Hello, wonderful therapists and intrepid navigators of the private practice seas! Dr. Kate Walker here, ready to dive into the sometimes perplexing, often overlooked, but utterly essential world of bookkeeping for therapists. Armed with insights (and a few chuckles) from my conversation with the incredible Dr. Olivia Wedel, we're going to tackle the daunting realm of taxes and make it, well, a little less daunting.
TCCBB #76: Bookkeeping for Therapists: Navigating Your Taxes in 2024
Why Trust This Advice?
Well, Dr. Olivia Wedel is an LPC in Texas, and she's also a national certified counselor and is perinatal mental health certified. She's affiliated with the leadership of the Texas Counseling Association and the Texas Mental Health Counselors Association (disclaimer: the opinions expressed in this podcast and article are her own and do not reflect those of TCA or TMHCA).
Dr. Wedel has extensive bookkeeping and payroll experience, and she does the bookkeeping for her own business and her husband's. Most notably, she offers consulting service for counselors who are interested in starting a private practice.
So! If you've been humbled by the recent business tax deadline, there's no better time than right now to start thinking about THIS year by listening to or reading Dr. Wedel's advice. Let's get into it!
The Essentials of Bookkeeping for Therapists
Our journey into this podcast on bookkeeping began with a shared acknowledgment of the task's perceived dreariness: “Our free webinar…is about how to not get in trouble with the IRS.”
Olivia's response, with a laugh, was exceptionally relatable: “Yes, just hearing ‘IRS' feels a little scary.” Yet, as we ventured further, it became clear that with the right approach, your private practice could actually be an adventure that you don't end up dreading every year.
Anchoring Your Practice with Solid Record-Keeping
One of the first treasures Olivia shared was the importance of diligent record-keeping. “Counselors create and maintain records and documentation necessary for rendering professional services,” she highlighted, underscoring that this wasn't just about staying compliant but honoring our ethical commitment to professionalism.
Yes, we all know that counselors are fantastic record keepers, but did you know that this should apply to financial documentation, as well? Treat your finances like you would your notes–be detailed and consistent. Ultimately, accurate financial documentation is not just a legal obligation but a pillar of our ethical stance as counselors.
Dr. Wedel notes that the basics are super important when considering your own private practice accounting–don't go at it alone. You'll need a bookkeeper, a CPA that is well-versed in private practice accounting, and you'll need to know the LPC rules, our code of ethics around record keeping. These things will serve you well and keep you from wanting to tear your hear out come tax season next year.
Her tales of balancing the books for both her and her husband's business, alongside her counseling practice, paint a picture of bookkeeping not just as a necessity but as a navigable, even enjoyable, part of our professional journey.
Navigating Tax Season With Organization: A Map for Therapists
You can document everything and pay attention to every rule, but if you don't have a system of organization for all of this, you're going to struggle. Here are a few suggestions for keeping your private practice accounting documentation from spiraling out of control:
- Have a filing system–whether this is an old school filing cabinet, or a DropBox/Google Docs account, make sure you have a place for every single piece of documentation you create.
- Keep track of your continuing education certificates and your receipts. You can even take pictures and screenshots and store these in organized files on your desktop or in DropBox or Google Drive if you like.
- Keep calendar notes for what you will need to pay yearly (e.g. insurance renewal). Keeping calendar notes for yearly payments is a great way to stay organized and prevent certain expenses from sneaking up on you.
The beauty of organization is that you can find what works for you, and it doesn't matter what anyone else says about it! If it works for your business, keep doing it.
Embarking on Your Bookkeeping Journey with Confidence
As we wrapped up our enlightening discussion on private practice accounting for beginners, Dr. Wedel left us with a nugget of wisdom that felt like finding gold: “Don't hesitate to reach out…the only silly question is the one you don't ask.”
It was a reminder that in the vast ocean of bookkeeping for therapists, we’re not adrift alone. There’s a community here, ready to support, answer questions, and share in the victories (and yes, even the frustrations).
It’s clear that the task of managing our financial records or even business problem solving, daunting though it may seem, is integral to the health of our private practices. Dr. Olivia Waddell’s insights not only illuminate the practical steps we need to take but have also weave in the importance of joy, curiosity, and camaraderie on this journey.
So here’s to facing tax season not just with dread but with a sense of empowerment and, dare I say, a bit of excitement for the opportunities it presents to grow, learn, and maybe even laugh a little along the way.
Action Items
- Which of Dr. Wedel's suggestions appeals most to you? How can you become more proficient at financial documentation in your practice?
- Appreciate this advice? Leave us a podcast review here!