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Accounting Engagement Letter Template
An Accounting Engagement Letter is a statement prepared by the accounting firm or a private accountant and sent to the client to showcase the services they are able to provide and set expectations for the upcoming working relationship with the client whether the latter needs to file tax documentation or commissions audit services.
Alternate Name:
- Accounting Services Engagement Letter.
Once the customer finds the accountant that suits the current needs of their business, they can decide which services are required for the company and determine their price using a letter of engagement. If this document lists all the essential terms of the business relationship between the organization and the accounting firm and is signed by both parties, it works as a legally binding contract recognized by all third parties, including courts and other authorities. An Accounting Engagement Letter template can be downloaded below.
How to Write an Accounting Engagement Letter?
Here is how you can draft an Engagement Letter for Accounting Services:
- Identify the parties by their names and legal addresses. If one of the counterparts is an accounting firm, you can state the name of the accountant responsible for the business relationship straight away.
- Describe the accounting services to be provided. Whether you need to keep your company on track following different payments and loans, monitor the financial development of your business, or manage expenses better to improve the financial standing of the entity, you need to outline the scope of work you are prepared to perform for the client - traditional bookkeeping, tax filing, auditing, looking for discrepancies in financial records, etc. In case the customer asks you to provide services you did not mention in the letter, you will be able to refer them to this document and avoid confusion and disputes.
- Record the duration of the engagement - you can make it definite or indefinite, depending on the project in question. It is a good idea to agree upon a short-term contract and then extend it, probably on new terms the parties come up with weeks or months later.
- Negotiate and write down the hourly rate of accounting services. Alternatively, you can enter the sum of money you will charge for the project at hand if you had a chance to get a closer look at it or request the customer to pay you a retainer - a fixed amount of money that will cover the first weeks of work. Include a payment schedule and establish late fees and penalties for both parties in case either breaches the conditions listed in the letter.
- Sign the letter once both parties have had a chance to scan through the document and approve it. This will minimize the risks for both the client and the accountant. If you believe the services in question require additional protection, you can obtain a notary seal for the letter; however, this is optional and the document will be considered enforceable even if the parties do not go to the notary public.
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