In order to grow your therapy practice’s income, you need financial tools to track your earnings, expenses, assets, and other key metrics. And financial tools with professional support—such as online tax filing solutions—help you make the most advantageous tax moves for your growing practice.

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Here are ten solid reasons why investing in financial tools makes sense for growth.

Key takeaways

Financial tools give you the insights you need to plan for growth
A realistic budget makes your practice more efficient and your income easier to predict
You can use data from financial tools to project future scenarios and make informed business decisions
If you have long-term plans—like building up equity in your business or hiring staff—financial tools keep you on track
Without the help of financial tools, you will likely have a larger tax burden due to missed deductions

Why invest in financial tools?

Financial tools used by therapists in private practice include:

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Accounting software for day-to-day bookkeeping and financial reports
Payroll platforms for onboarding and paying staff
EHR systems for billing, payment processing, and integrated bookkeeping
Expense trackers for documenting and organizing receipts
Complete financial platforms like Heard, for bookkeeping, financial reports, and tax filing handled by a team of experts

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These financial tools cost money. But they are also essential for sustainably building your practice and increasing your income over time.

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By investing in financial tools, you can:

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Track performance and growth
Build a resilient budget
Project future scenarios
Identify opportunities to earn more
Prepare for the unexpected
Save for long-term goals
Plan for growth
Hire clinicians
Manage multiple revenue streams
Maximize tax savings

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Without tools to give you insight into your practice’s finances, you’re operating in the dark. It’s impossible to accurately track how money is being earned and spent, make informed business decisions, and plan for growth.

Which financial tools does your practice need?

Which financial tools you invest in depends on your particular situation—like your business structure, whether you have staff, and your goals as a self-employed therapist.

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It also depends on the size of your practice.

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If you’re just starting out and have only a handful of clients, it may not make sense to invest in comprehensive and complex bookkeeping, accounting, and tax platforms.

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On the other hand, if your client list is maxed out, you have multiple revenue streams, and your goal is to grow your practice further, it doesn’t make sense not to invest in financial tools.

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Should You Do Your Own Bookkeeping as a Therapist? can help you decide when it’s time to switch from a DIY solution to professional financial tools.

Track performance and growth

Your profit and loss statements (P&Ls) tell you how much you earned over a particular period (revenue), how much you spent (expenses), and how much you kept as profit (income).

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By comparing P&Ls from different periods, you can track how revenue and expenses change over time and how those metrics impact your income.

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You need that information in order to see:

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How your business decisions affect your finances
Which revenue streams are most profitable
Where you can afford to spend more and where you need to cut back
The return on investment (ROI) of expenses like marketing
What to expect in terms of seasonal fluctuations in revenue

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All of this gives you a clear picture of your practice’s performance. You can see what works, what doesn’t, and what steps you need to take to increase your income.

Build a resilient budget

Your practice’s budget gives you goals for spending and earning. By sticking to a well-planned budget, you can meet both:

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Long-term goals, like building up emergency savings or paying off debt; and
Short-term goals, like covering monthly expenses and paying yourself a reasonable salary

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A budget isn’t static.

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For one thing, you need to update your budget for each period with actual figures—so you can compare how much you really earned and spent with how much you planned to earn and spend.

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For another, you should plan to periodically review your budget and make adjustments, because:

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Expenses and revenue change
Your short- and long-term goals may shift
Earlier versions of your budget may be unrealistic

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You can’t make informed, effective changes to your budget—or update it with the latest figures—without the data generated by bookkeeping and financial reports.

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And without a resilient budget, one that adjusts and adapts as your practice evolves, predictable income growth is impossible.

Project future scenarios

Some financial tools can generate financial projections for you. Others provide the raw data, in the form of financial reports, that you can use to create projections yourself.

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Whatever solution you choose, creating financial projections is important for income growth. A financial projection uses past data to predict how your business would perform in different scenarios.

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For instance, you could use financial projections to model the effect on your finances of:

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Moving to a new office location
Expanding your marketing
Hiring staff
Opening new revenue streams
Taking out a loan
Investing in automation
Setting aside extra savings
Hiring professional support (eg. an accountant)
Pursuing new credentials
Becoming licensed in multiple states
Transitioning to a new business structure

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Financial projections can lay out best- and worst-case scenarios based on the data you have, so you know whether your next major business decision is a smart one.

Identify opportunities

Data tracked by financial tools—including a history of financial reports, past tax returns, and detailed bookkeeping—helps you spot opportunities for increasing your income.

