The Essentials: Accountant, Business License, Business Bank Account
We are on our final blog post of the series—10 things needed to set up your private practice without losing your mind. Cue happy dance.
Up next, a few more nuts and bolts pieces. These are the things you are probably going to want to high-five your friend about, or text your partner and say “I just found the most amazing business accountant ever!” Okay, they might not get it, but we sure do.
In this blog post, we’ll discuss: how to find an accountant, setting up your business license, and setting up a business bank account.
How to find an Accountant for Therapists
How do people find an accountant?
The best way to find an accountant that specializes in therapists is… you guessed it… word of mouth. We suggest turning towards our trusted friend-Facebook groups.
Ask around in your community and meet with a few accountants. Just like finding the right therapist, it might take multiple consult calls to find the right fit.
That being said, you can also continue to use your personal accountant if they know how to file tax returns for LLCs or S-Corp. There’s nothing that specific about accounting in private practice that you HAVE TO get someone that specializes in mental health. It’s really up to you.
At PREMADE, we really believe in the principle of congruency. We want all of our contractors and vendors to feel aligned with our personal and professional values. Our accountant gets it, they are a true activist in anti-capitalism. They are out to support and educate small businesses to navigate these old structures. For us, it feels amazing and aligned. Do what works best for you.
For detailed questions to ask a tax accountant, check out Simple Profit’s blog post, Interview a Tax Preparer: Questions to Ask.
How much does it cost to meet with an accountant?
This depends on location, hourly rate, and need. In general, it costs anywhere from $400 - $2000 per year to meet with an accountant. A therapist in private practice might pay $25 a month for QuickBooks Online and a CPA $1000 for yearly tax preparation. Another therapist might forgo QuickBooks altogether and keep track of their own expenses on an excel sheet. Taxes for the year could cost $450.
The cost of meeting with an account will vary from business to business.
What are the advantages of hiring an accountant?
There are many advantages to hiring an accountant for your private practice and thus, knowing your taxes are prepared correctly.
Advantages of hiring an account:
Frees up your time to focus on your skill set and strengths
Reduces your stress, knowing that everything is prepared correctly
Allows others to utilize their expertise so you can focus on yours
Keeps the IRS out of your business!
Setting Up A Business License for Therapists
Should a therapist set up an LLC?
A therapist in private practice should set up a business separate from their personal assets to run a sound business. This could be an LLC or an S-Corp depending on what works best for your financial situation (talk to your accountant). Simple Profit has another great blog post on making this decision, Choosing a Form of Business: Options & Factors to Consider.
We recommend consulting with a tax professional when making this decision
Does an LLC protect personal assets as a therapist?
Yes, an LLC gives you personal protection as a therapist. It protects financial and real estate assets. It’s a wise thing to do for peace of mind as you transition into private practice.
Are therapists sole proprietors?
The long and the short of it is, that it depends. If your practice is owned by solely you, then yes, you are a sole proprietor.
Can a therapist start their own business?
Yes, a therapist can start their own business! We believe that therapists are equipped to run the business of their dreams, and we’re here to support you every step of the way. Therapists can run their own businesses and create the counseling practice of their dreams.
*Business laws and information are constantly changing. For the most accurate and up-to-date information, consult your tax and legal professionals.
Setting Up A Business Bank Account for Therapists
What type of account is best for small businesses?
The best bank account for a small business allows you to transfer funds easily between business and personal accounts. You’ll also need to set up an electronic transfer of funds from your credit card processing, so make sure that it can connect to Stripe or Ivy Pay (most accounts can). If you are doing bookkeeping on your own, you’ll also want to connect QuickBooks to your account.
Items needed to open a small business bank account:
EIN or Social Security Number
Personal Identification - driver’s license, passport, etc.
Business formation documents (see above)
Business license (see above)
How much money do you need to open a business account?
Some business bank accounts for therapists can be open with no money at all. Other accounts need a minimum balance to avoid the monthly service fee. When you are contacting local and national banks, it makes sense to keep track of the minimum balance and the monthly service fees (plus ways to avoid them). This will help in factoring in your decision when choosing a bank.
Can I open a business bank account without an LLC?
Some banks might allow you to open a business account without an LLC and just an EIN, but in general, you will need an LLC to open a business account or have your business formally registered.
Recommended banks:
Julie currently has her business bank account with Bank of America and DOES NOT RECOMMEND it. She’s pretty on top of paying her credit cards on time, transferring funds, and avoiding debt, etc. To her, it honestly feels like the interface is set up to trick you. It’s not intuitive and feels like a gotcha method.
Another great option is local credit unions. You can shop around and see if any offer no-fee options.
Next Steps
Focus on these three things to set up the private practice of your dreams:
Find an accountant
Get a business license
Set up a business bank account
Once you have all the business pieces in place, your website will come together seamlessly. Our templates, launching in October of 2022 will help you get there in no time!
JULIE GOLDBERG is the founder of Third Nature Therapy, a virtual therapy group offering holistic mental health care for people seeking a different perspective on wellbeing. She offers straightforward and easy to implement methods for running a successful private practice.