Dear Dangerously in Love with Finance,
I’ve recently opened my private practice as a therapist, and while I feel confident about helping my clients work through their emotions when it comes to managing the financial side of my practice, I feel like a fish out of water. My emotions are all over the place. I was told to look for services tailored to therapists, like “bookkeeping for therapists,” “accounting for therapists,” and “financial management for therapists,” but I have no idea where to even begin. Should I hire someone? Do I need fancy software? Or can I just wing it for now? I’m already so busy with clients and paperwork—please help!
Sincerely,
Drowning in Numbers
Dear Drowning in Numbers,
First off, take a deep breath. You’re not alone. Therapists and counselors are incredible at navigating the stormy seas of human emotions, Still, when it comes to crunching numbers, it’s easy to feel like you’re trying to do a therapy session in another language. The reality is financial management for therapists can feel daunting—but the good news? It doesn’t have to be. It doesn’t have to be. Let me walk you through the basics, and I promise it won’t be as dry as that tax filing guide you’ve been avoiding!
Let’s start with bookkeeping for therapists. Sounds boring, right? Like that client who keeps rescheduling at the last minute—bookkeeping feels like a nuisance. Still, you have to deal with it. Bookkeeping is basically the daily recording of financial transactions. In other words, it’s the nitty-gritty of how much is coming in and leaving your practice.
I know what you’re thinking: “I’m a therapist, not a bookkeeper or accountant!”. True, but knowing where every dollar goes is crucial unless you have the magic ability to summon a money tree (in which case, please share). This isn’t just about keeping your tax accountant happy come tax season—it’s about knowing your numbers so you can make empowered decisions about your practice. Without proper bookkeeping, it’s like driving blindfolded—eventually, you’ll crash.
So, how can you manage this without losing your sanity? Here’s the fun part—you don’t have to do it alone! Hiring a bookkeeper who specializes in working with therapists can be a game-changer. They’ll help you track client payments, manage your expenses, and ensure you’re setting money aside for things like taxes (yes, that thing we all love to forget about until April rolls around). Trust me, investing in a bookkeeper or financial accountant for therapists will save you more money and headaches in the long run.
And hey, if you’re more of a DIY kind of therapist, there are plenty of bookkeeping software options tailored to healthcare professionals. Programs like QuickBooks or Xero make it easy to keep track of your financial health—no spreadsheets required. Just remember: organized books mean a healthier practice.
Next up, let’s talk about accounting for therapists. While bookkeeping is the day-to-day tracking of finances, accounting is like stepping back and looking at the bigger picture. It’s about interpreting your financial data to understand your overall financial health and figuring out how much you owe Uncle Sam.
You might be thinking, “I only need an accountant at tax time, right?” Wrong! A good financial accountant for therapists can be your financial best friend all year. They’ll help you with tax planning, making sure you’re maximizing deductions (hello, home office expenses, and professional development), and guide you in creating a financial strategy for your practice’s growth.
Bonus tip: Hire a financial accountant who understands the unique needs of therapists and private practices. You’re in a field where certain expenses—like licensing fees, continuing education, and even supervision—are all tax-deductible, and you don’t want to leave any money on the table.
Oh, and remember that shiny new office chair you bought because your old one squeaked louder than your anxious clients’ heartbeat? Yep, that’s deductible too. Having an accountant who speaks your language (no, not Freudian—financial!) will ensure you’re setting up your practice for long-term success.
Stop Running Your Practice Like a Non-Profit (Unless You Are One)
Here’s where the magic really happens: financial management for specifically for therapists. If bookkeeping is the foundation and accounting is the structure, financial management is the blueprint for growth. It’s about more than just making sure the bills get paid—it’s about making sure your practice thrives.
Let me hit you with some tough love: If you’re just “getting by” or think it’s okay to avoid paying yourself so you can cover the rent, it’s time for a reality check. You didn’t start your practice to break even—you started it to make an impact and, yes, to make money.
A lot of therapist’s struggle with the mindset that making money and helping people are mutually exclusive. I get it—caring for people’s mental health is an emotional and noble job. But here’s the truth: the better you manage your finances, the more clients you can help. The more your practice grows, the more sustainable it becomes. In short, good financial management means better care for your clients.
Start by creating a budget. Don’t roll your eyes! Budgets are like boundaries for your business—they keep you in check, just like setting boundaries with clients keeps you from burning out. Make sure you’re budgeting for things like marketing (yes, you need to promote yourself), continuing education, rent, and of course, paying yourself!
Once you’ve got a budget, make a financial plan. What do you want your practice to look like in a year? Five years? Do you want to hire more therapists? Offer group sessions? Open a second location? Financial management for therapists is all about looking ahead and planning for growth, so you can make your practice work for you, not the other way around.
Mindful Take-Away Thoughts:
Alright, now that we’ve covered the basics, here’s some expert advice from yours truly. Don’t try to do it all by yourself. You wouldn’t expect your clients to solve their deepest emotional traumas alone, right? So why are you trying to run your practice’s finances solo?
You need a team—a bookkeeper or financial accountant, medical biller, and tax accountant—to support your growth. These experts are like your financial therapists, here to help you unravel the tangled mess of receipts, invoices, and tax deductions so you can focus on the bigger picture.
And if you’re still feeling overwhelmed by terms like “bookkeeping for therapists” and “accounting for therapists,” take it one step at a time. There’s no shame in learning as you go. Financial management for therapists doesn’t have to be scary. It’s just another form of self-care for you and your practice.
Remember, you didn’t become a therapist to stress about money. You became a therapist to help people, and managing your finances effectively is just another way of ensuring you can keep doing that for years to come. Now, go out there and thrive—both emotionally and financially.
Yours sincerely,
Dangerously in Love with Finance
This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax and accounting situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney or advisor regarding your particular facts and circumstances. Healthy Bodies of Finance is an accounting firm that specializes in working with health and wellness providers. We provide monthly accounting & bookkeeping services and financial education. For more information on our specialized services for health and wellness providers please contact us at [email protected]