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
Do you work with practices outside California?
Yes. I work with mental health practices in all fifty states. Lancaster, California is where I sit, and most of my clients are somewhere else entirely, working with me through QuickBooks Online, secure document sharing, and scheduled calls.
Read answerHow do I know if my group practice actually makes money on each clinician?
Take what each clinician actually collected, subtract everything you pay them, then subtract a fair share of overhead. What is left is what that seat contributes. Run it person by person, because a practice-wide margin can look fine while one seat quietly loses money.
Read answerWhat does monthly bookkeeping actually do for a private practice?
Monthly bookkeeping keeps your books current, keeps your financials tax-ready, and gives you a clear view of how the practice is doing. Each month transactions get categorized, accounts get reconciled to the bank, and you get a short set of reports you can read between sessions.
Read answerHow do quarterly estimated taxes fit into my bookkeeping?
Your tax preparer calculates the amounts. Your books supply the current profit number those calculations depend on, and they keep the record of what you paid and when. When the books are months behind, every estimate turns into a guess.
Read answerHow do I know if my session fee is too low?
Private-pay fees commonly run around $100 to $200, with specialty work higher, but that range is only context. Your real answer comes from what your practice costs, what you need to take home, and how many sessions you can sustain. Clean books make that arithmetic honest.
Read answerWhich parts of my practice make the most money?
You can only answer this if your books split revenue by service line and you know roughly how many hours each line takes. Individual sessions, couples work, groups, testing, supervision, and workshops all earn differently per hour of your time once direct costs come out.
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