I'm leaving agency work to start a private practice. What financial setup do I actually need?
The list is shorter than most people expect. After years of agency work where someone else handled the money entirely, this part can feel like the scariest piece of going out on your own. It really comes down to four things, and none of them require business experience.
Start with a separate business bank account, ideally before you see your first client. Add a debit or credit card tied to that account and run every practice dollar through it, both in and out. Your license renewal, your liability insurance, your EHR subscription, your consultation fees, your office rent. When personal and practice money share one account, someone has to untangle it later, and that untangling is the most common reason a brand new practice owner ends up paying for cleanup work in year two.
Second, you need one place where the money is tracked. I set up QuickBooks Online for practices like yours, and the difference between a file that helps you and a file that annoys you is almost always the chart of accounts. A generic small business template does not have a line for supervision, or CEUs, or a telehealth platform, so you spend every month guessing where things go. QuickBooks Online setup and training means the file matches how a mental health practice actually spends and earns, and you get shown how to use it rather than handed a login.
Third, a monthly rhythm from month one. Deposits from your practice management system get matched to what actually landed in the bank, processing fees get recorded, expenses get categorized, accounts get reconciled. Fifteen minutes of attention each month beats fourteen months of reconstruction.
Fourth, records your tax preparer will want. Reconciled accounts, categorized expenses, notes on mileage and any home office space, and a W-9 collected from anyone you pay as a contractor before you write the first check. That last habit is what makes January easy instead of frantic. Amounts, filing dates, and thresholds shift, so confirm those with your tax preparer.
Entity questions belong elsewhere. Whether you stay a sole proprietor or form an LLC, and how you should handle estimated taxes, is a conversation for an attorney and a tax professional who know your full picture. Bookkeeping for therapists supports their work by keeping the numbers clean and ready.
If you would like help getting this set up right the first time, book a consultation with me and we can walk through it together.
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More Questions
What 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 answerI'm embarrassed to show anyone my books. What will you think of me?
I think it took something to ask. Close to half the people who contact me open with an apology, so you are in good company. The state of your books tells me what work needs doing, and nothing at all about who you are.
Read answerWhen can my practice afford to add another clinician?
You can afford an associate when the arithmetic works, meaning their pay, the extra overhead that comes with them, and several months of a partial caseload all fit inside what your practice actually collects. Your books supply those numbers, and the decision stays yours.
Read answerWhat do you deliberately not do?
Four things stay outside my scope. Tax return preparation, insurance billing and credentialing, payroll system setup, and clinical or legal advice. Naming those lines up front means everything inside them gets my full attention.
Read answerWhy don't my SimplePractice deposits match my session income?
Your platform pays out after processing fees come off the top, and it batches those payouts on the processor's schedule rather than one per session. That means the bank will never match your session ledger on its own. Good books record the gross revenue and the fees separately so both numbers are real.
Read answerWhat does tax-ready books mean if you don't do taxes?
Tax-ready means the books are complete, categorized, reconciled, and documented before your tax preparer ever opens the file. I keep the records right all year so your preparer does the tax work quickly and with very few questions.
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