Small Business Hiring Guide

7. What is an Offer Letter and How to Write One

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What is an Offer Letter and How to Write One

Jun 09, 2023 • 10 min read
Offer of employment letter with glasses and pen on top of it.
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      After weeks—or even months—of searching for the perfect candidate to fill a role, you’ve found a great fit. You’re ready to extend a job offer to your chosen candidate, but want to do it the right way. Here’s everything you need to know about writing and sending an offer letter.

      What is an offer letter?

      An offer letter is a formal (but not legally binding) document given by an employer to a prospective new hire that outlines the terms and conditions of a job offer. Offer letters include a multitude of different pieces of information, including the job title and description, the job type, salary, and more.

      Offer letters get everyone in the hiring process on the same page. The hiring manager, the team who will accept a new candidate, and the potential new hire should analyze the offer letter to ensure communication about the position is clear, expectations are understood, and enough information is provided to make an informed decision (on both the hiring manager’s and the new hire’s parts).

      What is the difference between an offer letter and an employment contract?

      The simple difference between an offer letter and an employment contract is that an offer letter is not legally binding, while an employment contract is. Anything included in the offer letter should appear in an employment contract as a gesture of good faith, but has not been legally promised if the only place it appears is in the offer letter.

      Additionally, an offer letter is sent before someone agrees to fill the vacant position, while an employment contract is sent and signed after someone accepts the position.

      How to write an offer letter.

      An offer letter serves as a formal document that outlines the terms of the employment contract and which you both can reference at a later date. Here’s what to include:

      Basic information

      Include the company name, candidate’s name, job title, and position type (full-time, part-time, independent contractor, and/or shift). Basic information is helpful to include to ensure clear communication and reference later in your professional relationship.

      Start date

      Include the start date and whether it’s been discussed in previous conversations. Including the new employee’s start date in their offer letter, especially if you haven’t discussed a date, allows the candidate an opportunity to leave their current job or get affairs in order.

      Reporting structure

      The reporting structure is helpful to include in an offer letter to set expectations and educate the new employee. Including the names and hierarchical structure of the employee’s team provides key information and prepares them to start.

      Salary and benefits.

      The salary should not have any surprises contrary to what’s been discussed during the hiring process for the candidate—but if for some reason it does, explain why the changes happened to the best of your ability. Make sure to include the salary, bonus information, and benefits structure.

      Additional agreements

      Depending on the industry, your offer letter may include a non-compete agreement, a confidentiality agreement, or both. These agreements protect the company’s intellectual property in the marketplace and discourage corporate spies.


      If you have discussed contingencies during the hiring process, include them in the offer letter. Contingencies mean the offer is conditional on a certain task or step. The candidate may need to supply more positive references, or the company may need to send the candidate additional job-related documents to fulfill the contingency and move the process forward.

      Expectations discussed in the hiring process.

      If you’ve talked about on-the-job expectations or the work environment has very specific expectations for its new employees to learn, include them in the offer letter, so the candidate can practice them from day one.

      Contact information

      Provide the candidate’s contact information to someone with whom they can discuss their offer letter if they have questions or concerns.

      Acknowledgment and confirmation.

      Finally, be sure to include an acknowledgment of receipt of the offer letter and a place for them to sign to confirm and accept the offer.

      While a good deal of important information should be included in the offer letter, you should avoid a few crucial items. Stay away from using language that indicates promised bonuses, statements that allude to job permanency, or talk about reasons for termination (it conflicts with the nature of at-will employment).

      Should I send a traditional letter or an email?

      When it comes to sending a traditional letter or an email, consider your options.

      • Traditional printed-out letters mailed overnight to the candidate are professional and take the friction out of the candidate printing out, signing, and sending back the offer letter. However, it costs money to overnight a document, a response isn’t immediate, and if your offer letter has more than one or two pages, it may use a significant amount of paper.
      • Emailed offers have grown in popularity due to eco-friendliness and quick turnaround with younger generations. Apps such as DocuSign allow candidates to electronically read and sign the letter, saving a signed copy simultaneously. 

      Whether you choose to send a traditional, direct-mail offer letter or use email, use your company’s letterhead. It’s professional and conveys that the document is an official, professional piece of communication.

      What does an offer letter look like?

      If you’re unsure about what your offer letter should look like, take a look at the offer letter template below to get started.












      Dear [Employee],

      On behalf of [company name], I’m pleased to extend an offer of employment to you for the position of [position name/title]. After careful consideration, we believe your skills and expertise will be an excellent fit for the team and our organization.

      Your starting date will be [month, date, year]. As discussed in our previous conversations, the position’s salary is [$XX,000], paid [weekly/biweekly/monthly]. Direct deposit is available, and you can set it up during [orientation/your first week].

      [Write a benefits paragraph that outlines PTO, insurance, retirement/401K plans, and any other fringe benefit your company offers].

      If this offer is acceptable to you, please sign below and return a signed copy to my attention at:



      [You may also offer the option of electronically sending the signed copy back].

      I’m here to answer any questions you may have about this offer or the position.

      Thank you,

      [Your Name]

      I hereby accept the position of [position offered].



      The bottom line.

      Offer letters give employers and employees the opportunity to get on the same page before an employment contract is sent out. Ensure your offer letter is professional and includes all the pertinent information an employee needs to know to make their decision and give them enough time to read, sign, and send back their completed offer letter.

      About the author
      Sean Peek

      Sean Peek has written over 100 B2B-focused articles on various subjects including business technology, marketing and business finance. In addition to researching trends, reviewing products and writing articles that help small business owners, Sean runs a content marketing agency that creates high-quality editorial content for both B2B and B2C businesses.

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