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Is Clinical Supervision Tax Deductible for Therapists?

Clinical supervision for practicing therapists does not come cheap.

If you need to pay for clinical supervision in order to keep your license as a therapist, social worker, or psychologist, you can expect to pay fees close to the cost of your hourly rate

For part-time practitioners, or new solo therapy practices just getting established, the annual cost of clinical supervision can take a significant chunk out of your bottom line.

Good news, though: In most cases, the cost of that clinical supervision is a tax write-off. Here’s when and how you can take advantage of it.

When is clinical supervision tax deductible?

Business expenses are tax deductible when, in the words of the IRS, they’re “ordinary” and “necessary.”

What is an ordinary and necessary expense?

An expense is “ordinary” when you might reasonably expect to incur it in the course of doing business. 

For instance, an ordinary expense for a group therapy practice would be the cost of furnishing a client waiting area. A non-ordinary expense would be the cost of renting an inflatable bouncy castle.

An expense is “necessary” if it’s helpful for your business—that is, it helps you earn revenue. A necessary expense does not have to be indispensable, but it should still conceivably be able to benefit your business.

For example, you may not 100% need a ring light and microphone in order to do telehealth sessions with clients. But buying and using them will improve the client experience, potentially help you retain clients, and ultimately aid you in earning an income. So it’s a necessary expense.

When is the cost of supervision ordinary and necessary?

Clinical supervision is ordinary and necessary when you need it in order to keep your therapist’s license, or any other certification necessary for staying in business and offering the same quality of care to clients.

In most cases, that makes it tax deductible. Clinical supervision is ordinary because others in your field also typically pay for it. It’s necessary because it allows you to earn revenue. It’s hard to earn revenue if you lose your license and go out of business.

As with all tax deductions, it’s strongly recommended that you consult with an accountant before claiming it on your tax return. They can confirm that you’re eligible to deduct the expense, and help insure you have all the records you need on hand in case you’re audited and you need to back up the claim with proof of purchase.

When is clinical supervision not tax deductible?

Generally, clinical supervision is not tax deductible if you’re paying for it as part of your education as a therapist.

When it comes to claiming the cost of education as a tax write-off, the IRS is fine with continuing education: training or lessons to maintain your professional certification, or upgrade your level of certification within your field. 

However, the cost of education you receive in order to become certified in your field and start earning an income is not tax deductible.

After all, if you’re in school, training to become certified, and you are not yet earning income as a therapist, you’re not technically in business—so you can’t claim the cost of your education as a business expense.

Bottom line: The cost of clinical supervision while you are training to become licensed as a therapist is not tax deductible. Any additional supervision you need in order to keep your license and stay in business, however, is.

How to deduct clinical supervision on your tax return 

The form you use to claim the cost of clinical supervision depends upon your private practice’s business structure.

Remember: Save your receipts!

In the event you’re audited by the IRS, auditors can comb through your past six years of returns in search of false tax claims.

If you can’t prove you’re incurred an expense, the IRS considers it a false tax claim. As a result, you may be forced to pay hefty fines, in addition to the outstanding tax you owe.

To be safe, keep all records of clinical supervision on file for a minimum of six years. That includes all invoices and receipts given to you by the supervising party—whether it’s an individual or an agency.

Remember to consult with your accountant before claiming any tax-deductible expenses on your return. They can help you make sure you’re eligible to do so, so you don’t run the risk of incurring IRS fines.

Looking for more ways to potentially reduce your tax bill? Our complete list of tax deductions for therapists is the place to start.

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

Bryce Warnes is a West Coast writer specializing in small business finances.

Victoria Li, Co-Founder of Heard, Named to Forbes 30 Under 30

We are proud to announce our very own Victoria Li, Co-Founder and CTO of Heard, has been named to the Forbes 30 Under 30 list in the Finance category.

