Accounting and Taxation for Mental Health Professionals

Chicago mental health accountant

The financial health of your practice is critical to its continued success. But as a mental health provider, your time is best spent consulting with patients, not worrying about the books. Here at Upchurch & Associates, we understand this dilemma. We specialize in accounting and tax services for busy mental care providers so we know how to address the unique financial needs and tax burdens that a private practice like yours face.

Our Chicago, IL CPA firm works with a wide range of mental halth practiioners to effectively manage the accounting for their practice. So whether you’re a social worker, clinical psychologist, clinical professional counselor, or PsyD., we can prescribe a comprehensive financial plan that will grow with your practice. From managing day-to-day accounting and bookkeeping tasks to providing financial updates that will help eliminate extraneous expenses, shrink costs, and maximize profits, we can guide the way. We’ll also design a proactive tax planning strategy and will be in touch with you throughout the year to keep tax liabilities in check.

Frequently Asked Questions

Should I form a corporation? An LLC? What's the difference?

A majority of my therapist clients are being taxed as an S corporation.  However, some are organized as an LLC and others have no entity formed at all.  There is no one-size-fits-all answer.  But feel free to schedule a consultation and we can discuss the pros and cons of each entity type.

I work from home, will my home address be publicly available if I form a corporation or LLC?

When you form an entity, the business address is usually publicly available on the secretary of state website.  And all entities must list a Registered Agent and Registered Agent's office address.  Anyone that knows part of your corporate/LLC name would be able to perform a search and find that information.  Unfortunately, this information is requiered by the IL Secretary of State, but there is a solution.

Many of our client's choose to engage Jeff Upchurch as their Registered Agent and utilize his office address for these purposes. This allows you to maintain anonymity regarding your personal address.

What type of expenses are tax deductible?

The general rule of thumb is that any expense that helps you increase revenue (e.g. advertising) or helps you reduce your tax burden (e.g. hiring a CPA) are tax deductible.  However, the tax code is complex and quite nuanced.  There is often more gray than black and white.  But we are happy to discuss your particular circumstances and find a solution that works best.

How do I pay myself?

This largely depends on whether you've formed and entity and the type of entity.  Is your business is an S corporation then you are required to pay yourself a reasonable salary.  We offer full service payroll for this very reason.  But if you're a sole proprietor or a single member LLC, you do not pay yourself wages.  Instead, you disburse funds from the business as needed.  

If I form a corporation or LLC, does that change anything else with my practice?

If you were to form a corporation and begin performing services under that entity, the entity is now responsible for billing insurance.  Therefore, you will need to update all insurance billing data including obtaining a new NPI number.  As mentioned elsewhere, you might also need to start paying yourself a wage, depending on the type of entity.

How do I keep track of my income and expenses?

I have been using Quickbooks Online (QBO) for over 10 years and have many clients that utilize this product.  I recommend it for many of my small business clients.  However, if you are a one-owner therapy practice, QBO may not be necessary.  I've also had a lot of success creating a simple spreadsheet for my mental health practiioner clients that either they or I can maintain going forward.  The key is a small, one-owner business that doens't try to compllicate things.  In those circumstances, the excel file works fantastic.  And you don't have to pay the monthly QBO fees.

I'm a sole proprietor.  Am I too small to work with a CPA?

 While a small number of my therapist clients have developed practices with multiple practitioners, a large majority of my have only one owner.  I actually prefer working with small businesses as it allows me to work directly with the owner and I know I can make a real difference in their financial future.

Are my problems really all my mother's fault?

I don't know.  Go find a therapist and put in the work.  In my experience, it's well worth it.


Mental Health Practice Accounting Services

Our CPA firm is the cure for all your accounting challenges! Call us at 773-360-8280 today or set up a free consultation to learn more about what we can do for your practice.