Does the idea of “doing your books” intimidate you? It doesn’t have to. Many therapists figure out that business bookkeeping can be SIMPLER than you think!
Don’t believe me? Read on!
First step in private practice bookkeeping
The very first step in your private practice bookkeeping is developing a process. This process looks different for different therapists. It is important for you to choose a process that really works for you, is stress free, and that you can STICK with! The biggest mistake therapists make is picking a process that is stressful or that they avoid.
Avoiding bookkeeping creates more work
If you avoid your bookkeeping throughout the year, you will have A LOT of work to do, a lot of research and recalling to do, and you are much more likely to make a mistake. .You will also learn to associate your bookkeeping with stress- when it doesn’t need to be! You can also miss out on awesome opportunities to create tax savings- once the year closes you can’t go back in time. Check out the tax lesson it took me years to learn for an example.
So what might your process look like?
Make sure to open a separate account for your private practice and put all expenses for the business through that account. If you use your name as your business name- you might even qualify for a free checking account. I simply used a free personal checking account for the start of my business. Choose a bank that provides easy easy access to your money through online banking, and talk with them about whether they allow access from accounting software like Quickbooks online or Outright.
There is an app for that!
Put the free evernote app on your SmartPhone and take a picture of EVERY receipt you use for business. If you buy things for your business online- you can even forward those to your special email address that will save that receipt in your evernote account. If you drive for work doing home visits- download an app to track your mileage- or simply track that in Evernote as well!
Technology or Outsource
Now that everything is in one place- let’s put technology and/or outsourcing to use! If you are a solo or even small group practice give Outright a try. It is $9.99 a month and it will suck all of your information from your business account(s) and/or business credit cards and make it easy for you to see your profit and loss at a glance. It will automatically try to determine what categories expenses have- and as you make adjustments to make it more accurate- it will learn from you!
You could also hire out for a bookkeeping. As a small business if you are making under 6 figures and have everything organized- it shouldn’t cost more than $70 a month for someone to do your bookkeeping. They can provide you with all of your reports for tax time or to take to your appointment with the CPA during tax time.
Pay those quarterly taxes
What do you if you are making money? What do you do if you are making a lot more money? If you’ve already gone through your first year in business- you may have suggestions from the government on what to pay for your estimated quarterly taxes. However, many of you reading this blog may find your income is going steadily up! If that is the case- don’t be shy- pay a little extra- or send an email to your tax accountant or CPA let them know your profits for the quarter and ask them what they suggest you pay. A good rule of thumb is to plan for 30% of your net profits to go straight to taxes. Some therapists prefer to pay the minimum and save up their money in a tax account for the end of the year (and gain a little interest along the way). Others prefer to just pay and get it over with (I’m one of those!)
Bookkeeping is an important first step
Bookkeeping isn’t the final step. Sit down for at least 30 minutes once a year with someone who really knows their stuff. Around mid-November, early December sit down with a CPA with all of your ducks in a row and explore whether there are any additional steps you may want to take to reduce your tax liability. Sometimes, signing up for that awesome training you’ve been drooling over can mean you pay less taxes!
Are you feeling inspired and motivated to get your bookeeping done? We hope so!
Are you still struggling to get your private practice in order? Not sure how to plan for a successful private practice that really makes you happy?
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