An engagement letter is a written agreement between you and your client that defines what you’re doing, what you’re not doing, what the client is responsible for, and how much it costs. Every client, every return, every time.
Why It Matters
The number one source of disputes between preparers and clients is mismatched expectations. The client thought you were reviewing their entire financial situation. You thought you were preparing a 1040. The client thought amendments were included. They weren’t. Without an engagement letter, it’s your word against theirs.
What to Include
Scope of work. Be specific. “We will prepare your 2025 federal and [State] individual income tax returns based on the information you provide.” Not “we will handle your taxes.”
Client responsibilities. The client is responsible for providing complete and accurate information. If they leave something out, the engagement letter establishes that the omission was their responsibility, not yours.
Fee. State it clearly. Flat fee, hourly rate, or a range depending on complexity. Put it in writing.
What’s excluded. Spell out what the engagement does not include. You’re not auditing their books. You’re not providing legal advice. You’re not representing them before the IRS (unless you specifically agree to that separately).
Limitation of liability. You can limit your liability to the amount of the fee paid for the engagement. This won’t protect you from everything, but it sets a reasonable boundary.
Signature. Have the client sign before you start work. Keep a copy in the file.
How Long Should It Be?
One to two pages. It’s not a complex document. It’s a clear, professional agreement that takes five minutes to explain and can save thousands in disputes.
MuseSpring provides engagement letter templates and walks you through how to customize them for your practice. Visit musespring.com.