How to Write a Business Letter? (Need, Functions, Kinds & Layout)
Business Letter Writing
A business letter is a formal letter from one company to another, or between an organization and its customers, clients, or other external parties. It is a vital tool in business as it produces a permanent written record and is often taken more seriously than other forms of communication.
This guide covers the need, functions, kinds, and proper layout for writing a professional business letter.
1. Why Do We Need Business Letters? (Need & Functions)
In business, letters are a major tool for communication. They act as a representative of the organization and are an inexpensive substitute for a personal visit.
The primary functions of a business letter are:
To Convey Information: The most basic purpose is to share information about business activities with customers, suppliers, banks, or government authorities.
To Serve as Evidence: A business letter is a formal document that can be used as legal evidence for a transaction. It can be preserved for future reference.
To Build Goodwill: A well-written, professional, and courteous letter creates a positive image of the company and promotes goodwill.
To Create Demand: A circular letter (a type of sales letter) can be sent to many people at once to create demand for a new product.
To Expand Business: By creating goodwill and new contacts, letters help to enhance and enlarge a business.
To Place Orders: A very common function is to send a formal Order Letter to a supplier for goods or raw materials.
To Inquire: Businesses use Inquiry Letters to ask for information they need from other parties.
To Solve Problems: Letters are a professional way to handle disputes or misunderstandings in a formal, recorded manner.
2. Kinds & Types of Business Letters
Letters are broadly divided into Formal Letters (which include all business and official letters) and Informal Letters (personal letters to friends or family).
Within business, there are many kinds of letters, each with a specific focus:
Sales Letters: These start with a strong statement to capture the reader’s interest and persuade them to buy a product.
Order Letters: Sent to a supplier to order goods or services. Must be specific (model number, quantity, price).
Complaint Letters: A formal letter outlining a problem. The tone should be direct but tactful and professional.
Adjustment Letters: A reply to a complaint. If you are granting the customer’s request, say so immediately.
Inquiry Letters: Written to ask a question or request information.
Follow-Up Letters: Sent after a meeting or conversation to review what was discussed or to thank a customer.
Letters of Recommendation: A letter from a previous employer or professor describing a job seeker’s qualities.
Cover Letters (Application Letters): Sent with a resume to “cover” it, explaining what’s enclosed and why the sender is a good fit for the job.
Letters of Resignation: A formal letter from an employee to their manager stating their intention to leave the company.
Acknowledgment Letters: A simple receipt to let someone know you have received a prior communication (like an order or application).
Circular Letters: A letter that announces the same information (like a change of address or new management) to a large group of people.
Official Letters: Letters used internally to inform offices, branches, or subordinates about official rules, regulations, or procedures.
3. The Layout: 12 Parts of a Business Letter
A professional business letter is more impressive when you pay attention to every part of its layout.
The Heading / Letterhead: The company’s name, address, contact info, and logo at the top.
Date: Placed on the right-hand side, below the letterhead.
Reference: A code showing which department sent the letter (e.g., “HR/2025/01”).
The Inside Address: The name, title, and full address of the recipient. This goes on the left side.
Subject: A brief, eye-catching line that states the letter’s purpose (e.g., Subject: Inquiry about Model 5 Laptop).
The Greeting (Salutation): The formal greeting (e.g., “Dear Mr. Sharma,” or “Dear Sir/Madam,”).
The Body: The main message, usually 3 paragraphs:
Opening Part: The introduction and reason for writing.
Main Part: The clear, concise, and complete message.
Concluding Part: Any suggestions, a call to action, or expectations.
The Complimentary Close: A humble way of ending (e.g., “Yours faithfully,” “Yours sincerely,” “Thanks & Regards,”).
Signature: The handwritten signature, followed by the typed name and designation of the sender.
Enclosures (Encl.): A note showing what other documents are attached (e.g., “Encl: 1. Cheque, 2. Invoice”).
Copy Circulation (C.C.): A note showing who else is receiving a copy of the letter.
PostScript (P.S.): A small extra note added after the letter is finished (rare in modern business letters).
4. Professional Layout, Tone, and Etiquette
The layout and tone are just as important as the content.
Font and Spacing:
Use a plain, professional font like Arial or Times New Roman (10pt or 12pt).
Single-space the text within your paragraphs.
Leave one blank line between each paragraph.
Left-justify all text (align it to the left margin).
Etiquette and Tone:
Salutation: Always use “Dear” followed by the recipient’s title and last name (e.g., “Dear Dr. Gupta”). Avoid casual greetings like “Hi” or “Hello.” If you don’t know the name, use “To Whom It May Concern.”
Closing: Use conservative closings like “Sincerely,” “Best regards,” or “Respectfully.” Avoid casual closDings like “Cheers” or “Thanks!”
Language: Use complete sentences and professional word choices. Avoid slang, abbreviations (like “TTYL”), emojis, or text-speak. Always be polite, even in a complaint letter.
Paper: If mailing a hard copy, use standard white bond paper.
Key Tips for Writing:
Identify the Type: Know if you’re writing a formal, informal, or business letter.
Be Clear: Get to the point quickly, especially in formal letters.
Be Polite: Use courteous language.
Be Concise: Formal letters should be to the point. Lengthy letters often lose their effect.