How much should I set aside from each payment so taxes never surprise me?
The figure most people land on is 25 to 30 percent, and that is a reasonable place to start. I want to be honest that it is general guidance rather than your number. What you actually owe depends on your entity type, your filing status, whether your state has income tax, whether a spouse’s paycheck is already withholding, and what your practice can deduct. Your tax preparer can give you a percentage built on your real situation, and that is the person to ask. Rates and thresholds change, so it is worth confirming rather than carrying an old number forward.
The part that trips people up is what the percentage applies to. It applies to profit, which is what is left after your practice expenses come out. Say $10,000 in client payments came in during a month and $3,000 went out for rent, your EHR subscription, liability insurance, and the rest. Profit is $7,000, and 25 to 30 percent of that lands somewhere around $1,750 to $2,100. Measured against the deposits themselves, that works out to roughly 18 to 21 percent. If you want a simple per payment rule, take your usual profit margin, multiply it by the percentage your preparer gives you, and move that share of every deposit.
Then make it a habit you do not have to think about. Open a separate savings account that exists only for taxes and move the money the same day payments land, or on one set day each week. Practices that scramble at the end of the quarter to find the money are the ones that get surprised. This is one of the things I keep an eye on for clients as part of monthly bookkeeping, because it is easy to intend to transfer and then have a full week of sessions get in the way.
Revisit the number when something changes. Electing S corp status and running owner payroll shifts it, since some tax is already being withheld. A jump in caseload, adding an associate, or a large equipment purchase can all move it too.
Any percentage is only as good as the profit figure underneath it. That is where clean, reconciled books earn their keep, and it is a large part of what bookkeeping for therapists is really for. When your books are current, you know what the practice earned, your reserve is calculated from something real, and your preparer has what they need at filing time.
If you would like help getting to that point, book a consultation with me and we can talk through where your books stand.
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More Questions
How do no-shows and late cancellations show up in my numbers?
Mostly they show up as an absence, which is why they are so easy to miss. Cancellation fees you actually charge should sit in their own income category so you can see what you recovered, and the cost of the empty slots shows up as the gap between what was scheduled and what was earned.
Read answerHow much does bookkeeping cost for a private practice?
Full-service monthly bookkeeping for a private practice starts at $165 a month. Add-ons like payroll processing, bill payment, invoicing, and 1099s each have their own starting price, and catch-up or clean-up work gets quoted once I see what you have.
Read answerHow do you keep my financial information secure?
I only need financial records, never clinical ones. Documents move through secure file sharing rather than email, I work in QuickBooks Online under my own user login, and I use read-only bank connections instead of shared passwords wherever the bank supports it.
Read answerWhat does the practice actually pay beyond an employee's wages?
The wage is only the starting number. Employer payroll taxes, unemployment insurance, workers compensation, and benefits all sit on top, which is why a 60 percent W-2 split and a 60 percent 1099 split are completely different economics for both sides.
Read answerMy practice is fully telehealth with clients in several states. What does that mean for my books?
On the bookkeeping side, working across state lines mostly means keeping cleaner records. Platform and subscription costs get tracked, payouts get reconciled to real deposits, and income gets organized so your tax preparer can handle whatever state questions apply. Licensing and state tax rules belong with your boards and your tax professional.
Read answerI've been running my practice through my personal checking account. How do I untangle it?
This is the most common thing practice owners tell me, and it is completely fixable. The fix has two parts, opening dedicated business accounts for everything going forward, and sorting the historical mix so the practice's real activity gets recorded properly.
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