How to write a client engagement letter (+ samples)

You want relationships with new clients to start off without a hitch, and engagement letters are a key part of that. These business agreements for accountants and bookkeeping businesses let your clients know the scope of work involved and set clear expectations for both parties. 

They also help reduce the risk of scope creep, disputes, and other problems that can make it harder to build rapport with clients and increase revenue and growth.

Engagement letters are legally binding documents that outline your and your client’s responsibilities and define fee structures, project timelines, and deliverables.  So they’re incredibly important, but knowing how to write a client engagement letter can take some practice. 

We’ll guide you through this process and provide relevant samples for accounting and bookkeeping, so you can see how they’re written and what they typically include. 

You don’t have to start from scratch for every written engagement letter. In fact, doing it that way can take up a lot of valuable time. Templates are a much more convenient and quicker way to get these documents written and ready to send to clients.

But be cautious of using the first or simplest template you find. It might not include all of the sections and information you need or the specific wording or verbiage required for legal or compliance purposes. Your engagement letter should be legally sound and contain all relevant information for a business arrangement between you and your client. 

Creating your own template gives you more control over what it contains and how it’s worded, and you can make the process much easier by using customizable engagement letter templates tailored to your and your client’s needs. 

Ignition gives you a variety of industry-standard, vetted templates, based on your region, including: 

• NATP Engagement Letter Template for U.S. businesses
• CBP Canada Engagement Letter Template
• CPA Australia Engagement Letter Template
• ACCA Engagement Letter Template for U.K. businesses

These templates are pre-built with compliance in mind, but you might want to seek legal advice for extra peace of mind. If you’re outside the U.S. or providing non-tax services, you may need to consult with local industry organizations or legal counsel to ensure region-specific compliance. 

Whether you’re writing your own engagement letter from scratch or using a premade template, make sure you include each of the following sections.

This is a simple but important section for your letter. You just need to identify who you’ll be providing professional services to, whether that’s an individual or an organization. Before beginning your greeting, list your client’s name and address. 

Example:

John Matthews 

1027 42nd Street, New York City, NY 10036

Dear John, 

This letter is to confirm our understanding of the terms of our engagement and the nature and limitations of the services that we provide.

This is one of the most important parts of your letter because it helps you lower the risk of scope creep and prevent potential conflicts due to unreasonable client expectations about your services. 

For this section, carefully outline the scope of work you’ll be handling as a service provider. This means detailing which specific services are included—and which ones aren’t—to avoid any confusion or misunderstandings.

Example:

Service: Ledger Conversion, Setup, and Training 

We will set up a new Xero account for the entity named above. In this setup service:

• We will create and configure your chart of accounts.
• We will convert your data from your existing accounting system to bring in your historical balances, contacts, payroll, sales, and payable invoices.
• We will set up (up to 3) data feeds for your entities' bank and credit accounts and create automated bank rules for easy reconciliation of your transactions.
• We will customize up to 5 reporting templates for your business. *Configuration of additional reports can be purchased separately.*
• We will review and suggest appropriate additional software to increase efficiency in your accounting and bookkeeping.
• We will provide 2 x 2-hour online training sessions (up to 5 team members per session).
• We will record and deliver your training sessions via our hosted Vimeo channel (password protected).

Please note: Your subscription to Xero is not included in the scope of this service.

Terms of Service:

• If data in your previous system is not ready for conversion, you will be requested to have our team review the data and correct the errors before the migration is started. This will require extra service, and you will be provided with a new engagement and charged separately unless otherwise stated.
• The data is required to be provided at least 14 days prior to go live date to ensure there are no issues. Should this not occur, you may be sent an updated engagement with additional fees for “rush conversion.”

When does your agreement officially begin and end? That’s the information to include in this section of your letter, along with expected delivery dates or milestones for projects, if applicable. Having this section helps ensure your client understands when they can expect to begin working with you and when their contract will be up for renewal. 

Example:

This engagement starts on June 1st, 2025, and is valid until June 1st, 2026. Work prior to this start date is not included unless explicitly requested and agreed upon in writing.

This is where you’ll list detailed information on fee structure and payment terms, like whether you’re charging an hourly rate or a retainer. A price summary that breaks down services by billing type is also helpful to ensure clients understand what they’re paying for. 

But what happens if clients request ad-hoc or extra services or tasks that aren’t within the scope of work defined in your letter? Or what if a client pays late? Include details on how you’ll handle these situations, such as charging a late fee or billing for add-ons, to keep you and your clients on the same page. 

Example:

On Acceptance
Ledger Conversion, Setup and Training - $2,000

Monthly Recurring
Monthly Bookkeeping - $800/month

All prices are inclusive of tax.

The fee arrangement is based on the expected amount of time and the level of staff required to complete the services as agreed. The fee excludes miscellaneous expenses which are incurred to complete the engagement.

