SaveMost fee disputes start with a client who thought something was included. A clear engagement letter template for accountants settles that before the work starts. Below is a free template with schedules for bookkeeping and tax returns, what each clause is for, notes for the US, UK, Canada and Australia, and a simple way to renew every letter before tax season.
The template is general information, not legal advice. Use it as a starting point and have your professional indemnity insurer or a lawyer review your final version once.
Free download
Canadian letters, bookkeeping and T1. Blank schedules with [brackets], plus an invented Ontario café filled in so you can see a finished letter. Bookkeeping, Word · T1, Word · Printable PDF of both.
In Google Docs: File, then Open, and choose the Word file. Have a lawyer or your insurer read the version you send.
What an engagement letter is
An engagement letter is a written agreement between an accounting firm and its client. It sets out who the client is, which services you’ll provide and which you won’t, what the client must give you and by when, your fees and payment terms, and how either side can end the work.
It protects both sides. The client knows exactly what they’re paying for. You have a record to point to when a client asks for extra work, sends information late, or disputes a fee.
Engagement letter or contract? An engagement letter is a contract. The letter format is the convention in accounting because it reads clearly and lets you attach a schedule for each service.
What to include in an engagement letter
- The parties. The client’s legal name and every entity you’ll work for. Use one letter, or one schedule, per entity.
- The services. What you will do, described plainly, with a schedule for each service.
- What’s not included. The exclusions list. This clause prevents more arguments than any other.
- The client’s responsibilities. Accurate and complete information, records kept for the required period, and the dates information must reach you.
- Your responsibilities. The professional standards you work to and what you’ll deliver.
- Fees and payment. The fee basis (fixed, monthly or hourly), when invoices are sent, payment terms and late payment.
- Out-of-scope work. How extra work is quoted and approved before you start it.
- Confidentiality and data protection. How you handle client data, who you share it with, and where it’s stored.
- Limitation of liability. Any cap on your liability, where your rules and insurer allow it.
- Ending the engagement, complaints and signatures. Notice periods, how to complain, and the signature and date lines.
For a fuller list of what professional liability insurers expect, see the frequently asked engagement letter questions from the insurance programme of the US accounting profession.
Free engagement letter template
Copy the text below and replace everything in square brackets. Keep the core letter the same for every client and change only the schedules.
[Firm name] [Address] · [Phone] · [Email]
[Date]
Private and confidential [Client legal name] [Client address]
Dear [Client name],
Engagement letter
Thank you for choosing [Firm name]. This letter sets out the services we will provide to [Client legal name] (“you”) and the terms on which we will provide them. Please read it, together with the attached schedules and our terms of business, and sign and return a copy.
1. Services. We will provide the services described in the attached schedules: [Schedule A: Bookkeeping] [Schedule B: Tax returns] [Schedule C: Payroll]. We will only provide services listed in a schedule.
2. Services not included. Unless a schedule says otherwise, our services do not include [audit or assurance work], [financial planning or investment advice], [legal advice], [dealing with tax authority enquiries or investigations], [catch-up work for periods before [date]], or [services for any entity not named in this letter].
3. Your responsibilities. You are responsible for the accuracy and completeness of the information you give us, for keeping your business and tax records for the period the law requires, and for sending us the information listed in each schedule by the dates shown. If information arrives late or incomplete, we may not be able to meet a filing deadline, and any resulting penalties or interest are your responsibility.
4. Our responsibilities. We will carry out the services with reasonable care and skill and in line with [the professional standards of our professional body]. We will rely on the information you give us and will not audit it unless a schedule says so.
5. Fees. Our fees are set out in each schedule. We invoice [monthly / on completion] and payment is due within [14] days. We may pause work on overdue accounts after giving you notice.
6. Extra work. If you ask for work outside these schedules, we will tell you the fee before we start and will only proceed with your written approval.
7. Confidentiality and your data. We keep your information confidential and only share it as needed to provide the services, as the law requires, or with your consent. We store records in [secure systems / our client portal]. Our privacy notice, [link or attached], explains how we handle personal data.
8. Liability. [Our total liability to you for any claim relating to these services is limited to [amount], except where the law does not allow such a limit.] [Delete or adapt this clause after checking with your insurer.]
9. Ending the engagement. Either of us may end this engagement by giving [30] days’ written notice. You will pay for work done up to the date it ends.
10. Complaints. If you are unhappy with our service, please contact [name] at [email]. [If we cannot resolve it, you may contact [professional body].]
