How to Set Up a Chart of Accounts for Your Therapy Practice with Example

We wish starting a therapy practice in Washington was as simple as getting a few clients and slapping an “open” sign on the door. From insurance and licenses to accounting software, you’ll have a lot of ducks to keep in a row. Whether it’s understanding the nuances of tax laws, selecting the right bookkeeping software, or planning the financial future of your practice, a CFO or business coach can be a trusted ally. They can help you make informed business decisions, stay compliant with regulations, and achieve your financial goals, all while you focus on what you do best—helping your clients.

There are many user-friendly options available that are specifically designed for small businesses, including therapists. Accounting software can streamline your bookkeeping processes, help you generate financial reports, and make tax preparation easier. If your group therapy practice is an S Corporation, or the other therapists at your group practice are employees, you’ll need to set up payroll for them.

How to Choose Accounting Software for Your Therapy Practice

To ensure you follow HIPAA rules, consider using accounting software along with electronic health records (EHR) technology, like SimplePractice or TherapyNotes, to store sensitive patient data and process payments. By doing so, you’ll be able to transfer income data to your accounting program to keep your books current. Accounting software can be a huge asset for your therapy practice, giving you the tools and information you need to track the financial health of your business and prepare for tax season.

When you run your own therapy practice, it’s all too easy to fall behind on bookkeeping. This content is for information purposes only and should not be considered legal, accounting, or tax advice, or a substitute bookkeeping for therapists for obtaining such advice specific to your business. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation.

Why therapists use accounting software

This guide gives you everything you need to know so you can meet with a bookkeeper, work with them to get daily bookkeeping set up for your therapy practice, and answer questions when they arise. This can help you avoid delays in reimbursement and minimize the risk of improper payments or compliance violations, such as insufficient documentation, which can result in severe penalties. For your firm to be financially sound, your bookkeeping has to be updated on a regular basis, much like your therapy patients do for you to help them live well. You’ll continuously be scrambling to catch up and file your taxes on time if you get behind on your bookkeeping.

Not sure how to plan for a successful private practice that really makes you happy? Download your private practice visionworksheet by joining our free Private Practice Library here. Having a fuss-free billing workflow allows you to monitor the status of your claims and ensure they are correctly updated in your books so you can spend less time following up with insurance companies. Likewise, you could see an expense of $2,000 show up in your general ledger, and have no idea whether it was the first month’s rent in your new office, or the money you spent on new office furniture. That being said, QBO has a steeper learning curve than other options, costs more, and may come with a load of tools you never use. In that case, it’s worth comparing to Xero and Wave, the other options on our list.