After graduating from MIT, Victoria worked as a software engineer at multiple startups (including Fitbit) before co-founding Heard in 2019 to help therapists manage their back-office finances. Read her full profile in Forbes.

The judges for the Finance category were Alex Atallah, Jenny Just, Christine Moy, and David Vélez.

“Victoria is the most accountable, resourceful, and (im)patient leader I have ever had the pleasure of collaborating with. She sets a high bar, and leads to exceed that bar week after week after week,” Andrew Riesen, Co-Founder and CEO of Heard said in a statement on LinkedIn.

“She is relentless in the development of not only her team, but also in her obsession to grow as a Company leader. It is not an understatement when I say that my career trajectory changed when I met her. Deeply grateful to be on this journey building Heard together, and building a lifetime of friendship.”

How to Overcome Financial Anxiety as a Therapist

By opening your own therapy practice, you’ve become responsible not just for your personal income, but for the success of your business. 

Your clients’ needs, your reputation, and any funds you’ve invested in launching your practice are all tied up in the survival—and, hopefully, flourishing—of your private practice.

The good news is, the simplest steps you can take to relieve financial anxiety are also ones with the potential to improve how your private practice operates, and free up more time and energy for you to focus on your clients.

Here are eight steps you can take to tackle your financial anxiety head on.

1. Revisit your attitudes about money

As Lynn Grodzki notes in her book Building Your Ideal Private Practice, therapists who struggle with financial anxiety can be sorted into five categories, based on their attitudes about money.

Grodzki uses these categories to understand why therapists often undercharge for services, but they can apply to financial anxiety as a whole.

The attitudes are:

  • Shame
  • Anxiety
  • Obsession
  • Bewilderment
  • Fear

The boundaries between these categories aren’t always clear—some may overlap. But spend time now considering which one most applies to you, and take some notes.

Shame about money

You grew up in a household where no-one discussed money. If you asked your parents how much something cost, they might shush you or tell you it was rude to discuss. Explicitly or otherwise, money was considered a “dirty” topic. 

Today, you still feel ashamed to talk about money, whether that’s planning household expenses with a partner, splitting the bill at lunch, or discussing fees with clients. 

Anxiety about money

Growing up, your family was financially deprived—money was in short supply, and you were taught to be very careful with it. 

This may have instilled anxiety about every cent you spent, so that even today you worry about making minor purchases for your business. That makes it difficult to invest in your practice and your own wellbeing.

Obsession with money

When you were young, cash ruled everything around you. Not only were your family members comfortable openly discussing money, but it was the be-all and end-all; every activity was justified by its potential to earn or save money.

Today, you feel a powerful sense of reward when it comes to earning. You may be driven to work extra hours, pushing yourself beyond your mental, emotional, and physical limits in the pursuit of a bigger paycheck.

On the flip side, when you fail to earn, or when you don’t live up to your expectations as an earner, you may experience fear or shame.

Bewilderment about money

When they had money, your family spent it. When it was gone, everyone suffered. It was never made clear to you where money came from, or how someone might plan their spending and saving.

Even as an adult, money feels like a mystery to you. Sometimes there’s cash in your bank account, and you spend impulsively. Sometimes there isn’t, and you suffer as a result. When it comes to setting a budget or planning for the future, you don’t even know where to start.

Fear of money

Any time money was discussed when you were growing up, it was accompanied by family arguments, confusion, and worry about the future. Deep down, you still associate money with conflict and pain, and you do your best to avoid discussing it or even thinking about it.

Recognizing your deep-seated attitudes about money won’t magically disintegrate your mental blocks or lay your anxiety to rest. 

But, by simply seeing that the way you view money is subjective and (at least partly) shaped by forces in your past, you may find it easier to step back and more objectively view the obstacles and opportunities your business faces.

2. Embrace the abundance mindset

There are two ways to think of business expenses: with a scarcity mindset, and with an abundance mindset.

The scarcity mindset considers every expense your business pays a burden, and a potential catalyst for disaster. Money is a limited resource, this mindset says. The more you have to spend, the more vulnerable you become.

This attitude may be helpful if you’re trying to reign in reckless spending. But it takes its toll by making it easy to attach negative emotions to every cent you spend. As a result, you come to see your business as besieged by expenses, struggling to survive.

The abundance mindset sees every expense as an investment in your business. For instance, when the time comes to renew your business license for the year, you aren’t suffering a blow to your finances; you’re investing that money in staying open for business and continuing to grow. 

When you embrace the abundance mindset, you see the bigger picture, and may begin to associate more positive emotions with the day-to-day financial operations of your practice.

3. Set fair fees

When you set your fees too low, and pay yourself too little, you plant the seeds of resentment.

It becomes easy to resent your clients, the demands of your work, and every little obstacle that comes your way. Your struggle to make ends meet sets the tone for all your business dealings, and may make you feel undervalued, professionally and personally.

The solution is to set fees that allow you to feel you’re earning what you’re worth—that your time is valued—while ensuring your services remain accessible to clients. 

Check out our article on setting fees for your private practice for some useful tactics.

4. Make financial reports your friends

Businesses use three kinds of financial reports to track their money:

Profit and loss statements (P&Ls), which tell you how you spent money, how much you earned, and how much you kept as profit during a particular period. If you don’t receive quarterly and monthly P&Ls, there’s no way to tell how much profit you’re earning, or the factors (like expenses) that affect it. You’re always in the dark, wondering how much your next paycheck will be.

The balance sheet, which tells you your assets, liabilities, and equity as of a particular date. When you don’t have an up-to-date balance sheet, you don’t know how much money your business has—either in the bank, or tied up in other assets—and you don’t know how much you’re owed. It’s impossible to make informed plans for the future; you’re always flying by the seat of your pants.

Cash flow statements, which tell you how many of your assets and liabilities are cash, as opposed to money owed or money owing, respectively. Without cash flow statements tying everything together, your P&L and balance sheets may give you false impressions of your practice’s financial health; you can never be sure how much cash you have on hand to work with.

If you’re new to bookkeeping, these financial statements may seem intimidating. But they don’t require any complicated math, and they’re fairly easy to read, once you’ve seen a few examples.

Your financial reports may be generated by accounting software (if you decide to do your own bookkeeping), or delivered by your bookkeeper (or else a service like Heard.)

5. Get the pros on your side

Maybe you’re struggling to keep up with basic day-to-day bookkeeping, and dread the approach of tax season and all the extra paperwork it will bring.

Or maybe you’ve been improvising your finances as you go, and haven’t set up a bookkeeping system at all. In that case, you may have very little insight into how your business is performing, and worry constantly about disaster striking.

In either case, getting help from a professional bookkeeper and a professional accountant, both of whom are experienced with therapy practices, could save you a lot of emotional turmoil—and a lot of money, too.

FYI, Heard handles both bookkeeping and accounting exclusively for therapy practices.

Many therapists try to DIY their finances early on, because they’re concerned about spending money unnecessarily. 

But doing your own financial back office work eats up time and energy that is better spent working with current clients, or bringing new ones onboard. 

Think about it this way: If you spend five hours per week wrestling with accounting software or struggling through tax form fine print, that’s five hours per week you could spend seeing clients—and billing them for your time.

Even if it seems like a major expense right now, hiring a bookkeeper and accountant may save you money in the long run. Learn about the difference between bookkeepers and accountants, and how they can help your practice succeed.

6. Learn to love budgeting 

When you create a budget, you’re planning exactly how much you’ll earn and how much you’ll spend in a particular period. You’re also planning how you’ll earn that money, and how it will be spent. 

That may sound stressful. After all, if you’re planning to earn exactly X next month, and you fall short, doesn’t that make you a failure?

A small business that relies on one earner for revenue—like your solo therapy practice—is rarely precisely on budget. The important thing is that your budget gives you targets to aim for, and creates a map for where your business is going in the future—even if it’s only one month in the future.

