I've been running my practice through my personal checking account. How do I untangle it?
First, take a breath. This is the single most common thing practice owners tell me, usually in a slightly apologetic voice, and it is fixable. Most practices start small. A few clients on the side of a full-time job, one payment app, and the personal account was simply what was there. Nobody sits down and decides to mix everything together. It just grows that way.
The fix has two halves. The first is going forward, and that part is easier than people expect. Open a business checking account and get a business debit or credit card. Then move every practice dollar through it. Your EHR or practice management payouts, your merchant processor deposits, office rent or your share of a suite, your EHR and telehealth subscriptions, liability insurance, license renewals, continuing education, supplies. Once money comes in and goes out of one account, the books largely keep themselves.
Pay yourself on purpose too. When you need money personally, transfer it from the business account to your personal one. That transfer gets recorded as an owner draw, or as a paycheck if you are on payroll, and it keeps the line between you and the practice easy to see.
The second half is the history, and that is really just patient sorting. Pick a start date, usually the beginning of the year you want cleaned up or the month the practice actually began. Then work through the personal statements for that stretch and pull out what belongs to the practice, every client payment received and every practice expense paid. Those expenses still count even though personal money covered them. In the books they get recorded as business expenses funded by owner contributions. I never connect a personal account to QuickBooks and import all of it, because then grocery runs and car payments end up living in the practice’s records forever. I record only the practice activity. That is exactly what clean-up bookkeeping is for.
It matters for three practical reasons. The practice ends up with records that stand on their own. Tax time stops being a scavenger hunt, because your tax preparer can work from a real profit and loss instead of rebuilding a year from a mixed statement, and questions about what you owe and how to plan stay with that professional where they belong. And most owners see the honest economics of their practice for the first time, which changes how they think about fees, caseload, and hours. Bookkeeping for therapists and other mental health practices is what I do all day, so none of this surprises me.
If your practice is an LLC or a corporation, separation carries extra weight, and your tax preparer or attorney can tell you what your particular setup expects.
If you want help sorting the mix and setting things up so it never happens again, book a consultation with me and we will look at it together.
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Tell me where your books stand right now, even if the honest answer is that nobody has looked at them in a year. I'll ask a few questions and give you a clear idea of how I can help.
More Questions
What is a healthy overhead percentage for a practice?
Common guidance puts overhead under roughly 32 percent of revenue for a lean solo practice, with group practices running higher. Treat that as a starting reference to verify, since the number that actually helps you is your own, tracked month after month.
Read answerHow much should I set aside from each payment so taxes never surprise me?
Common guidance runs 25 to 30 percent of profit, and your tax preparer should confirm the right figure for your situation. The percentage applies to profit rather than to the full deposit, so knowing your real profit number is what makes the reserve accurate.
Read answerI'm a good therapist and my books are a disaster. How normal is that?
It is extremely normal. Clinicians spend years training for the work in the room and almost no time learning bookkeeping, so the money side is usually the part that slips. Catch-up work has a clear beginning and a clear end, and it says nothing about your skill as a clinician.
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 answerShould my associates be W-2 employees or 1099 contractors?
Classification is not really a preference you get to pick. It turns on how much control the practice has over the associate's work, and associates who see the practice's clients on the practice's schedule often land on the employee side of those tests. The call belongs with employment counsel and your tax professional, and I make sure the books and payroll records match whichever answer is true.
Read answerWhat changes in the books when a solo practice becomes a group?
Once you are paying other clinicians, the books have to answer new questions. Payroll or contractor payments begin, revenue needs to be traceable to each clinician, shared overhead has to be spread across the team, and your own pay becomes a deliberate line instead of whatever is left over.
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