As a therapist, keeping track of your finances can bring up a lot of difficult feelings. It may feel like your practice’s financials are hanging over your head. You might be dealing with a full caseload of clients, pinching pennies trying to figure out how to best market yourself, or feel lost overall at the idea of getting your financial books in order. After all, you didn’t become a therapist to spend all of your time worrying about money or taxes.
Despite this, feelings of uncertainty or anxiety around your business finances are completely normal. Your graduate program never talked about how to file your taxes, much less calculate your deductions or tax write-offs. So, how do you make your finances work for you and feel more secure in propelling your practice to financial success? This is where it can be helpful to utilize an accounting company to assist with bookkeeping and managing your taxes. Services such as Heard can come in to take care of your books, relieve stress around your finances, and empower you to feel successful when filing your taxes and managing your practice.
One of the key financial hacks for a therapist, or anyone running their own business, is mastering the art of the tax deduction. At first glance it can seem overwhelming, but learning how to use tax deductions to your advantage can save you a lot of money in the process, ultimately setting you and your therapy practice up for the utmost success.
Anything with the word tax in it can draw up a bit of fear, but tax deductions or write-offs are actually an extremely advantageous part of the tax process! Tax deductions are ultimately deductions to your taxes that come from business-related expenses. You are able to subtract or “write off” certain expenses from your income, and then are taxed on the remainder of your income as your standard income tax. The terms “tax deduction” and “tax write-off” can be used interchangeably.
It’s important to note that, as amazing and helpful as they can be, tax deductions must come only from expenses that are directly related to your business. (No personal expenses allowed!)
Whether you have a solo practice or group practice, there are many expenses you can incur when running your own therapy business. Whether you’re attending workshops, have your own office or travel for work, you might be making a variety of payments over the course of the year that you’ll then be able to count as tax deductible.
Some of the most common opportunities for tax write-offs for therapists and mental health professionals include:
Tax deductions can definitely come in handy and save you lots of dollars in the long run, and with the above list, you’re ready to tackle them. But while these categories provide a solid overview of write-offs that will benefit your business, your deductions can vary based on your business entity and personal situation. The above categories are a quick sample of how you or your bookkeeping service can organize your books. This way, you can pay attention to where your cash is going and how best to maximize it come tax season. When the end of the fiscal year rolls around, all of your practice’s business expenses will be in one place and you’ll be all the better for it.
* The content of this post is intended to serve as general advice and information. It is not to be taken as legal advice and may not account for all rules and regulations in every jurisdiction. For legal advice, please contact an attorney.
Sarita Gulati is the Content & Partnerships Lead at Heard, a bookkeeping and tax platform for therapists, intended to ease the financial burdens of mental health therapy services and track the financial health of your practice. A proud partner of TherapyNotes™, Heard can help get your practice on the right financial path toward success.
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