Also, you can change your budget as you go, fine-tuning it, so get a clearer and clearer picture of what you can expect. Budgeting removes a lot of unknowns from running a business, so you spend less time lying awake at night, wondering how you’re going to afloat.

Do yourself a favor, and get familiar with how to create a budget for your therapy practice. Your bank account will thank you.

7. Consider a line of credit

If you haven’t already, talk to your bank about opening a line of credit for your business. Even a relatively small line of credit gives you a pressure relief valve in case of cash flow problems. 

For instance, if your payment processor is slow paying you out, or an unexpected expense pops up, you may find yourself short of the cash you need to pay office rent at the beginning of the month.

Without a line of credit, you may be forced to dip into your personal savings, to use an expensive cash advance from your business credit card, or to negotiate a late rent payment with your landlord.

A line of credit clears up the problem by giving you access to cash at a (relatively) low interest rate. Provided you pay back the difference promptly, it won’t cost you much—and it will save you from overstepping financial boundaries (using personal money to cover business expenses), incurring big credit card fees, or having an awkward conversation with your landlord.

A line of credit won’t eliminate all your financial stressors, but it gives you some wiggle room in case of an emergency—and that can go a long way towards reducing financial anxiety.

8. Accept impostor syndrome

As Dr. Marie Fang explains, one of the most important decisions she made as she adapted to running her own practice (and popular therapist education resource) was accepting impostor syndrome.

As you take the reins of your finances—hopefully, with help from a bookkeeper and accountant—and put in hard work to help your practice to succeed, you may feel underqualified or completely out of your depth.

Rather than trying to ignore this feeling, or (alternatively) letting it drag you down, accept that you have it—and that, if your business is successful, it probably isn’t going anywhere.

Impostor syndrome is a common experience for those of us to take on new, difficult roles and aspirations—whether that’s accepting a promotion at work, becoming a parent, learning to play piano, or launching our own therapy practice.

The sooner you can come to accept impostor syndrome as a necessary—albeit, sometimes uncomfortable—side effect of ambition, success, and new horizons, the sooner you’ll be at peace with running your own therapy practice..

Looking for support from a financial pro? Learn how to hire an accountant for your therapy practice.

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

Bryce Warnes is a West Coast writer specializing in small business finances.

IRS Penalties for Therapy Practices

If you file and pay your taxes accurately and on time, it’s extremely unlikely you’ll need to worry about IRS penalties.

On the other hand, if you file or pay your taxes late, inaccurately, or—worst of all—not at all, you’re going to get dinged.

Here’s everything you need to know about how IRS penalties may affect your therapy practice, how you can avoid them, and what to do if you can’t afford to pay.

How to tell the IRS is going to penalize your therapy practice

Some good news: If the IRS is going to penalize you, they’ll be sure to let you know.

When you’re late filing or paying your taxes, the IRS typically doesn’t lose much time sending you a notice in the mail. And, if you have an Electronic Federal Tax Payment System (EFTPS) login, you should be able to see any outstanding amounts you owe.

Heads up: If you get a text, email, or phone call from someone claiming to be the IRS, saying you owe them money, it’s almost certainly a scam. As a first point of contact, the IRS will always send you a letter by mail.

IRS late filing and payment penalties for therapy practices

The delinquency penalties recognized by the IRS are generally separated into three categories:

  1. Failure to file a timely return
  2. Failure to pay tax reported on a return
  3. Failure to pay an assessed tax that should be shown on a return, but which is not

For the purposes of your therapy practice, penalties 1 and 2 are most relevant.

The penalties:

  • Failure to file a timely return: Monthly interest of 5% on your unpaid taxes for the year, up to a total of 25% the value of your unpaid taxes. Regardless of how much you owe in taxes, if you are over 60 days late filing, the minimum Failure to File Penalty is $435, or 100% of the tax on the return, whichever is less.

