What it is
Payroll work has fixed dates, and a late input from the client becomes a late deposit. The engagement letter sets the information deadline, the funding date and who decides each point.
This letter lists the services, the client’s duties, the firm’s duties, deposit and funding terms, fees and the term of the engagement.
When to use it
- Before taking on payroll for a client.
- When a client moves from a payroll provider to the firm.
- When adding payroll tax filings to a bookkeeping engagement.
What’s inside
- Service table with frequency
- Client duties: input deadline, funding, I-9, worker status
- Deposit and funding table with late-funding terms
- Fee table with per-employee fee, and signature block
Standard cited
This template follows IRS Pub 15. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
Who verifies work authorization?
The employer completes Form I-9. The letter states the firm does not review the documents.
How is the deposit due date set?
By the deposit schedule, monthly or semiweekly, which comes from the taxes reported in the lookback period in IRS Publication 15. The letter says the firm tells the client the amount and the due date.
Who decides if a worker is a contractor?
The client. The letter says the firm processes what it is told, and the worker classification worksheet helps the client document the decision.
Related templates
- Bookkeeping Services Engagement Letter
- Worker Classification Worksheet: Employee or Contractor
- Payroll Tax Deposit and Filing Tracker
- New Hire Payroll Onboarding Checklist
Last updated 11/06/2026. All free templates.