Is this a proper/good engagement letter for my bookkeeping and payroll business? May 15, 2024 Name: Address: City, State, Zip: Dear [Client Name]: We are excited about the opportunity to serve you in your business endeavors. Knowing your bookkeeping and payroll needs are in good hands is essential in ensuring your business's success. This letter confirms our mutual understanding of the terms of our engagement to provide bookkeeping and payroll services for your business. We are here to help with setting up bookkeeping services. With this, we will: • Prepare your accounting file from scratch • Create and map the chart of accounts to the balance sheet and profit and loss statement • Integrate banking systems with the accounting system • Set up the accounts receivable process, including billing, invoicing, and aging. • Set up of accounts payable via create card and check • Management report set up including balance sheet, cash profit and loss statements by week and month • Recommendation on managing tax liability, including saving 25-40% of your monthly cash profits and setting them aside for tax payments. We will provide monthly or quarterly bookkeeping services, which consist of the following: • Importing all bank activity for your __ checking account and ___credit cards. • Classifying all transactions according to your business needs. • Reconciling banks and credit cards each month. • Grossing up payroll transactions. • Answering questions regarding accounting posed by your CPA or tax preparer. All monthly or quarterly bookkeeping services will be completed by the 10th of the month. Additionally, we will provide weekly bookkeeping services consisting of: • Processing accounts payable, including entering all bills, reviewing outstanding liabilities, and processing agreed-upon payments for your vendors. • Processing accounts receivable, including sending invoices and statements as needed. We will also follow up monthly with your clients with outstanding balances. All weekly bookkeeping services will be completed by Wednesday each week unless there is a holiday, in which case all services will be completed by Thursday. We also offer clean-up services. With this, we will: • Fix customer payments and credits that have not been applied correctly. • Write off non-collectible invoices. • Review your accounts receivable aging summary report for any additional corrections, updates, or changes that need to be made to your accounting file. • Fix vendor payments and credits that have not been correctly applied. • Look over your unpaid bills report for any additional corrections, updates, or changes that need to be made to your accounting files. • Reconcile your bank accounts and credit card accounts. • Locate discrepancies in your bank reconciliations. • Reclassify transactions that have been incorrectly recorded into your accounting files. • Look over your working trial balance for misclassifications and data entry errors, and prepare a list of suggested adjusting journal entries to correct these bookkeeping mistakes. • Troubleshoot prior account balances that have been changed. • Look for changes to your company’s chart of accounts. • Review the setup of your accounting file and make any necessary corrections. • Inform you of changes to your customer and vendor lists. • Find changes to your business’ fixed asset items. • Processing accounts payable, including entering all bills, reviewing outstanding liabilities, and processing agreed-upon payments for your vendors. • Processing accounts receivable, including sending invoices and statements as needed. We will also follow up monthly with your clients with outstanding balances. The payroll services we provide include: à Calculating payroll for your employees and contractors à Calculating federal and state payroll tax deposits with the confirmation of online software. à Preparing federal and state payroll tax forms as required with the confirmation of online software. à Setting up your payroll system and the payroll dates and processes for running payroll continuously. à Preparing Form W-2 & 1099s with the confirmation of online software. à Electronically filing all W-2s & 1099s with the confirmation of online software. Our payroll responsibilities include: Beginning with the first approved day to run payroll with the agreement of which day this will be, we will run payroll for your company weekly/bi-weekly/semi- monthly/monthly (depending on your needs). We will set up new employees and contractors for payroll on an as-needed basis using the information from the required employment documentation that is provided. We will inform you of the amount and due date of your payroll tax payments and filings and assist you in making them. Your responsibilities will include: Providing us with payroll information on a timely and periodic basis, including hours worked, pay rates, employee status, and benefits information. You will also promptly provide us with updated and corrected information as needed. You must maintain sufficient funds in your bank account to cover payroll expenses and related tax liabilities. You will be charged an exception fee if insufficient funds are in your account when payroll or payroll taxes are due. Firm Rates and Fees The monthly fee for our services outlined above will vary based on the work done. There is a minimum rate of $300 for bookkeeping and $120 for payroll per month. The hourly rate is $60/hour. Our monthly bookkeeping costs typically range around $300-600/month and $120- $180/month for payroll services. Additional consulting services outside the scope of the items listed above will be billed at our standard hourly rate. Our hourly rates are as follows: • Administrative staff: $100/hour • Bookkeeping and Payroll Services $60/hour This engagement will recur until either party cancels the agreement through written communication with 30 days’ notice. Payment Services You may authorize us to make payments for you. To do so, a principal officer must sign the Electronic Services Authorization form accompanying this letter and return it to us so we can make payments. If you authorize us to pay your employees or contractors electronically, you must ask them to sign a Direct Deposit Authorization and retain it in your files. By giving us access to your bank account, you authorize us to make vendor, payroll, contractor, and payroll tax payments and filings on your behalf, and you will be bound by them as though you had made them yourself. Typically, we will send payment transactions through the Automated Clearinghouse (“ACH”) Network. You agree that these payment transactions will be governed by the ACH Rules as in effect from time to time and that each entry we make on your behalf will be authorized, timely, for an amount due and owing, and will not violate the laws of the United States. Alternatively, we can print and mail checks for you or provide you with the information to do so yourself with your approval. Our Responsibilities Error, fraud, or theft Our engagement does not include procedures designed to discover errors, fraud, or theft, so it cannot be relied upon to disclose such matters. Government inquiries This engagement does not include responding to inquiries by any governmental agency or tax authority. If your tax return is selected for examination or audit, you may request that we assist you in responding to such inquiry. If you ask us to represent you, we will confirm this in a separate engagement letter and delineate how additional charges for this service will be calculated. Responding to Subpoenas All information you provide to us concerning this engagement will be maintained strictly confidential. If we receive a summons or subpoena that our legal counsel determines requires us to produce