Private Practice Accounting: Everything Therapists Need for Tax Season

You can also deduct the cost of hiring accountants or tax professionals on the same line. Reconciling the books is the practice of checking information recorded in your general ledger against information recorded in your bank statements. And by analyzing your balance sheet alongside your P&L for each reporting period, you can see the impact your varying income levels and expenses have on the amount of value your practice holds. Nothing appears bookkeeping for therapists on the books until money has either been earned or spent. With data from your books, you can create financial projections to model what your business will look like in the future.

Modern Bookkeeping + Tax Advisory Built for the Wellness Community

• However, private practice bookkeeping can really give a clinician a deeper understanding of how their practice is doing financially so they can make better business decisions.
• These streamline the entire accounting process, from bookkeeping and tracking expenses to billing and invoicing.
• Meaning, when you bill clients and receive payment, you can import that information into your accounting software, so the transactions are recorded on the books.
• Without those numbers, there’s no real data or information to look at for reference.
• Even when your transactions are automatically imported into software (or into your bookkeeper’s system), mistakes can happen.
• Not sure how to plan for a successful private practice that really makes you happy?

Wave does not integrate with any practice management or EMR/EHR tools. Wave offers good basic tools, but when it comes to advanced reporting, and sharing data with accountants and bookkeepers (most of whom are trained to use QuickBooks), it falls short. Wave may be a good choice if your practice is brand new, you’re just starting to do your own Accounting Periods and Methods bookkeeping, and you need basic accounting functionality.

Average Therapist Salaries: How Much Should You Pay Yourself?

At Therapeutic Tax Solutions, we specialize in providing comprehensive bookkeeping, tax preparation, tax planning and business advisory services to therapists who own their own practices. Our commitment goes beyond numbers; it’s about helping therapists achieve financial peace of mind. We believe that when you can focus on your clients and your passion for healing, you can make a more profound impact on the lives of those you serve. Our services are designed to free you from the burden of financial tasks, allowing you to concentrate on what you do best.

• However, you can gain insight into your practice’s financial health by reviewing its financial statements on a frequent basis.
• Regularly reviewing financial statements and bookkeeping tasks is crucial for maintaining a practice’s financial health.
• If you’ve fallen behind on bookkeeping and the problem has become overwhelming, don’t be ashamed to contact a professional bookkeeper for help.
• Properly categorizing these isn’t just a bookkeeping detail; it impacts tax deductions and overall financial clarity.
• Your end-of-year financial reports give you—or your accountant—all the information you need to file taxes.
• But most bookkeeping systems today, including Heard, generate monthly financial statements without the help of an accountant.
• Your cash flow and having the necessary funds to pay your expenses is directly affected by patient payments, so having an organized bookkeeping system can streamline this process.

You can keep better track of your tax-deductible expenses

A bookkeeper can be anyone who keeps your books up to date and accurate. They can be your accountant, a certified bookkeeper, or yourself. There are certifications for bookkeeping, such as a Quickbooks-certified bookkeeper, but this is not a requirement to operate as a bookkeeper in the US.

To collaborate with your bookkeeper, you will likely be given Interior Design Bookkeeping access to your books via whichever accounting software they use. That means learning the fundamentals of the software, and keeping an eye peeled for any alerts that pop up. They may still prompt you to categorize certain transactions they’re not sure how to categorize themselves. That’s especially the case if your bookkeeper does not have experience working with therapy practices and isn’t totally familiar with your workflow.

• Running a private practice can be very different to running a typical small business.
• Thus, bookkeeping for therapists isn’t just about keeping clean books.
• Here are the different DIY and professional solutions to consider.
• We also streamline your insurance billing process, ensuring timely payments and reducing administrative workload, letting you focus fully on your clients and the growth of your practice.
• The team at Heard was kind enough to offer a free checklist for you with a complete list of everything you need to gather in order to prepare your taxes.
• To enhance their profit margin, therapists should consider implementing several key strategies.

Just about any decision you make that will impact your practice benefits from being informed by up-to-date financial reports. There is no law requiring you to do bookkeeping for your therapy practice. But bookkeeping is an integral part of most practice’s day-to-day operations, and the benefits of bookkeeping are so great that whether or not you keep up with bookkeeping could make or break your business. After a week of back-to-back sessions, a therapist finally sits down to catch up on admin. An insurance reimbursement came through, but it’s $40 less than expected.