Bookkeeping Engagement Letter Template

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Table of contents

An engagement letter is a contract between a client and the service provider. It defines and clarifies the scope of the services, payment regulations, duration, and other important terms & conditions for both parties. A bookkeeping engagement letter, or an accounting engagement letter, also works the same way. 

Contract-based services require a proper structure for all the parties to have complete knowledge about the given project. If there aren’t defined services, goals, payment methods, etc., there can be conflicts and miscommunication. When the participating parties don’t see eye-to-eye, things can become problematic. An accounting engagement letter mitigates these issues. 

Given below is a complete guide on a bookkeeping engagement letter template, understanding its importance, and tips on drafting one: 

Ii. What Is A Bookkeeping Engagement Letter?

Before beginning a professional relationship with anyone, it is pivotal to draft a bookkeeping engagement letter that all the parties agree upon. It defines the roles of the participants. Once both parties agree on the engagement letter, it streamlines a lot of things.

A. Definition Of A Bookkeeping Engagement Letter

A bookkeeping engagement letter is like a contract or agreement between a bookkeeper and the hiring party. The letter will contain the scope of work expected of them. It will define their role and the skills required of them.

It covers the timeline in which the project is expected to be completed. There can be milestones (goals) for them to achieve in a fixed timeframe. There will be clearly defined costs for the services offered by the bookkeeper. It could also cover the payment method. There will be accurate information on how the payment will proceed, who will proceed with it and through which medium. 

The engagement letter also covers any scope of additional work an accountant or bookkeeper might have to conduct. As financials are private for an enterprise (hiring party), the engagement letter can also work as a non-disclosure or a contract to ensure privacy and safety. It ensures that the bookkeepers are bound to their duty.

Overall, a bookkeeping engagement letter establishes communication and eliminates any doubts regarding the work and responsibilities of both parties. 

B. Purpose Of A Bookkeeping Engagement Letter

Usually, people hire an accountant when they need tax filing or financial audits. A bookkeeper is needed to keep track of the financials. Some may hire a long-term accountant to work with them. There are different types of accounting and bookkeepers. Their role or department can easily be any of the following: 

  1. Tax
  2. Audit
  3. Finance
  4. Project
  5. Staff
  6. Forensic
  7. Investment 
  8. Cost
  9. Management
  10. Government 

The purpose of the bookkeeping engagement letter is to give the accountant or bookkeeper proper instructions on their role and duties. It will tell them which of the above-given services or roles they are expected to fulfill. An accounting engagement letter is a legally-bounding document. A bookkeeping or an accounting engagement letter is less formal than an actual contract, but it can be used legally if the situation shall arise.

C. Who Uses A Bookkeeping Engagement Letter?

Both sides may offer an engagement letter that the other party can go through. The hiring party can use it to ensure that the bookkeeper or an accountant will fulfil the duties and be responsible. Correlatively, the bookkeeper will create a defined boundary, or scope of work, without letting the hiring party slip any additional services (for free). They can also make sure that they will get paid on time.

Almost anyone can use a bookkeeping or accounting engagement letter to hire a professional. Whether you’re an individual person looking for better financial management and services, or a full-fledged enterprise, you can use the letter. It is not an impolite gesture but an appreciative effort to streamline the entire course of services. 

D. Key Components Of A Bookkeeping Engagement Letter

A bookkeeping engagement letter will need the name and details of both parties (the client and the bookkeeper). It will also need the signature or authentication of the agreement at the bottom. 

The letter doesn’t have to be extensive and full of nitty-gritty details. There can be two letters, one offered by the hiring party and another by the bookkeeper. In such cases, it is important for the letters to not nullify or void any point in the other one. 

It will have a clear mention of time, services or job profile, and payment circulation. With these components, an engagement letter will be ideal. 

Benefits Of Using A Bookkeeping Engagement Letter

An accounting engagement letter is a legally bounding document that can solve a lot of problems and empower both sides. Other benefits include: 

A. Protection For The Client And The Bookkeeper

The client will have their private information, financial, and other records safeguarded by the terms in the letter. 

If either side doesn’t hold their end of the deal, legal actions can be taken. It also prevents any exploitation. 

The bookkeeper also receives security that their work and efforts won’t go to waste, and they will be compensated according to what’s mentioned in the letter. 

B. Clarification Of Responsibilities And Expectations

Often, the client thinks that they don’t have any duties to fulfill. Who will provide the financial records and help the bookkeeper or accounting compile, maintain, or access all the information? The letter will define these.