documents from this engagement or testify about this engagement, and we are not prohibited from doing so by law or regulation, we agree to inform you of such summons or subpoena as soon as practical. Within the time frame permitted for our firm to respond to any request, you may initiate such legal action as you deem appropriate at your own expense to attempt to limit discovery. If you take no action within the time permitted for us to respond, or if your action does not result in a judicial order protecting us from supplying requested information, we may construe your inaction or failure as consent to comply with the request. If we are not a party to the proceeding in which the information is sought, you agree to reimburse us for our professional time and expenses, as well as the fees and expenses of our counsel incurred in responding to such requests. Responding to Outside Inquiries We may receive requests for information in our possession arising out of this engagement. The requests may come from governmental agencies, courts, or other tribunals. If permitted, we may notify you of any request for information prior to responding. In certain proceedings, an accountant-client privilege may exist. You agree that we are not under any obligation to assert any privilege to protect the release of information. Before we respond to any request, you may initiate legal action to prevent or limit our response. Unless you promptly initiate such action after we notify you at your last known address, as reflected in our files, we will release the information requested. PRIVACY POLICY In accordance with the Federal Trade Commission rule, Privacy of Consumer Financial Information, we are required to inform you of our policy regarding the privacy of client information. Types of Nonpublic Personal Information We Collect We collect nonpublic personal information about you that you provide to us or obtain from third parties with your authorization. Parties to Whom We Disclose Information For current and former clients, we do not disclose any nonpublic personal information obtained during our practice except as required or permitted by law. Permitted disclosures include, for instance, providing information to our employees and, in limited situations, to unrelated third parties who need to know that information to assist us in providing services to you. In all such situations, we stress the confidential nature of the information being shared. Protecting the Confidentiality and Security of Current and Former Clients’ Information We retain records relating to professional services that we provide so that we can better assist you with your professional needs and, in some cases, comply with professional guidelines. We maintain physical, electronic, and procedural safeguards that comply with our professional standards to guard your nonpublic personal information. Electronic Data Communication and Storage To facilitate our services to your company, we may send data over the Internet, store electronic data via computer software applications hosted remotely on the Internet, or allow access to data through third-party vendors’ secured portals or clouds. Confidential electronic data to your company may be transmitted or stored using these methods. We may use third-party service providers like tax return preparation software to store or transmit this data. Using these data communication and storage methods, our firm employs measures to maintain data security. We use reasonable efforts to keep such communications and data access secure by our obligations under applicable laws and professional standards, and we require all of our third-party vendors to do the same. Electronic Data Communication and Storage You recognize and accept that we have no control over the unauthorized interception or breach of any communications or data once it has been sent or has been subject to unauthorized access, notwithstanding all reasonable security measures employed by us or our third-party vendors, and consent to our use of these electronic devices and applications during this engagement. Outsourcing The firm may, from time to time, and depending on circumstances, use third-party service providers to serve your account. We may share confidential information about you with these service providers, but we remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures, and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain this confidentiality and take reasonable precautions to ensure that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. If we cannot secure an appropriate confidentiality agreement, you will be asked to provide your consent before your confidential information is shared with a third-party service provider. Furthermore, the firm will remain responsible for the work provided by any such third-party service providers. In this engagement, we will complete the above bookkeeping and payroll activities with care and due diligence. We will respond to all communication from you or your business within 48 hours. Your responsibility for this engagement includes providing access to your accounting system, bank accounts and/or statements,all documentation and information necessary to complete bookkeeping, and paying invoices for services within 15 days of receiving the invoice (if the invoice is not paid on time, an accruing interest charge will be added to it until it is paid). While we stand behind our professional judgment and experience, this does not override your business judgment. We are also not responsible for changes to your books made by yourself or your staff. Our work consists of record keeping, and we do not provide any auditing or fraud detection. We are also not responsible for delays caused by delays in receiving information from your business. Please date and sign a copy of this letter and return it to us to acknowledge your agreement with the terms of this engagement. We look forward to working with you. Sincerely, _________________________ Owner, Cornerstone Accounting Group Inc. Accepted by: ________________________________ Client Signature Date

Your engagement letter is quite comprehensive and covers a wide range of services and responsibilities. However, there are a few areas where you might consider making improvements or clarifications to ensure clarity and legal soundness: 1. **Clarity and Brevity**: The letter is quite lengthy, which might overwhelm some clients. Consider summarizing key points and providing detailed terms in an appendix or separate document. 2. **Scope of Services**: Clearly define the scope of services for both bookkeeping and payroll. Ensure that clients understand what is included and what constitutes additional services that will incur extra charges. 3. **Liability and Limitations**: While you mention that your services do not include fraud detection, it might be beneficial to explicitly state that you are not liable for any errors or omissions in the financial records provided by the client. 4. **Payment Terms**: Specify the payment terms more clearly, including when invoices will be issued and the consequences of late payments, such as interest rates or service suspension. 5. **Confidentiality and Data Security**: While you cover these areas, consider adding a clause about the client's responsibility to protect their own login credentials and sensitive information. 6. **Termination Clause**: You mention a 30-day notice for termination, but it might be helpful to specify any conditions under which immediate termination could occur, such as non-payment. 7. **Client Responsibilities**: Clearly outline what you expect from the client, such as timely provision of information and maintaining sufficient funds for

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