how to do bookkeeping for therapists

The other accounting terms you are probably most aware of are “income and expenses”. Profit, of course, is when your income is greater than your expenses. “Gross income” is all the money you take in during a period of time. When you set up your practice, everything of value that is part of that business is considered an asset. The cash you start the practice with, furniture you buy, money you borrow (credit cards, loans, etc.),  computers, phones, or any office supplies, all become tangible assets of your practice.

how to do bookkeeping for therapists

While it’s unwise, many small businesses—particularly ones where the owner is the only employee—use personal bank accounts to cover expenses and save retained earnings. Typically, software used by regular, for-profit businesses cannot be used by nonprofits. Major accounting products, like Quickbooks, may offer special versions specifically designed for nonprofits. Heard software does not support nonprofit therapy practices at this time. Even with an understanding of HIPAA regulations, identifying potential breaches may not always be straightforward.

Better tax preparation

When you run your own therapy practice, it’s all too easy to fall behind on bookkeeping. In other words, you have access and control to how your money moves. With a simple and efficient bookkeeping system, you can stay on top of this “movement” on a consistent basis instead of being surprised by it whenever you look at your bank account. Tracking your income bookkeeping for therapists and your expenses as a business owner gives you a front-row view of how you and/or your team have managed your money. Many therapists block off an entire weekend in April before taxes are due to search for receipts and calculate the totals for each category of their expenses. When a business owner pays themselves, it is referred to as an “owner’s draw”.

When you use paperless recordkeeping for your therapy practice bookkeeping, you cut down on the likelihood of errors and make it easier to maintain organized records. A financial report summarizes information recorded on the books in order to give you a big picture view of how your therapy practice is performing. Typically, it will cover a period of one month or one quarter (three months). It means sorting out all your business transactions from your personal transactions at the end of every bookkeeping cycle (monthly or quarterly). It also means you run the risk of mixing the two—claiming a personal expense as a business expense, for instance.

Filed Under

The problem with DIYing your accounting is you might not even realize that you’re reporting something incorrectly or missing something important on your taxes. Bank account reconciliation is the practice of making sure everything in your bank account matches up with everything in your general ledger. Whether you want to stay as a solo practitioner forever, or grow into a large group practice, you’ll need a vision and a clear path to get there. The numbers in your financial reports can help create and map out your journey. Finally, it is important to understand how all these things work together. This will allow you to know how much money you are making and predict future growth based on your numbers.

It involves recording transactions and storing financial documentation to manage the overall financial health of an organization. Most businesses use an electronic method for their bookkeeping, whether it’s a simple spreadsheet or more advanced, specialized software. The double-entry system of bookkeeping is common in accounting software programs like QuickBooks. With this method, bookkeepers record transactions under expense or income. Then they create a second entry to classify the transaction on the appropriate account. As a small business owner, most of your business-related expenses are tax-deductible.

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