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Starting a Private Practice? Get the Money Side Right from Day One
Leaving an agency, hospital, or group practice is a big step. Here's how to set up your practice's finances so your first tax season is calm instead of a scramble.
Your First Steps
Choose the right entity
Many states require licensed professionals to use a professional entity, such as a PLLC or a professional corporation. Check your state's rules and your licensing board before you file anything.
Get an EIN
An employer identification number from the IRS is free, takes minutes online, and keeps your Social Security number off of forms you give to platforms and payers.
Open a separate business bank account
Keep every practice dollar, in and out, in its own account and card. It's the single most important habit for clean books and easier taxes.
Set up bookkeeping from the first deposit
Starting clean costs far less than catching up later. We'll connect your bank, platforms, and payment processor during onboarding.
Plan your quarterly taxes
Without an employer withholding tax, you'll pay estimates on April 15, June 15, September 15, and January 15. We calculate the amounts and send you reminders.
Know when an S corp makes sense
Most new practices don't need an S corporation in the first year. We'll watch your profit and tell you when the numbers say it's time.
Leaving a W-2 Job
When you leave an employer, you also leave behind the taxes and benefits it handled for you. Plan ahead for these:
- Self-employment tax. You'll now pay both the employee and employer shares of Social Security and Medicare.
- Health insurance. If you buy your own coverage, you may be able to deduct the premiums as a self-employed person.
Questions from New Practice Owners
Do I Need an LLC or a PLLC?
Many states require licensed professionals to use a professional entity, such as a PLLC or a professional corporation, and some don't allow a standard LLC for licensed services. Forming an LLC on its own doesn't change your federal taxes. The S corporation election is what changes how you're taxed. We'll help you sort out what your state and licensing board require.
How Much Should I Set Aside for Taxes?
Many self-employed therapists set aside 25% to 30% of practice profit as a starting point, but your actual number depends on your income, state, and deductions. On every monthly package, we calculate your quarterly estimates for you. To avoid federal underpayment penalties, the general rule is to pay at least 100% of last year's tax through estimates and withholding, or 110% if your prior-year adjusted gross income was over $150,000 (IRC ยง6654).
I Still Have a W-2 Job. Can You Help with My Side Practice?
Yes. Many therapists keep an agency, hospital, or group practice job while building a private practice. We plan your estimated taxes around both, so the withholding from your job and your practice income work together instead of leaving you with a surprise bill.
Start Your Practice on Solid Ground
Book a free 20-minute discovery call. You'll talk with a CPA, get straight answers, and leave knowing where you stand.