Bookkeeping Engagement Letter: What to Include (With Template Wording)

Practice Runbook · updated 2026-09-22

An engagement letter is not a formality you send because someone told you to. It is the document you reach for when a client says “I assumed that was included” eight months into the relationship.

Most disputes in a solo bookkeeping practice are not about competence. They are about scope — what was included, who was supposed to provide what, and by when. A letter that answers those questions in advance is worth more than any amount of goodwill afterwards.

What it must cover

Seven sections. Anything less and you are relying on memory.

1. The parties and the period

Full legal name of the client entity — not the trading name, not the owner's first name. State the date the engagement starts and whether it runs until terminated or for a fixed period.

“This letter sets out the terms on which [Your practice] will provide bookkeeping services to [Client legal name], company number [X], with effect from [date], until terminated by either party in accordance with section 7.”

2. Scope — and what is outside it

List what you will do, in plain terms: transaction processing, bank reconciliations, sales and purchase ledger, payroll, VAT returns, management accounts, and how often each happens.

Then list what you will not do. This is the section people skip and later regret.

“The following are outside the scope of this engagement: preparation of statutory accounts, corporation tax or personal tax returns, audit, financial or tax advice, and representation in correspondence with the tax authority. Additional work may be undertaken by separate written agreement at the rates in section 3.”

3. Fees and how they change

State the fee, what it covers, when it is invoiced and when it is payable. If you charge a fixed monthly fee, say what volume it assumes — the single most useful sentence in the whole document.

“The monthly fee of [X] assumes up to [N] transactions per month across up to [N] bank and card accounts. Where volumes exceed this for two consecutive months, we will agree a revised fee before further work is undertaken.”

Add your annual review clause. Rates that have never been reviewed are how practices end up with a roster of clients paying year-one prices.

4. What the client must do

Your work depends on their records arriving. Make that a stated obligation with a date attached.

• Records provided by the [Nth] working day of the following month.
• Bank statements or read-only feed access for every account.
• Responses to queries within [N] working days.
• Notification of new bank accounts, loans, or changes to the business.

Then say what happens if they do not: deadlines move, and the consequences are theirs.

“Where records are provided later than the date above, we cannot guarantee that filing deadlines will be met, and any resulting penalties or interest are the client's responsibility.”

5. Responsibility and reliance

You process what you are given. Say so explicitly, and say that the client remains responsible for the accuracy and completeness of the underlying records.

“We will process the records provided to us. We do not audit or independently verify them. Responsibility for the accuracy and completeness of the accounting records, and for maintaining adequate records as required by law, remains with the client and its directors.”

6. Data, confidentiality and software

Where the data lives, who can see it, how long you keep it, and what happens to it when the engagement ends. Also: who owns the accounting file subscription. That question causes real friction at handover if nobody settled it at the start.

7. Termination and handover

Notice period on both sides — a month is common. State that fees are payable up to the termination date, and what you will provide on exit: a trial balance, reconciled accounts to a stated date, and the file in a usable format.

“Either party may terminate this engagement by giving one month's written notice. On termination we will provide the accounting records up to the last completed period, reconciled, subject to settlement of outstanding fees.”

The clauses most solo bookkeepers leave out

• The volume assumption. Without it, a fixed fee is an open-ended commitment. This is where fixed-fee practices quietly lose money.
• Late records. If nothing is written down, a missed deadline caused by a client becomes your problem.
• Out-of-scope work. Say what it costs in advance and “can you just” requests become quotes rather than favours.
• The annual review. Raising a rate is far easier when the client agreed in writing that you would.
• Who owns the subscription. Cheap to settle now, expensive to argue about later.

Practical points

Get it signed before the first piece of work, not after the first month. A signature makes the conversation real in a way an emailed PDF does not.

Re-issue it when the scope genuinely changes — new payroll, a second entity, a VAT registration. A letter describing a relationship that ended two years ago protects nobody.

And keep it readable. A letter written in language the client actually understands is more likely to be honoured than four pages of boilerplate nobody finished.

One caveat: this is practical guidance, not legal advice. Consumer and contract rules differ by country, and if you are a member of a professional body it may require specific wording or its own template. Check before you rely on anything here.