{"id":11255,"date":"2025-10-20T08:02:00","date_gmt":"2025-10-20T13:02:00","guid":{"rendered":"http:\/\/taxprocenter.proconnect.intuit.com\/?p=11255"},"modified":"2025-10-20T12:29:21","modified_gmt":"2025-10-20T17:29:21","slug":"engagement-letter-best-practices-for-tax-pros","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/practice-management\/engagement-letter-best-practices-for-tax-pros\/","title":{"rendered":"Engagement letter best practices for tax pros"},"content":{"rendered":"\n

Although engagement letters are a base requirement for the preparation of all tax returns, these letters also walk a fine line. Good ones are a balance between providing enough information and clarity to the tax client about the services you are providing, but not so detailed that the client is scared off by the length of the letter.<\/p>\n\n\n\n

There is also an element of tone to the letter. The letter should assume that the client is honest, but it needs to protect you if the client is questionable. Of course, if honesty is not part of the relationship, would you have the client at all?<\/p>\n\n\n\n

First, the basics<\/strong><\/p>\n\n\n\n

The engagement letter must address additional work if needed. For example, is additional bookkeeping required because the client\u2019s books are provided in a haphazard manner? This may be due to an unusual transaction, such as the sale of a rental property, which calls for additional computational work. The engagement letter can address this by stating additional work will be discussed with the client prior to starting work. Price<\/a> and delivery time should also be spelled out.<\/p>\n\n\n\n

Part of a new tax client engagement is to request prior year tax returns. This may be one year or more depending on a variety of factors, including the complexity of the tax work and type of activities on the returns. Discussion of findings should be addressed, as well as the action that should be taken.<\/p>\n\n\n\n

Business tax returns<\/a> for corporations, partnerships, and limited liability companies require a few additional considerations. Business returns may have better accounting as support for the tax return preparation, but regardless of what is provided to you, the supporting work must be reviewed prior to starting the tax return. The engagement letter for business entities should contemplate all additional steps needed to do a quality job. You should also have some experience<\/a> in the client\u2019s industry or business to do a good job. For example, if you have no experience in construction, then you should not be taking on the tax preparation work for such a business.<\/p>\n\n\n\n

What’s included in your engagement letter<\/strong><\/p>\n\n\n\n

Unless you\u2019re new to the profession, you probably have examples of letters you\u2019ve already prepared. That\u2019s great, but make sure you cover your bases. These include the following elements:<\/p>\n\n\n\n