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Looking over the data—or hiring an accountant to do it for you—you can see:

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Which expenses are necessary and which ones you can afford to cut
Which revenue streams are worth doubling down on and which ones aren’t worth your time
Which marketing channels give you the best ROI and which ones are worth dropping
Whether insurance billing is worth your while or whether you’re better off switching to cash pay only
How much money you have available to invest in growth strategies like hiring staff or expanding into new markets

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Without the information provided by financial tools, these opportunities for long-term planning and growth are likely to pass you by.

Prepare for the unexpected

To increase your income, you need to build a financially stable and predictable practice.

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But private practice itself is not always stable and predictable:

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Clients churn
Office leases end
Insurance premiums increase
Equipment and furniture need replacing
Accidents occur
Personal life forces you to take time off
The broader economy rises and falls

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A hit to your revenue or an unexpected expense can leave you short of funds to cover your operating costs. That in turn affects your income, assets, and growth trajectory.

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An emergency savings fund protects you from this eventuality. By setting aside a portion of your income each month and following an emergency savings plan, you can smooth out dips in revenue and stay on track for growth.

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But you can’t save effectively unless you know:

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How much you can afford to set aside each month
How much you need in the bank to cover your operating costs in an emergency
Exactly how big the shortfall is when your revenue temporarily decreases

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You get that data from financial tools. Even better, any financial tool with built-in bookkeeping will let you create an “Emergency Savings” account in your chart of accounts. That way you don’t forget to set aside funds each month and you can accurately track how much you’ve saved.

Save for long-term goals

Besides an emergency fund, you may have other long-term expenses to save up for. They might even be investments to help your practice grow.

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Some examples:

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Additional credentials from continuing ed
An advanced degree
Registration and licensing in multiple states
An office in a better location
Additional clinicians or administrative staff
Time off to invest in new revenue streams (eg. creating an online course)
Paying off debt, including student loans

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As with everything else on the list, you can’t plan to save effectively unless you have the insights financial tools provide.

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What’s more, secondary financial tools—like personal budgeting apps—can help you set goals and stay motivated as you build up your savings fund.

Plan for growth

Financial projections can model growth scenarios for your practice. But it’s today’s bookkeeping and financial reports that are most important for planning future growth.

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Data from financial tools can tell you:

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How much income you can afford to invest in growth opportunities like expanding marketing efforts or hiring staff

How much your practice holds in assets, so you can calculate your tolerance for risk
How your practice is spending money, and where you may be able to afford to cut back

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If you plan to apply for a business loan, you should be ready to provide detailed financial reports demonstrating the profitability of your practice. And you can only get those financial reports—and have them certified by a CPA—if you have the right financial tools for the job.

Hire clinicians

A payroll platform is the most important financial tool in your kit when you’re planning to hire staff.

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With a platform like Gusto, you can:

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Quickly onboard new hires
Calculate employee pay
Withhold and remit taxes
Generate and file essential tax forms
Track employee pay over time
Manage benefits like health plans and retirement savings
Process invoices and pay contractors

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A comprehensive payroll platform is able to connect with your accounting software or a done-for-you solution like Heard, guaranteeing that payroll and the rest of your financial back office are always in sync.

Manage multiple revenue streams

Opening up multiple revenue streams for your private practice can:

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Increase your income
Make you more financially resilient
Help you expand your professional skills

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But when your business earns revenue from multiple sources, you need to track it carefully with a bookkeeping and accounting solution.

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That’s because different revenue streams:

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Have different profit margins. You should focus your time and energy on the most reliable and profitable sources of revenue.
Are taxed differently. For instance, educational materials like workbooks or online courses may be subject to sales tax.
Change over time. Tracking revenue sources and generating financial reports tells you which revenue streams are growing and which are shrinking, so you can make informed business decisions.

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For more, check out our Complete List of Income Streams for Therapists.

Maximize tax savings

Deductible expenses reduce your tax burden. The more you can claim, the more you can reduce your taxable income. Any missed deduction is money left on the table.

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Common financial tools help you take advantage of deductions:

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Bookkeeping and accounting tools track your expenses so you can calculate your deductions.
Expense tracking and receipt storage tools ensure you have the documentation you need to support your deductions in the event of an audit.
Tax filing solutions give you professional support filing your taxes so no deduction is left unclaimed.

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You can also use data from bookkeeping and accounting to determine the most profitable way to claim different tax deductions. For instance, the amount of your home office deduction can vary considerably depending on which calculation method you use. It’s impossible to compare calculations unless you thoroughly track your home office expenses.

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For more, check out The Most Valuable Tax Write-Offs for Therapists.

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Ready to hire staff for your growing practice? Check out How to Grow Your Solo Therapy Practice Into a Group Practice.

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