While you can decline a job offer over the phone, it's best to follow up with a letter stating you aren't going to accept the position. You can also send a letter instead of calling the employer. Doing so is a professional practice that can help you build a positive relationship with the employer. That positive relationship, in turn, can benefit you if a more suitable position for you opens up in the future.
Type a letter to the employer, using a business letter format (see Resources for template examples).
Express your thanks for the confidence that the employer has demonstrated that you can do the job well. The Philadelphia University Career Services Center suggests that you write something like, "I appreciate your confidence in my abilities to be successful with your organisation." Thank the employer for the chance to work with the company (see References 1).
State that you respectfully must decline the offer of employment in the second paragraph. You might give a reason for your decision such as, "I must unfortunately decline your offer of employment as I feel that my long-term career goals are better suited to another position."
Keep the reason(s) you give as positive and as centred on you as possible. For example, you wouldn't say that you do not like that everyone works in a cubicle in the company and that you really want a corner office (see References 2). Bad news travels fast from employer to employer. If you're disrespectful in your letter in any way, it will likely be generally known among employers in the same industry. As a result, you may have a more difficult time finding another job.
Offer to maintain a relationship with the employer and keep the communication channels open in the future. For example, you might say, "I hope that my decision does not negatively affect my relationship with the company and I look forward to discussing future openings with you" (see References 2).
Print the letter on U.S. letter-sized paper and mail it to the employer using a standard envelope.
Type the letter in size 10, 11 or 12-point font. Use a font that's easy to read such as Times New Roman or Arial. Keep the overall tone of your letter as positive as possible. General courtesy and expression of gratitude will go a long way to showing the employer that you are conscientious of maintaining a good relationship and that you're a true professional. The word will also spread to other employers that you are a competent professional who can be counted on to treat each exchange as important as another one, whether it's positive or negative in nature.