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How to Catch Up on Bookkeeping for Your Therapy Practice

Bookkeeping Basics for Therapists

Depending on how many employees you have, payroll can be a time-consuming task, one that recurs frequently. Many businesses opt to work with a payroll provider, a company which acts as a third party between the business and its employees, taking care of the payroll process entirely. You may have a mixture of W2s and contractors working at your practice. Whether a therapist at your group practice is a W2 or a contractor has a significant impact on your bookkeeping. For a deeper dive, see our article on how to hire an accountant for your therapy practice.

Then they create a second entry to classify the transaction on the appropriate account. It’s always a good idea to seek advice from a qualified accountant or bookkeeper at Bookkeeping Pro Services. Outsourcing your bookkeeping to professionals, like, can free up valuable time that you can use to focus on other important tasks in your therapy practice. Letting experts handle your books can ensure that your financial records are up to IRS standards, saving you time and effort in managing your own bookkeeping. Think of bookkeeping as the detailed roadmap of your practice’s financial health.

Label and describe every item on your chart of accounts

Others, like payroll, can be outsourced to independent companies that specialize in the task. An accountant takes the information your bookkeeper prepares, and uses it to file your tax return, taking advantage of as many tax deductions as possible. One example might be if you recorded an expense of $100, but thanks to sales tax, it’s a $107 debit charge to your bank account. Or, you could record a $120 payment from a client near the end of April, but thanks to delays with your payment processor, you don’t receive the funds until May.

Accounting software will store the chart of accounts for you in its own location. When you earn profits, any cash you don’t take as an owner’s draw or salary becomes Retained Earnings. These funds are earmarked for business use only, in order to pay business expenses or save for the future. If you use any of this equipment for both personal and professional reasons, a CPA or tax advisor can tell you how much of the value of each you’re able to report for the purpose of tax deductions.

Contractor bookkeeping and accounts payable (AP) at your group therapy practice

Understanding the chart of accounts is essential for setting up a bookkeeping system for your private practice. Even if you have a bookkeeper handling it for you, understanding the chart of accounts gives you more insight into how money moves around within your business, and how your therapy practice is doing financially. Accountants, on the other hand, use the information provided by bookkeepers to summarize a business’s financial position and render financial advice to the business owner. Many accountants also prepare tax returns, independent audits and certified financial statements for lenders, potential buyers and investors. The professionals at Heard take care of all your day-to-day bookkeeping, then help you get your taxes filed accurately and on time.

Not only can you follow outstanding and paid invoices, you can also budget better by analyzing and predicting your regular expenses. Try to keep track of everything, no matter how big or small the expense, as you’ll have to account for them when you file taxes. Falling behind on your bookkeeping bookkeeping for therapists means you’ll constantly find yourself rushing to catch up and file your taxes on time. In this webinar replay, Rachel Stas, CPA take the confusion out of preparing for tax season and help you with bookkeeping best practices in this free webinar for mental health professionals.


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