This letter, the schedules and our terms of business form the agreement between us. It replaces any earlier agreement for these services and stays in force until it is replaced or ended.
Yours sincerely, [Name], [Title], [Firm name]
Acceptance. I confirm that I have read and agree to the terms of this letter, the schedules and the terms of business, and that I am authorised to sign for [Client legal name].
Signed: ________________ Name: ________________ Position: ________________ Date: ____________
Bookkeeping engagement letter template (schedule)
Schedule A: Bookkeeping services
What we will do each month: record and categorise transactions from your [bank and card feeds]; reconcile [number] bank and card accounts to the statement balance; record sales and purchase invoices you send us; prepare a monthly [profit and loss report and balance sheet]; and send you a list of missing receipts or unexplained transactions.
What you will do: give us read-only access to your bank and card feeds; send receipts, invoices and statements by the [5th] of each month; answer our queries within [5] working days; and keep business and personal spending separate.
Close date: we will close each month by the [15th] of the following month if we have everything we need by the [5th].
Not included: payroll, sales tax or VAT returns, year-end accounts and tax returns, unless covered by another schedule.
Fee: [amount] per month, based on up to [number] transactions and [number] accounts. If volumes go above this for [two] months in a row, we will agree a new fee with you first.
Engagement letter for tax services (schedule)
Schedule B: Tax return preparation
Returns covered: [the individual income tax return for [name] for the tax year ending [date]] [the business tax return for [entity] for the year ending [date]].
Information deadline: please send all the information listed in our checklist by [date]. Information received after this date may need an extension or may mean we cannot file on time, and any penalties or interest are your responsibility.
Your responsibilities: you are responsible for the accuracy of the information and for reviewing and approving the return before we file it. We will not file without your approval.
Incomplete records: if records are missing, we will tell you what is needed. Any estimates we use will be agreed with you in writing.
Not included: responding to tax authority enquiries, audits or investigations, amended returns for earlier years, and tax planning advice, unless agreed separately.
Fee: [fixed fee / estimate] for each return, payable [on completion].
US firms: Section 7216 consent. In the US, using or sharing a client’s tax return information for anything other than preparing the return, such as offering other services or sharing it with a third party, needs the client’s separate written consent. The IRS sets the required format and wording in Rev. Proc. 2013-14, and the Section 7216 information center explains when it applies. Use a separate signed consent form, not a clause buried in the letter. Practitioners who represent clients before the IRS should also follow Circular 230.
Country notes: US, UK, Canada, Australia
| Country | What to check |
|---|---|
| United States | Follow your state board’s rules and your insurer’s guidance. Use a separate Section 7216 consent when you use or share tax return information beyond preparing the return. |
| United Kingdom | The ICAEW’s engagement letters helpsheet uses a structure of letter, service schedules, terms of business and privacy notice, and its recent updates add schedules such as identity verification and Making Tax Digital. Tax advisers can also see the CIOT’s engagement letters. You must be supervised for anti-money laundering and carry out identity checks before you start (GOV.UK guidance). |
| Canada | Have a signed letter for bookkeeping and for a T1. GST/HST, QST, PIPEDA and Form T183 are the clauses generic templates skip. See the full Canadian letters. |
| Australia | Members of the Australian accounting bodies must follow APES 305 Terms of Engagement, which sets out what an engagement document must cover, including recurring engagements. CPA Australia has a summary of APES 305. Registered tax and BAS agents should also check the Tax Practitioners Board’s guidance on letters of engagement. |
The professional bodies’ own sample letters are for members and are copyrighted, so use them as a reference rather than copying them.
Engagement letter for Canada: bookkeeping and personal tax (T1)
Most free engagement letters are written for the US or the UK. A Canadian bookkeeper also has to say who files the GST/HST, how the CRA authorizes them, and how client data is kept under PIPEDA or, in Quebec, Law 25.
Client C is invented: a sole proprietor in Ontario, a small café, registered for GST/HST after one busy quarter, who wants the returns filed. The fee in the download is fiction. Not legal advice. Have your lawyer or insurer read the letter you send. CPA Canada’s PACT templates are the member versions. These are a starting point.
When a Canadian firm needs a letter
For a compilation, CPA BC’s CSRS 4200 FAQ says the letter should be tailored, signed and dated, and that you should discuss it with legal counsel. Bookkeeping that is not a compilation still needs one. It is where the GST/HST argument gets settled.
The T183 signed each spring is not that letter. It covers electronic filing of one return, for one year. The letter covers the rest, including slips that arrive in May.
Canadian bookkeeping engagement letter
Schedule C1 below is the bookkeeping add-on. The Word file is the same clauses, plus Client C filled in. Tie the monthly cycle to the month-end close checklist so “by the 15th” means the same day on both documents.
Schedule C1: Bookkeeping, Canada
Cycle. We keep the books [monthly / quarterly]. You send records by the [5th] of the following month. If we have them, we deliver the [profit and loss and balance sheet] by the [15th]. A late package moves the delivery date.
Volume and fee. $[amount] per [month], for up to [number] transactions, [number] bank accounts and [number] cards. If volume is higher for [two] months in a row, we agree a new fee before the next invoice. Work before [start date] is a separate quote, not part of this fee.
Sales tax. You register, and you are responsible for the amounts. We [will / will not] prepare the GST/HST return, and we [will / will not] prepare the QST return. You approve the return before filing. We file only if you have authorized us. You pay the balance.
CRA and Revenu Québec. You authorize us in CRA My Account, or we request access in Represent a Client and you confirm it. Form AUT-01 is for offline access only and does not open the online account. For Revenu Québec, authorize us in My Account or with form MR-69.
Not an audit. Bookkeeping will not necessarily find fraud or error. A notice or audit is outside this letter unless we agree to it in writing.
GST/HST and QST: who does what
A Canadian bookkeeping engagement letter should set the bookkeeping cycle and deadlines, the volume the fee covers, what is excluded, who prepares, files and pays GST/HST and QST, how you are authorized with the CRA, how client data is protected, and how either side ends the work.
The CRA’s registration page is the GST/HST test most businesses use. You are a small supplier until taxable supplies go over $30,000 in a single calendar quarter, or over four consecutive quarters. Over $30,000 in one quarter, you charge GST/HST on the sale that took you over, and you register within 29 days of the effective date. Charities and public institutions use different tests, including $250,000 of gross revenue and $50,000 of taxable supplies. One sentence in the letter is enough: if the client is a charity, do not use the $30,000 line.
Revenu Québec’s small-supplier page describes a $30,000 threshold for the QST as well: worldwide taxable supplies, including associates, in one quarter or over the four preceding quarters. We could not load that page directly on 3 Nov 2026. The figure is the text of that official page as indexed that day. Open it before you send a Quebec letter.
| Task | Client | Firm, if the letter says so |
|---|---|---|
| Decide whether to register | Responsible | Advises, from the records |
| Register for GST/HST, and QST in Quebec | Responsible | Can do it if you are engaged to |
| Keep sales and purchase records | Responsible | Records them in the books |
| Prepare the return | Prepares | |
| Approve the return before filing | Approves | |
| File the return | Files, if authorized | |
| Pay the balance | Pays |
Client C’s letter says: we prepare the GST/HST return, they approve it, we file, they pay. QST is out, because the café is in Ontario. That is a filled version of the empty row, not a rule that every firm should file.
Personal tax (T1) engagement letter for Canada
A Canadian personal tax engagement letter names the taxpayer and tax year, lists the T1 and provincial returns and schedules you will prepare, sets the date for slips and receipts, explains that you file only after the client signs Form T183, and says that CRA reviews are a separate job.
Send these before the season, not in March. The timing sits on the tax season checklist. Late slips are the same chase as any other missing document: one list, not five emails. The signed T183 belongs in the client portal, not in a thread.
Schedule C2: Personal tax, Canada (T1)
Scope. [Taxpayer legal name], tax year [20XX]. We prepare the T1 and the [province] return, including [business / rental / capital gains] if the slips show them. A spouse is a separate engagement unless named here. A Quebec TP-1 is [included / not included].
Slips. Send them by [date]. After that, a late file or interest is yours. We will not invent a number. Any estimate is agreed in writing.
Form T183. We send the return and the T183. You review and sign. Only then do we transmit. The form is for this year, both of us keep it for at least six years, and a correction that moves the refund or balance by more than $300 needs a new signed T183. That is the CRA’s rule on Form T183.
Dates. Most people file and pay by 30 April. If you or your spouse or common-law partner is self-employed, you file by 15 June and any balance is still due 30 April. For the 2025 tax year the CRA’s dates are 30 April 2026 and 15 June 2026. Write the year you are actually covering.
Foreign property. You tell us if the total cost amount of specified foreign property went over $100,000 at any time in the year. That is Form T1135. Cost, not market value. The CRA’s questions and answers are the test. T1135 is [included / quoted separately].
E-file. Since 1 January 2024, a preparer paid to prepare more than five T1 returns a year must e-file them. A paper T1 can mean a $25 penalty each. We e-file. You still sign T183 first.
Outside scope. A review, audit or reassessment is a new engagement. You are responsible for accuracy, and you keep records for six years.
Fee. $[amount], payable [when the draft is sent].
Privacy clause for Canada: PIPEDA, Alberta, BC and Quebec
PIPEDA covers private-sector organizations that collect personal information in commercial activity. The Commissioner’s short guide is the ten principles. Alberta, British Columbia and Quebec have their own private-sector laws, treated as substantially similar. A breach with a real risk of significant harm is reported, the people affected are told, and every breach is recorded (mandatory reporting). You stay accountable for data a vendor holds, including outside Canada (third parties, across borders).
Quebec’s Law 25 names a person in charge. By default that is the person with the highest authority, unless they delegate it in writing, and the title and contact details go on the website. An incident with a risk of serious injury is reported to the Commission d’accès à l’information and to the people concerned, and the firm keeps a register. That page is in French.
Have your lawyer or insurer review this before it goes in a letter:
We collect and use your personal information only to do the work in this letter. We store it with service providers we have assessed. Some of them may keep data outside Canada. We protect it with access controls and multi-factor authentication. If a breach creates a real risk of significant harm, we will tell you and report it as the law requires. Quebec: our person in charge of the protection of personal information is [name, title, email, phone].
Using AI tools on client records
Optional. Delete it if the firm does not use these tools. Check the sentence against the tools you actually use. The Privacy Commissioner’s principles for generative AI are the federal starting point. What goes wrong when software categorises unsupervised is in AI bookkeeping.
We may use AI tools to help categorise transactions, draft correspondence and summarise documents. A person on our team reviews any output before we rely on it. We do not use your information to train public AI models. Tell us if you would rather we did not use AI tools on your file.
Quebec notes
A Quebec resident files a TP-1 with Revenu Québec as well as a T1. Say whether the TP-1 is in the fee. QST goes to Revenu Québec, on its own small-supplier test. Authorization is not CRA Represent a Client. The client grants it in My Account, or you use a professional representative account. The paper form is MR-69, and Revenu Québec says the online service is faster.
The downloads at the top are Schedule C1, Schedule C2, and the invented café. Copy the brackets. Leave the sample fee in the example.
How to send, sign and renew engagement letters
- Send it with e-signature. The client signs on their phone in a minute, and you get a dated record.
- Store the signed copy against the client record. Keep it where the team can find it when a scope question comes up.
- Make it part of onboarding. No signed letter, no work. The new client onboarding checklist puts it in the right place.
- Renew every year before tax season. Review services and fees in the autumn, send updated letters, and chase signatures before January.
- Keep a renewal tracker. One row per client: services, letter date, renewal due, sent, signed and any consent forms. The free client onboarding and document tracker can hold this alongside each client’s documents.
For what else to prepare before the busy months, see the tax season checklist.
Proposal and engagement letter software, and the alternatives
| Option | Best for | Effort | Main drawback |
|---|---|---|---|
| Word-processor template plus PDF e-signature | New and small firms | Low | Renewals and chasing are manual |
| Engagement module inside practice management software | Firms already using one system for jobs and clients | Low once set up | Tied to that system’s templates and pricing |
| Standalone proposal and engagement letter software | Firms that price by package and want proposal, letter and payment in one flow | Medium | Another subscription, and another place client data lives |
| E-signature inside your client portal | Firms that already send everything through a portal | Low | Proposal and pricing features are usually basic |
| AI assistant on top of any of these | Drafting a schedule from the client’s answers, and chasing an unsigned letter | Low | A person reviews every letter before it is sent. An assistant is not legal advice. |
Grok Bot is the assistant we would use to draft a schedule from the intake answers and to chase a letter that is still unsigned. You review it, then you send it. ChatGPT, Claude and Microsoft Copilot will draft from the same notes if you keep the client’s identifiers out of the paste. Setup for Grok Bot is in Grok Bot for a small business.
Ignition, Anchor, and the engagement features inside Karbon, TaxDome and Canopy all send letters for a Canadian firm. We did not check Canadian-dollar prices for this page, so we are not listing any. Open each vendor’s pricing page. Any e-signature tool you already pay for is enough if the letter itself is the Word file above.
The free route is the letters on this page, the Word and PDF downloads, and the Client Onboarding & Document Tracker, our free Google Sheet for who has signed. CPA Canada PACT, through Knotia, is the members-only set.