A bookkeeper will also know if there can be additional queries or advice the client may ask. Often, breaching the boundary, or ‘service creeping,’ starts small. It could be a single favor or a simple question. But over time, it can make a big difference. 

C. Mitigation Of Misunderstandings And Disputes

Once you start working with someone, it becomes challenging to define boundaries. This goes for almost any job, business, or partnership. The same applies to hiring a bookkeeper or accounting service. Often, it is worse because they won’t know about the other’s flexibility in work. 

For instance, a bookkeeper might not know how compliant and resourceful the client will be. The client might not know if the bookkeeper or accounting will toss in a few necessary services. 

An accounting engagement letter eliminates any guesswork. It doesn’t simply work on expectations or assumptions. Hence, both parties will have clear information. 

D. Professionalism And Credibility

Working with a letter of engagement enhances the credibility of the business and the professional. It shows a clear distinction between individuals who understand how to conduct business and rookies. 

An individual who wants to keep things professional and sorted will always use a letter of engagement to ensure efficacy. 

How To Draft A Bookkeeping Engagement Letter

A. Tips For Drafting An Effective Bookkeeping Engagement Letter

If you’re hiring an accounting staff or bookkeeper, make sure to ask about all the services they will offer. Enquire about the possibility of any other services you might need or if there are some hidden costs for any extra service. Get details as much as possible. 

For an accountant/bookkeeper, understanding the client is essential. If you can gauge their communication skills and how much they care about the project, it can help you draft an effective engagement letter. Often, clients just hire and forget, don’t want to participate or delay the resources because they don’t know their role in the project. So, make sure to clarify these aspects.

After that, you can: 

  • Make sure to discuss the engagement letter before you agree to work together. Sending an engagement letter without mentioning it during the meeting or hiring process may seem rude or offensive. 
  • Most letters of engagement lack subject lines. Make sure to include it in yours. 
  • You can keep it short and sweet if it is short-term work. For long-term projects, consider being more detail-oriented in drafting.
  • Divide the letter into information (date, name, etc.), an introduction that informs the other party that it is an engagement letter, then the terms and conditions, and end the letter with a statement of acknowledgement. 
  • The letter will also have the field clearly indicated for the signature/authentication. 
  • Try to use professional writing and formal language to define everything in the letter. 
  • Both parties can exchange their letter of engagement or sit together to write one. It can make things easier. 
  • Both parties should keep a signed copy of the engagement letter. 

B. Key Elements To Include In The Letter

What should an engagement letter for bookkeeping or accounting contain? It should cover and state the following:

  • Identification: The letter should clearly identify the client and the bookkeeper.
  • Services: The job role and other services that the bookkeeper will offer.
  • Client's Role: Everything expected of the hiring party (client) to provide to the bookkeeper.
  • Time: Period of engagement, working hours, and the duration of the project. Mentioning the date will be necessary, too. 
  • Milestones: The project can define weekly, monthly, or quarterly parameters or goals.
  • Expiration / Termination: Make sure to add the time or date regarding when the services will end. Include any other clauses for potential termination or withdrawal from the services.
  • Fee Structure: Hourly rates or flat rates with other rates like the cost for addition, reviews or services provided during non-working hours.
  • Authentication: Acknowledgement of the letter of engagement and signature from both sides.  There could be additional authentication, like stamps, to reinforce the authenticity.

These are all essential components needed in the letter of engagement. Without these, it isn’t a valid or effective accounting engagement letter.

Sample Bookkeeping Engagement Letter Template

Your sample for the accounting engagement letter is ready for you to use. Sign up for a free 7-day trial and get access to your easy-to-customize sample engagement letter. The template will help you cover all the necessary fields and ensure that you have complete information.


Overall, a bookkeeping engagement letter makes a significant difference in an efficient workflow. It maintains a favorable relationship between the bookkeeper and the client. As it also eliminates miscommunication and assumption, the entire process becomes easy.  An engagement letter is a soft addition for anyone looking to improve their professional approach, increase credibility, and have legally binding documents. 

However, it is understandable if you’re having trouble writing the proper accounting engagement letter. You can use the sample template to get used to the process. Once you become an expert, you can easily write your custom engagement letters. 

Learning is a process, but we are here to make things easier. If you want to save time, Bonsai brings you a free 7-day trial. All you need to do is signup and get your free copy of the bookkeeping engagement letter. You can use the trial membership for other writing samples or letter preparations, as well. 

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