Best Software for Automating Tax Engagement Letters

Dec 21, 2023 | TaxDome

If you could automate most things in life, we bet you would.

After all, history is full of turning manual operations into automated ones. For example, hand-washing laundry became washing machines, and manual cars have turned into automatic ones. So, if you haven’t automated your tax engagement letters yet, you are definitely missing out on saving yourself lots of time and effort.

Here are a few statistics to think about – Even if you spend only 15 to 20 minutes on average to write and review one tax engagement letter, it follows that it will take you about an hour to write three letters. What if you have dozens of clients? Or hundreds? Plus, you need to write each client an engagement letter yearly. If you are a tax professional, you spend hours writing these letters repeatedly instead of on other more important types of work.

This article will guide you on writing engagement letters and their importance to your business. More importantly, we will also discuss which engagement letter software you should use to automate writing and sending them out.

Affiliate Disclaimer: This post contains affiliate links. We may receive a commission if you make a purchase after clicking on one of these links.

What is a tax engagement letter?

If you are an EA or CPA, we’re sure you’re very familiar with what a tax engagement letter is already. However, if you’re not, Investopedia defines a tax engagement letter as “a written agreement that describes the business relationship to be entered into by a client and a company.” It has the same purpose as a contract but is less formal and uses less legal terms.

The letter describes the scope of the two parties’ agreement, terms, and costs. It is essential to have this type of letter because it sets expectations and minimizes risk for both parties.

Typically, a tax engagement letter contains the following sections:

  • Names of both parties
  • Scope of services
  • Fee structure
  • Engagement period
  • Each party’s responsibilities
  • Professional standards
  • Terms and conditions

An engagement letter is sent and signed before any work is started to ensure both parties have clear expectations and understand and accept the conditions of the agreement. These letters help provide a good customer experience, minimize the risk of misunderstandings, and protect you from potential liability. They are crucial in any tax pro’s business.

You might be thinking, “I can just send the same letter to all my clients.”

However, as a tax pro, you can’t send out the same letter to your clients. Remember, your clients will differ in the scope of services, fee structure, and engagement period, so you will still need to adjust and customize each letter. Sending out the wrong letter can result in misunderstandings and problems later on.

Fortunately, you no longer have to manually send out these engagement letters by email or e-signature tools that can be confusing to use or get buried in your client’s inbox. There are now several types of engagement letter software that allow you to automate the engagement letter process.

Types of engagement letter software

Here are a few of the most popular engagement letter software available in the market:

1. Canopy

Canopy is an accounting practice management software that allows users to quickly create various documents, including engagement letters, transmittal letters, and proposals. Some pros of this software include the option to create letter templates and reusable paragraphs that you can reuse for different clients. Canopy also allows you to populate important client info to a letter with a quick click of a button. One con is that writing an engagement letter takes more than ten steps from start to finish, which some people may find too long.

2. Knuula

This software focuses solely on automating engagement letters. Large accounting firms use it to create different types of audit, tax, and advisory engagement letters for clients. Knuula uses templates where users can merge client details with customizations triggered by conditions set by the user. One con of Knuula is that users may want an all-in-one software to use for their accounting needs and not have to use a separate program just to send letters.

3. Drake Tax

Drake Tax is a tax practice management solution made for tax professionals. The software can help them analyze multiple tax years, estimate refund amounts for clients, and create PDFs for returns. The platform can also generate various scenarios, including changes in income or marital status to see the effect on taxes. The platform also generates engagement letters. One con is that the interface is very basic and not as intuitive as other platforms.

4. TaxDome

TaxDome is arguably one of the most popular platforms for bookkeeping, accounting, and tax firms. The goal of TaxDome is to replace dozens of apps or programs with its powerful platform that can handle everything from accounting workflow automation to team collaboration and CRM for tax professionals. We guarantee you can find almost everything tax-related on Tax Dome. The platform also offers automation that allows customized engagement letters to be easily sent out.

