Hiring an Accountant for Your Private Practice
Do you dread the idea of handling and reconciling your business finances?
That’s because you’re a therapist and not an accountant. But when you hang your shingle in private practice, you also become a small business, and bookkeeping becomes a big concern.
That big concern can snowball into an even bigger concern if you don’t have a system for handling it. You need a strategy for managing your business finances and sometimes the best solution is to hire someone else to do it.
While you’re busy doing what you love, why not hire someone else to do the things you don’t love?
But before you start working with an accountant, there are a few things you need to consider. Let’s dive into the pros and cons of hiring an accountant along with the best practices to follow.
The Pros of Hiring an Accountant
Here are the benefits of hiring an accountant for your therapy practice:
Professionally Manage Your Finances
As a business, you need to document your receipts and track your expenses. But, you’d rather be helping your clients. So, hire a professional who enjoys handling finances and can make the connections that you can’t.
Remember that accountants can do more than just reconcile numbers. They can give you financial advice that helps you get loans, qualify for tax deductions, structure your pricing, and much more. Accountants are financial advisors that can help you grow your business.
Taxes are Infinitely Easier
The tax man cometh to us all. And for those in private practice, the tax man swings by four times a year (at least).
Are you bogged down by taxes? Do you spend a ton of time every quarter sorting through deductions and exemptions and expenses and receipts? It takes a lot of work to crunch the numbers and make sure that you’re not unintentionally defrauding the government.
This is when an accountant comes in handy. You don’t want to wait until an audit’s knocking down your door to hire someone who can make sense of your finances. Tax regulations change all of the time. By hiring an accountant for your taxes, you won’t need to keep up with it—only your accountant needs to.
Plus, accountant fees are tax deductible—but I’m not an accountant, so make sure you check with your accountant on that.
One Less Thing to Worry About
Even with your best intentions, it can be difficult to balance the needs of your clients with the needs of your private practice. This is especially true when you’re stuck after hours reconciling accounts and invoices.
Hire someone else to do it for you and reclaim your work life balance.
Of course, you don’t want to turn into a cautionary tale. So be sure to sign your own checks and stay informed about any major financial decisions that can affect your private practice.
Payroll is Driving You Crazy
Hiring staff is wonderful, but it can also be a death trap when you’re trying to keep track of payroll. From scheduling employee pay to deducting taxes and FICA, to sending out tax information on time to both the IRS and the employee or contractor, payroll can be a full-time job.
But there’s no need for it to be your full time job. An accountant can handle all of it without you needing to worry.
The Cons of Hiring an Accountant
Here are a few reasons why hiring an accountant may not be the best option for you (right now):
An Additional Expense
It goes without saying that an accountant doesn’t work for free. You’ll need to find room in your budget to pay for an accountant’s services. The good news is that this may be tax deductible, but as I mentioned earlier, discuss this with your accountant to be sure.
Hiring an Accountant is Redundant
Are you already good with bookkeeping? Do you have a system in place? If so, it may be more prudent to stay with that system instead of hiring someone else. Transitioning can be uncomfortable (and expensive).
You May Have to Kiss A Lot of Frogs
Your accountant should be someone who meshes with you and “gets” you. You may luck up and find the right accountant on the first try, or you may not. It’s possible that you’ll have to go through several accountants to find the right one for your business.
What About Confidentiality?
Now that we’ve talked about the pros and cons of hiring an accountant, let’s talk about some legal considerations you need to know as well.
In accordance with HIPAA laws, your accountant should not be privy to your clinical records. Anything related to the personal health information of your clients should be kept separate from your accounting records. Your accountant should never know the names, addresses, treatment plans, or other personally identifying information of your clients.
Our TheraNest software keeps your client information safe and protected, in compliance with HIPAA. If you do work with an accountant, there’s no need to hand over your client records (including payments, pending, etc.) because all of that can be reconciled with our software.
TheraNest handles everything related to your client records, including billing, payment, and invoicing. You’ll only need an accountant for business-related income and expenses that fall outside of the scope of client-related information. This can include utility bills, payroll, and taxes.
Should You Hire or Contract an Accountant ?
Not sure whether you should hire or contract an accountant? Here’s a helpful guide:
Hire an in-house accountant if…
- You have a large private practice. “Large” is subjective, but you may qualify if any of the following applies:
- More than a dozen employees.
- Annual revenue is above $1 million.
- More than two therapists on staff full-time.
- More than one office location.
- You run a smaller private practice, but you enjoy that extra layer of financial protection.
Contract with an accountant if…
- You have a small private practice and can’t justify the costs of a full-time accountant on staff.
- You’re comfortable with day to day bookkeeping but you need an accountant for special circumstances, such as taxes or a one-time setup of your financial system.
Best Practices When Working with an Accountant
Here’s what you need to know to successfully work with your accountant:
Ask for references. Start with your network of fellow therapists. You’re bound to know someone who works with an accountant.
Hire someone with experience. Hire an accountant who has experience working with mental health practices. Your accountant needs to understand what you do so that he or she can help you. Don’t just look for degrees and accolades. Look for hands-on experience in the mental health industry. This is why you should ask for referrals from your therapist network first.
Research accountants before blindly hiring. Meet and get comfortable with them. It’s important that you find an accountant that you “click” with because you’ll be working with them closely.
Know your own budget. Obviously, you don’t want to hire an accountant you can’t afford, so make sure that you know how much the accountant charges upfront. Fees vary. Most accountants charge by the hour, but some work on a monthly retainer. How much one charges depends on the type of service you require also, but remember to weigh that fee against how much their service can save you (in time and effort).
Know your needs. Understand what you want your accountant to do for your business. Would you like someone to process invoices or payroll? Do you need someone to help you with your quarterly taxes? Get clear about what you need before looking around for an accountant. Speaking of which…
Shop around. Don’t just go with the first accountant that you see. Check and compare accountants with each other to see who has the most to offer your practice.
Understand their processes. Do they provide daily updates on your financial health (such as aging accounts receivable)? During your interview, ask your accountant what you can expect from them daily, weekly, monthly, quarterly, and so on.
Take advantage of the free consultation. During your consultation, discuss what you’re looking for in an accountant and make a list of questions you’d like answered.
Look for someone who’s prompt. Don’t work with anyone who doesn’t provide a prompt response (that’s 24 hours or less).
Before you go, check out these additional resources: