If you’re thinking about becoming a bookkeeper, you might be wondering if you need to create a bookkeeping contract before working with clients. The answer is that it depends on the situation. If you’re working with a large company that has its own legal team, they may require you to sign a contract before starting work. On the other hand, if you’re working with smaller businesses or individuals, a contract may not be necessary.
Ultimately, it’s up to you to decide whether or not to create a contract. However, there are some benefits to having a contract in place. A contract can help to protect both you and your client by clearly defining the scope of work and outlining the expectations for each party. Additionally, a contract can provide recourse if there are any disagreements or issues down the line.
If you’re still not sure whether or not to create a contract, I have put together some basics of what should go into a contract and resources for free downloadable bookkeeping contract templates. Even with templates, it’s always best to consult with an attorney who specializes in business law. They can advise you on the best course of action for your specific situation.
What is a bookkeeping contract?
A bookkeeping contract is a legally binding agreement between a bookkeeper and their client which outlines the terms of the professional bookkeeping services to be provided. The contract should spell out the specific duties of the bookkeeper, as well as the frequency and method of payment. A well-written bookkeeping contract can help prevent misunderstandings and disagreements down the road.
Do bookkeepers always need to write a Bookkeeping Services Contract?
No, bookkeepers (or independent contractors) do not always need to write a bookkeeping contract nor is there a requirement to write one. However, there are some situations where it may be beneficial to have one in place.
For example, if you’re working with a large company that has its own legal team, they may require you to sign a contract before starting work. Additionally, a contract can help to protect both you and your client by clearly defining the scope of work and outlining the expectations for each party.
If an agreement is needed, be sure it is in writing and not orally. While oral contracts are enforceable, it can be difficult to prove what was actually said.
What should be included in a bookkeeping contract?
At a minimum, a bookkeeping contract should spell out the specific duties of the bookkeeper, as well as the frequency and method of payment. Additionally, the contract should outline the expectations of both the bookkeeper and the client. For example, the contract may state that the bookkeeper will provide monthly financial reports to the client. Alternatively, the contract may stipulate that the bookkeeper will have access to the client’s bank account in order to reconcile transactions.
What are some of the benefits of having a bookkeeping agreement?
There are several benefits to having a bookkeeping contract in place. First, a contract can help to prevent misunderstandings and disagreements between the bookkeeper and the client. Additionally, a contract can provide recourse if there are any issues or problems with the bookkeeping services. Finally, a contract can help to protect both the bookkeeper and the client by clearly defining the scope of work and outlining the expectations for each party.
What to include in a bookkeeping contract template
There are a few key components that should be included in any bookkeeping service agreement.
- Services provided. This may include any general bookkeeping tasks such as bank reconciliation, check registers, detailed general ledgers, bill payment, budget preparation, payroll processing, accounts receivable, and providing advice on financial matters. It is important to be specific about the availability of services that will be provided so that there is no confusion about the scope of work.
- Payment. This may include specifying how often the accountant will be paid, as well as how the fees will be charged (e.g. hourly rate, retainer, etc.). It is important to be clear about the payment terms (such as paid in full within 30 days of receipt) so that there are no surprises down the road. Also, any additional fees that are incurred, such as mileage, postage, tax fees, attorney’s fees, etc., will be paid by the client.
- Contract term. The contract should spell out when it will begin and end. This is important so that both parties know when the bookkeeping services will start and finish. Additionally, having a defined contract term can help to prevent any misunderstandings about the length of the bookkeeping relationship.
- Confidentiality. This ensures that the accountant will not share any confidential information without the consent of the client. This is an important protection for both the client and the accountant. As a bookkeeper, you will come across proprietary information, such as the client’s financial affairs, trade secrets, etc., and keeping this information private is super important.
- Material and data access. What data will the bookkeeper have access to? The contract should spell out what data the bookkeeper will have access to. This may include the client’s financial records such as bank statements, financial records, tax returns, etc.. It is important to be clear about what material the bookkeeper will have access to so that there are no surprises down the road. You may want to consider including a statement that the client will assume full responsibility for any existing financial information as your work could be wrong based on what they provide.
- Limitation of liability. The contract should spell out what will happen if the bookkeeper or affiliates (contractors or service providers hired by the bookkeeper) of the bookkeeper makes a mistake, whether due to gross negligence or the client’s omission of important information. This may include specifying that the bookkeeper will be liable for any damages to items such as business interruption, loss of or unauthorized access to information, damages for loss of profits, incurred by the other party arising out of the services provided under this Agreement. It is important to be clear about the limitation of liability so that both parties know what to expect in the event of a mistake.
- Relationship. In most cases, the bookkeeper won’t be an employee of the client, but rather an independent contractor. It’s important to put this in writing so the client knows you aren’t there for them 24×7. It may also be worth including that as a bookkeeper you would follow all requirements in accordance with all state and Internal Revenue Service codes.
- Cancellation. The contract should spell out what will happen if either party wants to cancel the contract. This may include specifying that the bookkeeper will be paid for any work that has already been done.
- Dispute resolution. If there is a disagreement between the bookkeeper and the client, the contract should outline a dispute resolution process. This may include mediation or arbitration. Having a dispute resolution process in place can help to prevent any disagreements from escalating into full-blown legal disputes. In addition, the agreement should include a clause for being in accordance with the laws of the state where you are located.
When should a bookkeeping contract be signed?
Ideally, a bookkeeping contract should be signed before work begins. This way, both the bookkeeper and the client can review the contract and make sure that they agree to the terms. Additionally, signing the contract before work begins can help to prevent any misunderstandings or disagreements about the scope of work or the expectations for each party.
What if I need help writing a bookkeeping contract?
If you’re not sure where to start, there are a few resources that can help. First, you can consult with an attorney who specializes in business law. They can advise you on the best way to structure your contract and can help to ensure that all of the necessary information is included. Additionally, there are a number of bookkeeping contract templates available online. These templates can provide a helpful starting point for drafting your own contract. Finally, you can also reach out to other bookkeepers in your network for advice and guidance.