Bookkeeping tips therapy practice owners need to know

Afterward, contact your bank to open https://www.bookstime.com/articles/bookkeeping-for-therapists your practice’s business checking account and apply for a business credit card. As a therapist, managing your finances is just as essential as managing your client relationships. With organized and compliant bookkeeping, your practice can stay financially healthy, meet legal requirements, and make the most of available tax deductions. TheraPlatform is an all-in-one EHR, practice management, and teletherapy software built for therapists to help them save time on admin tasks. It offers a 30-day risk-free trial with no credit card required and supports mental and behavioral health, SLPs, OTs, and PTs in group and solo practices. Looking at your balance sheet, income statement, and statement of cash flows each month keeps you aware of your current revenues, expenses, receivables, and payables.

Business Bookkeeping vs. Personal Bookkeeping: What’s the Difference?

Just as your therapy clients rely ledger account on your expertise for their wellbeing, your business’s financial health hinges on consistent and accurate bookkeeping. Neglecting this crucial aspect can lead to a perpetual cycle of playing catch-up with your finances and scrambling to meet tax deadlines. If you’re just starting a practice, mixing your personal and professional transactions can be easy if you don’t have a separate business account.

• To stay organized, set up a chart of accounts in your accounting software.
• Your financial records are essential for tracking income, managing expenses, and making informed business decisions.
• A good bookkeeping system means always knowing how much you’ve earned and spent.
• Here are five essential bookkeeping tips that you should know if you are a therapy practice owner.
• Pay special attention to your cash conversion cycle – how quickly you can turn inventory and receivables into cash – as this directly impacts healthy cash flow.

Simple Bookkeeping Checklist for Therapists

Not sure where to start or which accounting service fits your needs? Our team is ready to learn about your business and guide you to the right solution. The cost-benefit analysis of hiring bookkeeping help isn’t just about hourly rates.

• Therapists can simplify bookkeeping by using HIPAA-compliant software like SimplePractice and TherapyNotes.
• If you understand how your cash flows into and out of your business, you can properly pay your staff and other expenses and ensure you still bring home a profit.
• You also have to deal with insurance companies and government-backed programs like Medicare and Medicaid.
• These funds are earmarked for business use only, in order to pay business expenses or save for the future.
• In addition to expenses and operating costs, you also have to consider taxes and other financial matters.
• Avoid “solely relying upon a manual record keeping process (such as a spreadsheet and file folder of receipts) and/or not having an efficient technology-enabled accounting system,” Bayles advises.
• Sales tax collection and payment schedules can also vary by state and locality, so check your local requirements.

You know you really should do something with your business finances, but the time never feels right.

The category “equity” includes money you’ve invested or re-invested in your business. For instance, if you set aside $5,000 of your personal assets to get your practice off the ground, and you’ve spent $2,000 of it, the remaining $3,000 will be listed as Owner Equity on your chart of accounts. If you use any of this equipment for both personal and professional reasons, a CPA or tax advisor can tell you how much of the value of each you’re able to report for the purpose of tax deductions. If you sublet a furnished office, or you’ve moved your practice 100% online, you may feel an Equipment account is unnecessary. But anything you use in the course of running your business is equipment.

Bookkeeper in your Back Pocket

• Opening a business checking account can increase your chances of getting financing and simplify your cash flow management.
• She spent time teaching me how to continue the process and helped me feel more comfortable and equipped to navigate QuickBooks.
• Client tracking is essentially part of client management software (CRM).
• If you bill clients $150 per hour but spend 10 hours monthly on bookkeeping tasks you could outsource for $50 per hour, you’re essentially losing $1,000 in potential revenue.
• Even if you have a bookkeeper handling it for you, understanding the chart of accounts gives you more insight into how money moves around within your business, and how your therapy practice is doing financially.

To avoid financial repercussions and ensure compliance, it’s essential to maintain thorough and accurate records of all insurance claims and paperwork. While you focus on patient care, don’t let bookkeeping slow you down. With financials in tip-top shape throughout the year, you can make better business decisions and rest easy knowing that you’re running bookkeeping for cleaning business a successful practice. If invoices aren’t paid on time, running your business can become difficult, if not impossible.