Bookkeeping for Therapists: What to Consider Before Opening Your Practice
Starting a private therapy practice is an exciting step. It offers the freedom to set your own schedule, choose your clients, and build a business aligned with your values.
However, alongside the clinical work, there’s the financial side of running a practice—something many therapists don’t think about until they’re deep in the process.
Bookkeeping may not be the most exciting part of your journey, but it’s essential for long-term success.
Proper financial management can prevent stress, keep your practice profitable, and ensure you comply with tax laws.
7 Bookkeeping Points to Consider for Therapists
The Boutique COO has worked with and supported many therapy practice business owners with their bookkeeping. In doing so, we have encountered some key bookkeeping considerations that every therapist should review before opening their doors. Take a look at what they are in this blog.
1. Choose the Right Business Structure
Before seeing clients, you’ll need to decide on your business structure.
Will you operate as a sole proprietor, LLC, or S-corporation?
Each has different tax implications and legal protections, so it’s worth consulting with an accountant to determine which is best for your situation.
2. Separate Business and Personal Finances
One of the most common mistakes new business owners make is mixing personal and business finances.
Open a dedicated business bank account and, if needed, a business credit card. This will simplify bookkeeping, simplify tax time, and help establish credibility with clients and financial institutions.
3. Track Income and Expenses from Day One
Running a practice comes with costs from rent and office supplies to continuing education and licensing fees. Keeping track of every dollar spent and earned will help you:
Understand your cash flow
Set accurate pricing for your services
Maximize deductions at tax time
Accounting software like QuickBooks, Xero, or a simple spreadsheet can help you maintain organized records.
4. Understand Tax Obligations
Unlike traditional employees, private practice therapists must handle their own taxes. This includes:
Self-employment taxes – Social Security and Medicare contributions
Quarterly estimated tax payments – Required by the IRS and many states
Sales tax (if applicable) – Some states require tax on certain services
Failing to plan for taxes can lead to financial stress, so set aside a portion of your earnings in a separate account to cover these expenses.
5. Consider Client Payment Methods
How will you accept payments? Options include:
Private pay (credit cards, checks, cash)
Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA)
Insurance reimbursements
Each method has its own bookkeeping implications, so carefully track payments, fees, and outstanding balances.
6. Plan for Growth and Unexpected Costs
Even if you’re starting solo, your practice may expand over time. You might hire an assistant, lease a larger space, or invest in new software. A financial cushion and a budget can help you make growth decisions without financial strain.
7. Know When to Get Help
If bookkeeping feels overwhelming, consider hiring a professional. An accountant or bookkeeper can:
Help set up your financial systems
Ensure tax compliance
Provide insights into profitability and budgeting
This allows you to focus on your clients while keeping your practice financially healthy.
Building a successful therapy practice isn’t just about helping clients—it’s also about managing your business effectively. By setting up strong bookkeeping practices from the beginning, you’ll save yourself stress, stay compliant, and set your practice up for long-term success.
If you’re preparing to open your own practice, what bookkeeping questions do you have?
Consider scheduling a bookkeeping strategy chat with The Boutique COO to keep your business on track!
Book a free strategy chat with one of our specialized bookkeepers to find out how we can help your business keep your finances on track.