If you’re choosing a wider system, see practice management software and client onboarding software.
Common mistakes
- No exclusions list. Without it, every extra request becomes a negotiation.
- No information deadline. Late information then becomes your problem instead of the client’s.
- A letter that’s never renewed. Services and fees drift while the letter stays the same.
- Several entities in one letter with no schedules. It becomes unclear who owes what.
- No privacy notice (UK). Data protection law expects you to tell clients how their data is used.
- Starting work before it’s signed. The letter only protects you once both sides have agreed to it.
An engagement letter is one of the cheapest ways to protect a firm. Keep one core letter, a schedule per service, a clear exclusions list and a yearly renewal, and most scope and fee disputes never happen. If you’re also tidying how new clients start, the free document request checklist covers what to ask them for.
The Canadian Word files and the PDF are the same ones linked at the top. Copy Schedule C1 or C2, delete the clauses you will not do, and have someone who carries your insurance read it once before it goes to Client C’s real equivalent.
Questions
What is an engagement letter in accounting?
It is a written agreement between an accounting firm and its client that sets out the services, what is excluded, what the client must provide and by when, the fees and payment terms, and how either side can end the work. The client signs it before the work starts.
What is an engagement letter for taxes?
It is an engagement letter, or a schedule to one, that covers tax return preparation: which returns you will prepare, the date the client must send their information by, who is responsible for the accuracy of that information, how penalties and extensions are handled, and the fee.
How do you write an engagement letter?
Start from a template, name the client and every entity you will work for, list the services and the exclusions, set the client’s deadlines and responsibilities, state your fees and what happens with extra work, add data protection and liability terms, and finish with how to end the engagement and the signature lines. Have your insurer or lawyer review it once.
What is the difference between an engagement letter and a contract?
An engagement letter is a contract. The letter format is simply the convention in accounting, because it reads more clearly for the client and lets you attach service schedules and terms of business.
What is the difference between an engagement letter and a statement of work?
A statement of work usually describes one project in detail under a wider agreement. An engagement letter is the agreement itself, often with service schedules that play the same role as a statement of work for each service.
Do I need a new engagement letter every year?
Many firms send or confirm a letter every year, and you should always update it when the services, fees, entities or rules change. Sending renewals before tax season keeps the scope and fees agreed before the busy months.
Is there an engagement letter template for bookkeeping?
Yes. The template on this page includes a bookkeeping schedule covering reconciliations, categorising, monthly reports, the client’s duties and the monthly close date. A Canadian version, with GST/HST and QST, is further down the page and in the Word download.
Do I need an engagement letter for bookkeeping in Canada?
You should have one. For a compilation under CSRS 4200, CPA BC says the letter should be tailored, signed and dated, and that you should discuss it with legal counsel. Even when you are only keeping the books, the letter is what stops a fee argument about GST/HST filing. The T183 the client signs in spring is not this letter.
What should a personal tax engagement letter in Canada include?
Name the taxpayer and the tax year. List the T1, the provincial return, and the schedules you will prepare. Set the date for slips. Say you file only after the client signs Form T183. Say that a CRA review is a separate job. If the client lives in Quebec, say whether the TP-1 is included.
Is Form T183 the same as an engagement letter?
No. Form T183 authorizes the electronic filing of one return for one year. The engagement letter sets the whole job: scope, fee, deadlines, what is excluded, and how the work ends. The client signs both. You need a new T183 if a correction changes the refund or the balance by more than $300.
Who files GST/HST in a bookkeeping engagement?
Whoever the letter names. The client stays responsible for registering and for the amounts. The firm can prepare the return, the client approves it, and the firm files it only if authorized. Many bookkeepers do file GST/HST. Write that down. Do not leave it as a silent exclusion.
Does PIPEDA apply to a small bookkeeping practice?
Yes, if you collect personal information in commercial activity. Alberta, British Columbia and Quebec have their own private-sector laws, which the federal Privacy Commissioner treats as substantially similar. Quebec firms also have Law 25 duties, including a named person in charge of personal information.
What is the difference between an engagement letter and an appointment letter?
An engagement letter is the contract for the work: scope, fee, deadlines, and how either side stops. An appointment letter usually just names someone as the accountant or the representative. The appointment, or a CRA authorization, does not set the fee or say who files the GST/HST return.
This guide covers running the practice, not tax law. Rules differ by country and change often, so check anything technical with your local tax authority or professional body.