Should the client need extra services not included in this engagement, we bill at a rate of $150 per hour (subject to approval by *practice name*).

Your responsibilities are typically spelled out in the scope of services section. So for the client responsibilities section, you’ll want to include any specific resources, actions, or information you’ll need from your clients in order to fulfill services. Think documentation, access to databases, brand kits, etc. 

You can also include any relevant disclaimers here and state what will happen if the client doesn’t complete their responsibilities.

Example:

The Client is responsible for the reliability, accuracy, and completeness of the accounting records, particulars, and information provided and disclosure of all material and relevant information. Clients are required to arrange for reasonable access by us to relevant individuals and documents and shall be responsible for both the completeness and accuracy of the information supplied to us. Any advice given to the Client is only an opinion based on our knowledge of the Client's particular circumstances.

A taxpayer is responsible under self-assessment to keep full and proper records in order to facilitate the preparation of a correct return. Whilst the Commissioner of Taxation will accept claims made by a taxpayer in an income tax return and issue a notice of assessment, usually without adjustment, the return may be subject to later review. Under the taxation law, such a review may take place within a period of up to [ ] years after tax becomes due and payable under the assessment. Furthermore, where there is fraud or evasion there is no time limit on amending the assessment. Accordingly, you should check the return before it is signed to ensure that the information in the return is accurate.

Do any professional standards or rules of professional conduct apply to your service agreement, such as the Professional Standards Authority for U.K. businesses or the National Association of Tax Professionals for U.S. businesses? If so, they’ll go in this section of your letter. 

Example:

The conduct of this engagement in accordance with the standards and ethical requirements of *insert ruling body* means that information acquired by us in the course of the engagement is subject to strict confidentiality requirements, in addition to our obligations under the *insert confidentiality act*.

That information will not be disclosed by us to other parties, without your express consent, except as required by law or professional obligation.

The last part of your letter is as simple—and important—as the first. It’s a confirmation verifying that the client understands and agrees to the terms and conditions, responsibilities, payment terms, and all other parts of the contract. Include a space for clients to leave an electronic signature.

Example:

I/We hereby accept the terms of your engagement letter.

Signed:

Full name:

A letter of engagement should either directly include or reference a separate terms and conditions (T&Cs) document. Referencing this document helps keep your letter shorter and more approachable for clients. They can always go over it at their own pace to see what the T&Cs include. 

Whichever option you go with, make sure to include:

• Billing practices (including your terms for late payment)
• Alternative dispute resolution
• Withdrawal provisions 
• Limitations of liability 
• Intellectual property, ownership of data, and data protection
• Confidentiality agreement 
• Privacy policy 

Seeing examples of engagement letters can help you understand how they’re generally set up and how they’re worded. Ignition conveniently offers a library of accounting engagement letter templates from some of the leading associations across regions of the globe.  

You can tailor your own engagement letters for your clients and any applicable compliance/legal purposes. 

• CA ANZ Template: Chartered Accountants Australia and New Zealand 
• CPA Australia Template
• Institute of Public Accountants Template
• Australian Bookkeepers Network Template

• CBP Canada Template: Certified Professional Bookkeepers of Canada 

• AAT Template: Association of Accounting Technicians 
• ICAS Template: Institute of Chartered Accountants of Scotland 
• ICB Template: Institute of Certified Bookkeepers 
• ACCA Template: Association of Chartered Certified Accountants 

• NATP Template: National Association of Tax Professionals  

Templates are a great way to streamline the engagement letter process—but you can take it even further with an engagement letter and contract management automation solution. 

This software can create contracts and letters, update them for renewals, and modify them as needed for ad-hoc work. It also offers a centralized hub for storing all of your contracts and letters, giving you quick access at a moment’s notice. 

Top features of these solutions include:

• Customizable templates to simplify contract creation
• Digital signature integrations or built-in features 
• Automated workflows that streamline contract/letter processes
• Contract analytics with real-time data to improve decision-making
• Tools for monitoring contract performance 

An automated solution for engagement letters and contracts can eliminate a ton of manual data entry, and lower the risk of human errors. It can also speed up contract approvals and boost the client experience, leading to better client satisfaction. Plus, it’s scalable as your business grows, keeping the renewal process simple and you compliant and audit-ready. 

Automating contract management with a tool like Ignition helps you streamline contracts and engagement letters with pre-built, customized templates, e-signature capabilities, and auto reminders about renewals, so your business can stay agile and ready to capitalize on every opportunity.

Ignition isn’t your typical contract management tool. It supports the entire client lifecycle, from creating engagement letters, proposals, and contracts to seamlessly securing renewals via automated payments, accounting tool integration, and easy contract updates.

Ignition gathers payment details at contract signing, automates invoicing and billing, and collects both one-time and ongoing payments—offering even more value to your business. 

It helps you start client relationships off on the right foot and keep them running smoothly, paving the way for seamless revenue growth and helping you get paid on time for every project.