkeeping, preparing payroll, and providing financial statements, as well as preparing preliminary tax reports.
Compensation: Be specific about the amount agreed upon for payment of your bookkeeping services. This can be defined as an hourly rate, a monthly payment or on other terms as agreed.
Payment Schedule: Define payment due dates and any allowable special circumstances that may require a change of date for a one-time payment.
Signatures: To create a binding Agreement, both parties will need to sign the engagement letter.
How to Write Your Own Bookkeeping Engagement Letter
Now that you know what needs to be included in a bookkeeping engagement letter, you can write your own. Here is a step-by-step guide:
Gather the necessary information. 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.
Write the letter. 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. Then, outline the bookkeeping services to be provided, the payments to be made and the due dates for those payments. Include a section for signatures at the end of the letter.
Sign the 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.
Keep a copy of the letter. After signing, each of you will keep one fully-executed copy of the letter.
Template for a Bookkeeping Engagement Letter
This is a template for a bookkeeping engagement letter. Feel free to use it as is or modify it to fit your specific needs.
Bookkeeping Engagement Letter Template
This bookkeeping engagement letter (the “Letter”) sets forth the terms and conditions of the bookkeeping services to be provided by ______________________ (“Bookkeeper”) to ______________________ (“Client”).
- Bookkeeping Services. Bookkeeper will provide bookkeeping services to Client on a ____________________ basis (the “Term”). The bookkeeping services to be provided by Bookkeeper are set forth in Exhibit A attached hereto and incorporated herein by reference (the “Services”).
- Compensation. In exchange for the bookkeeping services to be provided by Bookkeeper, Client shall pay Bookkeeper _____________________ as follows: ____________________. All invoices are due and payable within _______________days of receipt.
- Term and Termination. The Term of this Letter shall begin on ____________________and continue until _______________________. Either party may terminate this Letter at any time with _____________________ written notice to the other party.
- Independent Contractor. It is expressly agreed that Bookkeeper is an independent contractor with respect to Client and not an employee of Client. As such, Bookkeeper shall be solely responsible for all bookkeeping services performed hereunder and for compliance with all applicable laws, including without limitation, all laws related to bookkeeping.
- Confidentiality. Bookkeeper acknowledges that in the course of performing bookkeeping services hereunder, it will have access to confidential Information (as defined following). “Confidential information” means any information or material that has or could have commercial value or other utility in the business in which Client is engaged. If Confidential information is in written form, the Confidential information shall be conspicuously marked or otherwise designated as “Confidential” or some similar warning. If confidential information is transmitted orally, the Disclosing Party (as defined below) shall promptly provide writing indicating that such oral communication constituted confidential information. Confidential information shall not include any information that is publicly known at the time of disclosure or subsequently becomes publicly known through no fault of the Receiving Party (as defined below), or is otherwise learned by the Receiving Party through legitimate means other than from the Disclosing Party or Disclosing Party’s representatives. During the Term and for a period of _______________ years after termination of this Letter, Bookkeeper shall hold and maintain the confidential information in strictest confidence for the sole and exclusive benefit of Client. Bookkeeper shall carefully restrict access to confidential information to employees, contractors and third parties as is reasonably required, and shall require those persons to sign nondisclosure restrictions at least as protective as those in this Section 5. Bookkeeper shall not, without the prior written approval of Client, use for Bookkeeper’s benefit, publish, copy, or otherwise disclose to others, or permit the use by others for their benefit or to the detriment of Client, any confidential information. Bookkeeper shall return to Client any and all records, notes and other written, printed or tangible materials in its possession pertaining to confidential information immediately if Client requests it in writing.
- Intellectual Property Rights. All bookkeeping services provided by Bookkeeper hereunder and all associated documentation contain proprietary information that is the exclusive property of Client. Nothing contained herein shall be deemed to grant Bookkeeper any right, title or interest in or to such bookkeeping services or documentation.
- Warranty. Bookkeeper warrants that bookkeeping services performed under this Letter will be performed in a professional and workmanlike manner consistent with bookkeeping industry standards and applicable laws and regulations.
- Non-Interference. Bookkeeper agrees that it will not interfere with or disrupt the business operations of Client in any way during the Term of this Letter.
- Term and Termination. This Letter shall commence on the date first set forth above and continue for a period of ______________________ (the “Term”). After the expiration of the Initial Term, this Letter shall automatically renew for successive one (1) year terms unless either party provides the other party with written notice of its intent not to renew at least ninety (90) days prior to the end of the then-current Term. Either party may terminate this Letter at any time, with or without cause, by providing the other party thirty (30) days’ advance written notice.
- Entire Agreement/Severability. This Letter constitutes the entire agreement between the parties with respect to the bookkeeping services provided by Bookkeeper and supersedes all prior agreements, representations, warranties and understandings. If any provision of this Letter is held by a court of competent jurisdiction to be invalid or unenforceable, then such provision shall be limited or eliminated to the minimum extent necessary so that this Letter shall otherwise remain in full force and effect and enforceable.
- Waiver. The failure to exercise any right provided in this Letter shall not be a waiver of prior or subsequent rights.
- Governing Law/Venue. This Letter shall be governed by the laws of the State of _____________________ without regard to its conflict of law provisions. Any dispute arising out of bookkeeping services provided by Bookkeeper under this Letter shall be brought exclusively in the courts of ________________________ located in _______________________, and the parties hereby irrevocably submit to personal jurisdiction in such court and waive any jurisdictional, venue or inconvenient forum objections to such court.
- Counterparts. This Letter may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
- Headings. The headings contained herein are for reference purposes only and shall not affect in any way the meaning or interpretation of this Letter.
Conclusion
A bookkeeping engagement letter is a formal agreement between a bookkeeper and a client. It outlines the expectations, services, and terms of the relationship. The bookkeeping engagement letter should be reviewed and signed by both parties before any work begins. This document serves as a binding contract and can be used in the event of any disputes.