However, the comprehensive system can become complicated and challenging without the proper guidance. This is where Workflows for Tax Pros come in. Read on to see how we can help you maximize Tax Dome and start automating your tax engagement letters.

Why you need tax specific software

Just like a graphic designer needs Photoshop, if you are a tax pro, you need tax engagement letter software. Many general-purpose software systems and platforms market themselves to tax pros. We’re sure you’ve heard of Fresh Proposals and Jotform, software that offers various templates and documents across multiple industries. You’ve probably used them in the past to send and sign other documents.

However, you should use dedicated tax-specific software if you are a tax pro and clients work with you specifically for bookkeeping or accounting assistance. Again, general software like the ones mentioned above can be very helpful. For example, Fresh Proposals can help users send out marketing proposals or staffing proposals. However, as their name already says, their main business is all about proposals. If you need to send out proposals for a living, then use Fresh Proposals by all means.

On the other hand, if you are a tax pro of a living, do you think you should use a “general” type of software or one made with tax pros in mind? We believe the answer is obvious. Just like you would go to a doctor when you’re feeling sick because they are experts in their field, you want to go to an expert in the tax, accounting, and bookkeeping industry.

These kinds of tax-specific software have everything you need in one place. Also, they were made specifically for tax pros. Whether you need help with tax return preparation, generating financial statements, or other tax services, you should use a platform created for tax professionals.

Put simply, the obvious answer is if you work with taxes, you need to use tax-specific software. If you want to automate sending out tax engagement letters, you should also use tax-specific software.

Engagement letters within Workflows for Tax Pros

Now that we’ve established that you should use an accounting platform that fits your needs, you should also learn how to maximize that platform.

In our opinion, TaxDome is the best all-in-one tax platform for tax, bookkeeping, and accounting firms. However, we also think it can be challenging to master the software and maximize this tool without proper guidance. The powerful platform offers users a wide variety of features and functions, including engagement letter automation, that it can be difficult to learn how to use on your own. We’ve heard of many EAs and CPAs struggling to use TaxDome and its many features.

This is why we’re here.

Workflows for Tax Pros will teach you everything you need to know about TaxDome, including how to automate tax engagement letters. We can save you hundreds of hours of writing repetitive and time-consuming letters by teaching you how to automate this process.

Look at a review from a satisfied user of Work Flow for Tax Pros:

Sounds great, right? It is! And you can have the same experience. We’ll teach you how to simplify, standardize, and automate your engagement letter process. By mastering TaxDome, you’ll grow your profits, and more importantly, free up more time to focus on other things, both professional and personal. We will give you step-by-step methods, proven templates, and expert guidance to automate your practice which will help you do the same, or increase, the amount of work done without spending more time on your business.

TaxDome has robust automation capabilities that you can set up for your specific requirements. For example, the system can trigger pre-set automations depending on what you need and want it to do for you. These include sending the engagement letter, generating a deposit invoice, and providing instructions to your client via email. You can also create internal tasks to maintain a smooth flow through your pipeline and eliminate manual tracking.

Here’s an example of a training video you’ll receive once you sign up for our course:

Our comprehensive course will teach you how to set up flowcharts and the best methods of how to automate your workflow to save you time. Our clients have increased their profits, gained more clients, and more importantly, gained back more of their time, the most important finite resource a person has.

Here’s an example of several automations a client has set up after going through our training course. You can see the different stages of the process and the conditions set for the different automations, including sending engagement letters.

Automating your processes removes unnecessary manual and repetitive tasks from your workflow. This also decreases the occurrence of errors in your tax documents, because you are no longer manually or individually entering numbers and figures. We all know that mistakes happen, but leaving it to an automated system can help minimize possibly costly mistakes.

We guarantee you’ll learn all this and more after signing up with Workflows for Tax Pros. We’re here to help you make the most of TaxDome and change how you work.

 Learn more and streamline your business today!

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Hi! We’re Jamie and Jessica, the dynamic duo behind Workflows for Tax Pros.

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