Tax Basics for Sole Proprietor Therapists

March 9, 2024
July 29, 2021
Fact-Checked by Richard Huynh, Tax Attorney

Run your own therapy practice and file taxes as a sole proprietor?

Here are some basic details you need to know about annual taxes, quarterly taxes, and tax extensions.


Filing your annual taxes as a sole proprietor

As a sole proprietor, you are taxed as an individual. You will report all income and expenses from your business on your personal tax return.

The only difference between filing as a sole proprietor as opposed to an individual is that, as a sole proprietor, you must complete a Schedule C with your Form 1040.

To find your tax bracket as a sole proprietor, see our guide to tax brackets for self-employed therapists.

Filling out your Schedule C

To complete Schedule C of Form 1040, you’ll need the following information:

  • Your Social Security Number
  • Employer Identification Number, or EIN
  • Financial statements –– more specifically, profit and loss (P&L) statements showing earnings and expenses
  • Records and receipts for planned tax deductions
  • Mileage records, if you plan to take business vehicle deductions

How do I fill out Schedule C for my therapy practice?

There are five distinct parts that need to be filled out to complete your Schedule C, four of which relate to your private practice:  

  • Income is where you report all of your practice earnings for the year. This can be found on your financial statements.
  • Expenses is where you include all of your practice expenses for the year. This can be found on your financial statements.
  • Information on your Vehicle is for sole proprietors who want to account for the Business Use of Vehicle deduction.
  • Other expenses are for any other expenses that you would like to report that you couldn’t find a location for in the above sections.

As a private practice owner, you are selling your services and not physical goods, and as such, you do not maintain inventory on hand. This means you do not need to complete the Cost of Goods Sold section.

Do I need to file more than one Schedule C?

If you run multiple, non-related businesses, then you will need to complete a separate Schedule C for each. Be sure to talk to your accountant or the Heard team if you have separate, distinct forms of income.


Paying your quarterly taxes for private practice

If you're a self-employed therapist who will owe more than $1,000 in taxes for a given tax year, you're still required to pay your taxes four times a year in estimated payments. These are also known as quarterly taxes. 

You can learn more from our article, What to do if you Miss a Quarterly Estimated Tax Deadline for your Therapy Practice.

Filing for an extension on your taxes

If you won’t be able to file your taxes on time, file for an extension as soon as possible.

When you file for an extension, you get an extra six months to file your taxes. Effectively, your tax deadline is moved from April to October. 

You can learn more about filing for an extension—including how to get one online—from the IRS guide to tax extensions.

Wondering how S corporations handle their taxes? Learn more here.

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.


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Simplified tax and accounting software built for therapists

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