Bookkeeping contracts are the unsung heroes of the financial world.
However simple or straightforward the contract looks, these agreements hold much weight and force that can make or break your business operations.
Coupled with a bookkeeping team that crushes your business’ cash flow issues easily, you need a legally binding agreement that hits two targets with just a shot—holding your team accountable and keeping your company secure.
But without knowing what to include in your contract, you defeat the purpose of making one in the first place.
Let’s break it down together.
BONUS! We have a free bookkeeping contract template that anyone can use.
The Problem at Hand: What’s Up with Bookkeeping?
So, you’ve got bookkeepers crushing invoice delays, managing vendor accounts, and preparing financial statements for investors. They’re hitting KPIs and keeping cash flow smooth.
But a year in and they still have no clear scope for their work. They’re bringing killer results, but feel their work is killing them too.
During touch bases, clients insist on their own understanding of the bookkeepers’ obligations, pushing demands through surprise calls, long meetings, and countless emails.
Frustration builds on both ends. What should be a smooth partnership has become a tug-of-war, with each party digging in their heels, refusing to budge.
“What now?” you may ask.
Well, accounting demands accountability, and good bookkeeping service providers should mirror that.
Before tapping bookkeeping help, make sure everything is aligned between all involved.
Each party should agree on their rules of engagement, which should come in a tangible, consolidated file.
This is where your bookkeeping contract comes in.
What is a Bookkeeping Contract?
A bookkeeping contract is a legally binding document that outlines details of the agreement between the bookkeeping firm and the clients. The contract covers (but isn’t limited to) the following:
- Scope of work
- Payment terms
- Duration of agreement
- Confidentiality concerns
- Liability and indemnification
- Guidance and explanatory notes
Most business owners find value in laying out agreements between parties. However, others don’t really pay it too much mind. We won’t sugarcoat it: If you’re taking the latter route, you’re bound to fail.
It’s not just a matter of can but will when it comes to misalignments between the parties involved. In some cases, businesses suffer from unwanted budget stretches, pipeline time sinks, and bottlenecks that cost them their best clients (and their reputation as well).
The worst part is that all of these losses would’ve been prevented had a contract been established.
How a Bookkeeping Contract Benefits Each Party
Three non-negotiable Ps should come to mind when crafting a bookkeeping contract: Power, protection, and prevention.
These factors are what make your contract essential.
Power
It’s not just a piece of paper. That contract actually has teeth to it—and pretty strong ones at that!
Your bookkeeping contract is what keeps every party from wanting out of the agreement, especially if their reasons are undisclosed or unspecified.
Holding such power, the contract encompasses all measures, possibilities, risk factors, and limitations that both your firm and clients should honor.
Protection
Feel like things can go awry anytime? Scared of your most sensitive data thrown out in the open? Or both?
A well-put and comprehensive bookkeeping services agreement significantly eases that anxiety.
For one, your contract protects your data against the possibility of leakage, especially with the right confidentiality measures put in place.
It also compels your bookkeeper to safeguard clients’ confidential data and documents all the more, while honoring the original business structure and arrangement.
Prevention
A solid contract leaves no room for the notoriously sneaky scope creep.
When there’s a bookkeeping contract, parties end up on the same page—service types, timeframe, payment dates, and everything else.
On top of that, it provides a framework for resolving disputes and terminating the contract if necessary.
This means no surprise tasks for the bookkeepers, no unwanted extra payments from the clients, and no other misalignments that could hurt business partnerships.
Good vs Bad Bookkeeping Services Agreements
- Detailed scope of work with enumerated tasks (no ad hoc duties or indicated possibilities of ad hoc tasks with a number limit)
- Outlined services to be provided, like financial statement preparation, payroll processing, and tax filing
- Specified payment terms, including the hourly rate, fees paid, and late fees
- Confidentiality clauses to protect sensitive financial data
- Indicated termination clause and notice period
- Detailed dispute resolution process
- Both parties’ signatures, including the client’s address and contact information
Meanwhile, it also helps to detect poorly written contracts to avoid potential business operations risks. Here are some things you should look out for:
- Absence of precise definitions
- Overreliance on jargon that’s not universally understood
- Descriptions of goods, services, or obligations that can leave room for misinterpretation and disagreement
- Confusing sentence structure
- Incomplete information, especially essential data (e.g. names, addresses, dates, specific deliverables)
- Lack of fact-checked and/or current details (e.g. dates, prices, contact information)
- Contradictory clauses
- Inconsistent numbering and/or cross-referencing
- Unnecessary or complex schedules/attachments
Now that we have our boxes to tick, we’ll make it even easier for you. Whether you’re an independent contractor or a permanent employee, we have a free template you can use.
