Yes, Owl Practice integrates easily

with commonly used accounting programs

Therapists are not typically former accountants (though I have met some!), so I thought I’d share some perspective on how to make accounting work for your practice, and make your accountant happy in the process.

Accounting for therapists

In most cases, private practice accounting is very straight forward.  On the the one hand, you have the revenues derived from the services you provide to clients, and on the other, the expenditures you have to operate your practice.  Let’s look at each in turn.

Practice Revenue

On the revenue side, most things you charge for in your practice start with billable client events.  This is the time you spend with clients and charge for.

Obviously, without a sophisticated calendaring application, this can be difficult and cumbersome to manage.  I often bump into people using two different tools – one for calendaring, and another to do billing and invoicing – or simply an accounting system with no scheduling component at all.  This is clearly suboptimal as it is error prone, requires duplication of effort, and results in wasted time.  A good practice management tool does this seamlessly.

Related to billable services are your accounts receivable and the related collections process.  From time to time, you may have clients who have outstanding balances with you.  This is money you’ve earned, but is not yet showing up in your bank account.  While accounting programs can track receivables, what most therapists really need is a client-level view, and active reminders, of what’s outstanding so you can take the appropriate steps to collect in real-time.

Also, you need to be able to easily export your revenue transactions for whatever time period you’re interest in (monthly or annually), and be able to send it in a non-client-identifying file to your accountant by email.  With Owl Practice, this can be done easily, and your accountant will be delighted when it shows up in her or his inbox at year’s end.

You can see that it’s critically important that you have a holistic view of all the events that result in revenue for your practice.  Make sure you’re setting yourself up for success by being able to track each of these things easily and in an integrated fashion.

Practice Expenses

On the expense side, most practices have three broad expense categories:

• Recurring Expenses – these happen each month and include things like rent, insurance, mobile phone, Internet, website hosting, and a practice management solution
• Ad Hoc Expenses – these expenses come as they happen and include things like College dues, conferences, and office supplies
• Depreciation – if you have any significant assets in your practice (most often furniture or computing equipment), these items will be written off over their useful life

In many ways, tracking expenses is very easy and you can use a tool like Excel or Quickbooks to enter items over time.

Chances are, however, that you’ll end up procrastinating on the required data entry.  If you find yourself pushing off this unpleasant task, know you’re not alone.  Whereas there is a strong incentive to manage the revenue side of your financials (if you don’t, you don’t get paid), expenses often end up in a shoebox and are only input once a year during tax time.

While the best strategy is to enter things as you go along, if you find yourself reconciling expenses just once a month, or even just yearly, it’s not the end of the world.  The reality is, your expenses often don’t vary greatly over time, and you’d need to spend them anyway regardless of whether you actively tracked them or not.

What’s most important though is that you have a sense of what you’re spending to insure your profitability, and that you’re able to tabulate things come tax time.

More than accounting

It’s great wanting to make your accountant happy.  Just make sure you’re making yourself as a practice owner happy too.

Practice wisely!