Free bookkeeping service agreement template: key elements and common mistakes

When working with bookkeeping clients, it’s important to have everything spelled out at the outset. This is where a bookkeeping service agreement comes in handy. 

A detailed service agreement isn’t just a formal box-ticking exercise. It forms the backbone of successful bookkeeper-client relationships, ensuring that both parties are on the same page. This helps you avoid all manner of issues and disagreements further down the line. 

In this article, we’ll explore the benefits of a well-written bookkeeping service agreement, as well as some common mistakes to avoid when drafting your own. But that’s not all — we’ll include a link to a bookkeeping service agreement template that you can download and customize for free. 

What is a bookkeeping service agreement?

A bookkeeping service agreement is a formal contract between a bookkeeper and their client. It outlines key information about services the bookkeeper will provide, including details about payment, deadlines, and the responsibilities of both parties.

The goal of a bookkeeping service agreement is to align expectations at the start of the working relationship. Once signed, the client understands: 

• What services they will receive
• How much those services will cost
• When the services or related tasks will be completed
• Their role in the completion of these services

As a result, this document provides transparency around the working relationship. It helps avoid disputes or difficult conversations later on. It also answers most of the questions the client may have, saving the bookkeeper valuable time.  

Key elements of a bookkeeping service agreement

So what exactly should a bookkeeping service agreement include? In this section, we’ll run through the key elements and what they contain. 

Scope of services

This section outlines the specific services you will provide. Where possible, it’s a good idea to break down services into their constituent tasks. Instead of writing “bookkeeping services”, for example, you can itemize the tasks involved, such as:

• Reconciling accounts
• Managing accounts receivable and payable
• Producing accurate financial statements

Make sure you provide clear yet succinct explanations for each task. This improves transparency and helps the client understand exactly what they are paying for. In some cases, it’s also important to be explicit about what services or tasks aren’t included. This helps the client understand exactly where your responsibilities start and end.

Fees and payment terms

It’s crucial that the client understands how much you will charge them for the agreed-upon services. This section should provide detailed information about: 

• The cost of individual services, as well as a total fee if possible
• How the fees are calculated — e.g. flat fee, hourly rate, or retainer
• Payment terms — i.e. when and how the client should make payment
• What happens in the event of late payment

Timelines and deadlines

Your bookkeeping service agreement should include details about key dates, milestones, and deadlines. This could be for completing services or providing deliverables, such as bookkeeping reports. 

By including timelines and deadlines, you improve transparency and avoid confusion. But remember — your clients will hold you to this information, so be realistic! 

The responsibilities of each party

A successful working relationship requires both parties to fulfill certain duties. For you, this means performing the agreed-upon services within the agreed-upon timeframe. For the client, it means providing the necessary data, documents, and access to key systems — as well as paying you in full and on time. 

Confidentiality and data security

Bookkeeping involves handling highly sensitive financial and personal data. For this reason, it’s essential to include a confidentiality clause. This ensures that both parties agree to protect the confidentiality, integrity, and security of sensitive data — and the steps involved in doing so.

Termination and renewal terms

This section explains the circumstances where either party can terminate the agreement, and how. Remember to include any information about notice periods. 

You should also explain any renewal terms for extending the agreement. For example, the agreement could renew automatically at different intervals, until either party terminates it. Alternatively, you can specify any actions the client needs to take to renew the agreement.

Dispute resolution

A thorough service agreement should help avoid any potential disputes through transparency and mutual understanding. That said, disagreements may still occur during the provision of services — especially if either party fails to meet their obligations. Make sure you specify how disputes will be resolved, so your client understands what to do should any issues arise.

Limitation of liability

From a legal perspective, it’s important to protect yourself in the event of any claims, losses, or damages caused during the provision of services. With this in mind, it’s a good idea to include a short section outlining the limitation of your liability. 

Typically, this section states that your liability as a bookkeeper will not exceed the total fees paid by the client. It should also exclude liability for any indirect or consequential damages, such as lost profits or data.

Bookkeeping service agreement template

To save you time drafting a bookkeeping service agreement from scratch, we’ve prepared a template that you can use for free. Simply download it at the link below, copy it to a new Google doc, and customize it to suit your needs. 

You can add all relevant information in the placeholders. Feel free to also add, remove, or change any other section as you see fit. 

If you found this template useful, we’ve got plenty more free tools designed to save you time and streamline your bookkeeping practice. Implement these templates and checklists in your firm today! 

• Bookkeeping client onboarding checklist
• Bookkeeping client onboarding questionnaire
• Bookkeeping pricing template

Common mistakes in bookkeeping agreements and how to avoid them

Service agreements outline key information and expectations between a service provider and their clients. If an agreement is poorly written or missing critical information, it can lead to misunderstandings or disagreements later on. 

Here are some common mistakes people make when drafting service agreements — and how to avoid them.

Vague language

One mistake service providers make is assuming their clients know as much as they do. As a result, they use vague language that leaves important matters open to interpretation. This can lead to disagreements and frustration for both parties. 

Be as specific and clear as possible when describing services, payment terms, and other important details. Instead of saying “bookkeeping services,” break it down into individual tasks. Describe each task so that there’s no doubt about what it involves.

Ignoring client responsibilities

When writing a service agreement, it can be tempting to focus solely on your responsibilities as a bookkeeper. However, clients have a crucial role to play in the effective and timely delivery of bookkeeping services. For example, they need to provide you with documents and information for you to do your job. 

If you neglect to outline the client’s responsibilities in your service agreement, you potentially leave yourself in a tricky situation — asking the client to do something they haven’t formally agreed to do. This can result in delayed work and tensions between both parties. 

So, remember to include a section on the client’s responsibilities, including clear instructions on: 

• What documents and information you need, and in what format
• Deadlines and key dates for submitting information, to ensure timely delivery of services
• How information and files should be submitted — e.g. via a document management system or client portal
• How to access the client’s key systems, if necessary

Inadequate payment terms

Failing to provide detailed payment terms can lead to disputes over fees and payment deadlines. Without clear guidelines, your clients may not understand when to pay you, or how. Any dispute involving money can become fraught. 

This issue is entirely avoidable. When preparing your service agreement, take care to explain your fees and fee structure. Clearly outline payment deadlines, how you want to receive payments, and what happens if your client doesn’t pay you on time.

No confidentiality clause

Failing to include a confidentiality clause can leave both parties at risk — especially when handling sensitive information. From the client’s perspective, it also raises a lot of questions about professionalism and trust. 

Make sure you include a confidentiality clause that specifies how sensitive data will be protected. Be specific about the type of data the clause relates to. For example, data in financial documents, email, and software systems, as well as data provided orally during meetings or video calls.

Unspecified termination terms

If your service agreement doesn’t include clear termination terms, it can lead to complications if either party wishes to end the relationship early. Again, from the client’s side, this may appear unprofessional. 

Avoid these issues by clearly outlining the conditions under which either party can terminate the agreement. Include details about notice periods, as well as how the termination should be communicated. This helps set expectations and provides either party with a clear exit strategy if needed.

Omitting a limitation of liability clause

When outlining service and payment details, it can be easy to overlook this short but important section. But without a limitation of liability clause, you leave yourself exposed to significant risks in the event of legal disputes. 

Remember to always include a short clause that limits the scope of your liability. Ideally, this will be capped at the total fees paid under the agreement and excludes any indirect damages caused as a result of your services. This will help protect you from excessive claims and crippling financial repercussions.

Need help managing your bookkeeping clients?

Managing a bookkeeping business can be challenging. With multiple tasks, clients, and team members to manage, it can be hard to keep on top of everything. So what’s the solution? The answer is simple: the right tech. 

With TaxDome, you get a broad range of tools that streamline and automate your entire bookkeeping business. Instead of jumping between different platforms and apps, you can do all of this and more on one powerful and intuitive platform: 

• Save time and scale your business with automated workflows
• Delegate work, track deadlines, and boost team collaboration 
• Manage all client data and communications in a powerful CRM
• Onboard clients and gather information and documents automatically
• Provide a secure client portal on desktop or mobile for all client interactions

This is just a fraction of what TaxDome offers forward-thinking bookkeeping practices. For a full breakdown of TaxDome’s capabilities, check out this article and explainer video: Practice management software in action.

The bottom line

Bookkeepers shouldn’t enter into formal engagements with clients without a bookkeeping service agreement. Why? Because service agreements align expectations from the start, ensuring a level of trust and transparency that is crucial to a successful working relationship. 

The service agreement template we’ve provided in this article will help you speed up this process. Simply download or copy the doc, edit the template to suit your needs, and fill in the blanks for new clients. Simple! 

That’s just one of the ways you can streamline your bookkeeping workflows. If you want to take your practice to the next level, you need the right practice management software. With TaxDome, you get all the tools you need to manage clients, teams, projects, and workflows on one award-winning platform.

To see why firms that use TaxDome save up to 40 hours per employee per month, request a demo today.