Free Bookkeeping Contract Template for Your Business
TEMPLATE 1
This Bookkeeping Services Agreement is entered into (“Effective Date”) __________________________________ by _______________________________ (“Bookkeeper”) and _________________________________ (“Client”), collectively referred to as the (“Parties”).
WHEREAS, the Client is in need of bookkeeping services and seeks to hire a bookkeeper to perform such services; and
WHEREAS, the Bookkeeper agrees to perform such services for a fee; and
THEREFORE, the Parties agree as follows:
1. The Bookkeeper agrees to provide the following services:
- Bill payment
- Financial statements
- Financial records
- Financial reporting
- Accounts payable
- Accounts receivable
- Bank reconciliation
- Budget preparation
- Detailed general ledgers
2. The Client will pay fees for the services above:
- The Client will pay the Bookkeeper a fixed rate of $___________. Payment shall be made upon execution of this Agreement and must be paid via _______________________ [cash/check/Venmo/PayPal/ (select one)]. By signing this Agreement, the Bookkeeper acknowledges receipt of payment in full of the Client. In the event of late payments, the Party will pay an additional payment of $________________
3. The Client will be responsible for providing all the necessary documentation and accounting system access necessary to perform the Services outlined in the Bookkeeping Services Agreement above. The Client acknowledges that the accuracy of financial information provided is the sole responsibility of the Client, and the Bookkeeper will be held harmless from any liability resulting from the inaccuracy of the financial records provided by the Client.
4. The Parties agree to the following Confidentiality Terms:
- The Bookkeeper acknowledges that all data from the Client is personal and/or financial information.
- The Bookkeeper will honor and implement strict confidentiality regarding such confidential information.
- This confidential information includes financial documents, information contained in accounting systems, and information provided verbally by the Client.
- The Bookkeeper will not disclose any sensitive personal and/or financial information to any third party without the prior written consent of the Client.
5. The Parties agree to the following Termination Clause
The Parties agree to commence on _______________________ and end on ______________________, without date subtractions or extensions.
Terminated by Both Parties. By providing the other Party at least ____days’ written notice.
Terminated by Client ONLY. By providing the Bookkeeper ____ days’ written notice.
Terminated by Bookkeeper ONLY. By providing the Client ____ days’ written notice.
Payment of any outstanding invoices is due immediately upon termination of this contract by the Client.
6. Dispute Resolution
All legal disputes under this agreement shall be settled by binding arbitration in the state under which the agreement was entered into. Arbitration may be started at any time by either Bookkeeper or Client, which starts upon the provision of written documentation to the other Party. Any payment awarded by the single arbitrator will be considered binding under this Agreement, creating a legal obligation for the Party (Bookkeeper and Client) to pay.
7. Limitation of Liability
Under no circumstances shall either party be held responsible to the other for any damages, including but not limited to, business interruptions, loss of or unauthorised access to information, or damages resulting from loss of profits incurred by the other party due to the services rendered under this agreement, even if such party has been informed of the potential for such damages. Furthermore, neither party’s liability for any claim, loss, or liability arising from or related to this Agreement shall exceed the amounts paid to the Bookkeeper during the period immediately preceding the event that gave rise to such claim or action by the Client, or the limits set forth in the Bookkeeper’s professional liability policy, whichever amount is greater, including the errors and omissions policy currently in effect.
8. Acceptance
The signatures below indicate entire agreement and the Parties entering into this contract.
Our Surefire Solution to Your Bookkeeping Needs
Whether you’re negotiating contracts or closing deals, you’re known for always stepping to the fore. Just as your stakeholders do, it pays to pay mind to legal obligations.
But before crafting an across-the-board bookkeeping contract, start with your building blocks. Work with a class-leading partner that can boost your bookkeeping processes, providing you with an elite team that keeps any impending cash flow chaos at bay.
It’s time to crush your most pressing bookkeeping concerns. We know exactly how to help you, and it all starts by taking this game-changing step today.
