A bookkeeping service agreement is an official business document that records the client’s decisions and the bookkeeper regarding the rendering of accounting either as a one time or monthly contract. When a client is selecting a person or company to be a bookkeeper, it’s wise to pick a trustworthy individual. The bookkeeper has access to bank records, company receipts, finance records, and other critical details.
For a Bookkeeping agreement to be made, both the client (individual/company) and the accountant (individual/company) must enter into a contract, and the date of the contract agreement noted.
In the contract, the client has to clarify whether the contracted bookkeeping accountant will be retained or the accountant is employed independently and has agreed to offer the required services.
The contract should clearly outline the duties and obligations of each party. In some arrangements, the accountant may be contracted only to handle the client’s taxes. In such agreements, the role of the bookkeeper is limited. In others, the accountant’s position may be to maintain all the company finance details, bookkeeping, and taxes information of the client. Essential details that should be encompassed in a good bookkeeping contract include:
- The name, address and contact information of the accountant
- The name, address and contact details of the client
- Details of the accountant’s license
- Date of the commencement of the contract and the duration
- The roles and duties of the accountant
- The things the accountant is not permitted to do
- The service charge and payment system agreed.
- Something that can lead to the termination of the agreement
- The laws that govern the agreement.
What are Bookkeeping Contracts?
Bookkeeping contracts are documents that formalize the relation between the bookkeepers and the clients they work for. The agreements outline the services the bookkeepers should render and their respective income from the services. In a nutshell, a bookkeeping contract is an arrangement between an individual or company and the bookkeeper.
Bookkeeping contracts are necessary since they outline the services the clients are to receive from the bookkeepers. The document also protects the rights of bookkeepers and defines their responsibility. It’s through the contract that the bookkeeper gets to understand whether they will only handle taxes or the entire business records.
Bookkeeping Contract Basics
Four situations that need you to have a bookkeeping contract
It’s advisable to enter into a bookkeeping contract if:
- You are a bookkeeper engaging in a contract with new clients to offer accounting and bookkeeping services. It’s wise only to begin working after drafting the deal and making a formal agreement.
- You are a representative of an accounting company contracted to be a bookkeeper for a client. The bookkeeping contract will be vital in defining both the bookkeeper and the client’s role and responsibility.
- You are a person in need of a bookkeeper who will handle your accounting. A formally drafted agreement will outline to you and your accountant the services to be done.
- As a company, you need to hire an accounting person or firm to deal with bookkeeping. A bookkeeping contract will clearly outline the role of the firm or individual bookkeeper.
How Much Does Bookkeeping Cost?
This is a question that everyone who seeks bookkeeping services asks themselves. Four factors determine the cost of bookkeeping. They include:
- The size of the company. Large companies will have to incur more bookkeeping costs than small ones.
- The number of transactions. Companies with many transactions have a heavier bookkeeping task and will spend more when hiring an accounting firm.
- The number of workers in a company. Bookkeepers find it easier to handle accounting for Companies with fewer employees and thus may charge lower for their services.
- Companies that process many invoices and bills with numerous balance sheets that have to be reconciled spend more on bookkeeping.
Full vs. Basic Bookkeeping Services
Basic bookkeeping involves an accountant only recording a company’s transactions and producing bookkeeping records. This is essential for small starting businesses that need to concentrate on compliance. A basic bookkeeper ensures the company follows government policies and regulations, pays bills adequately, and monitors the financial transactions.
As businesses or companies grow and target higher accounting goals, full accounting becomes necessary.
Payment for Bookkeeping
The payment is enshrined in the terms and conditions of the bookkeeping agreement. Some clients and bookkeepers may agree to make a payment on a weekly, fortnight or monthly basis. In such cases, the accountant issues an invoice to the client for the services rendered and the payment released after a specified period of receipt of the invoice.
To write a good bookkeeping contract with ease, download a bookkeeping contract template here and fill in the relevant details.
Are bookkeeping and accounting similar?
While many people tend to confuse bookkeeping with accounting, the two do support your business differently. Bookkeeping usually deals with transactional and administrative issues such as identifying, measuring and recording financial transactions. On the other hand, accounting deals with analyzing and interpreting financial transactions.
What are bookkeeping services?
These are services that help develop and maintain a company’s overall financial processes and management. They include keeping financial records, storing records and retrieving financial transactions.
Bookkeeping contracts are essential for businesses that hire accountants to help them in keeping and managing records. It’s imperative for any company that needs to grow to seek the services of professional bookkeepers.