  • Failure to pay tax reported on a return: Monthly interest of 0.5% on your unpaid taxes for the year, up to a total of 25%.

When these penalties both apply in the same month, they total a maximum of 5% (rather than 5.5%): your failure to file penalties are reduced to 4.5%, and your failure to pay penalties remain 0.5%.

You may also be charged an underpayment penalty in the event you fail to pay the complete amount owing on your quarterly taxes. 

Accuracy related IRS penalties

It’s possible to be charged a penalty for inaccurately filing your taxes, but only if you’re audited.

In the unlikely event you’re audited by the IRS and they discover you filed an inaccurate tax return, either through your own negligence or by significantly understating the amount you owed in taxes, you may be charged a 20% penalty.

The IRS audits just 0.3% of all tax returns. Some business structures, such as sole proprietors, are more likely than others to be audited.

So, think of accurate tax filing as insurance in case of the worst case scenario. One of the best ways to ensure you file accurately is to work with a bookkeeper or an accountant.

How to reduce tax penalties (or avoid them entirely)

Word of advice: the best policy you can follow is to file and pay your taxes accurately and on time each year (or on a quarterly basis, when it comes to quarterly taxes and payroll taxes.)

Doing so will not only save you from the financial cost of IRS penalties, but it will reduce the mental and emotional toll of playing catch-up.

Don’t worry, though. In the event your tax deadline does go whooshing past before you’re ready for it, there are steps you can take to mitigate the damage.

File your taxes even if you can’t pay

As you may already be able to guess based on how they’re penalized, the IRS is more forgiving of late payment (0.5% interest) than late filing (5% interest).

In their eyes, it’s understandable if you’re short on cash. They provide a number of ways to pay your tax bill late (more on that below).

But there’s one thing the IRS just can’t stand, and that’s being left in the dark. They want to know what your business owes in taxes, so they can keep their own books balanced. Whether you’re able to pay immediately is of secondary importance.

So, even if you can’t afford to pay your taxes, or if you’re behind on quarterly payments, file your annual tax return as soon as possible. You’ll lower the amount you pay in penalties by a factor of ten (from 5% monthly to 0.5%). 

You’ll also signal to the IRS that you’re eager to follow the rules to the best of your ability. That may work to your benefit later if you need to negotiate a late payment plan.

If possible, file for an extension

If the April tax deadline is looming and you know you aren’t prepared to file on time, file for a tax extension.

A tax extension gives you an extra six months to figure out your revenue and expenses for the year and file your return. 

It doesn’t buy you extra time to pay your taxes, however—they’re still due on the deadline, whether that deadline is annual or quarterly. And they’ll still accumulate penalties as long as they go unpaid. 

Hire help catching up 

One common reason business owners file their taxes late is that they don’t have the information they need in order to file.

An annual profit and loss statement (P&L) tells you how much income to report on your tax return. And a complete set of books for the year provides the information you need to itemize deductions. Neither of these is available if you have no bookkeeping system in place. 

Luckily, many bookkeepers offer retroactive services. They can go back, analyze your bank transactions, and create a complete set of books (including financial statements) you can use to file.

If you’re behind on your bookkeeping and tax season is approaching, get in touch with a bookkeeper who has experience working with therapy practices. Or consider using Heard: one of our specialties is helping self-employed therapists catch up on bookkeeping.

What to do if you can’t afford to pay your taxes

A business that can’t afford to pay its taxes is nothing new to the IRS. The four tax relief options they offer are designed to help you pay your taxes without bankrupting you. Each option may be more or less appropriate, depending on your circumstances.

Before pursuing any tax relief option with the IRS, it’s a good idea to consult with an accountant. They can help you identify the best strategy for your practice.

Penalty abatement

For the 2019 and 2020 tax years, in response to the pandemic, the IRS canceled penalty payments for most individuals and businesses filing late—benefiting about 1.2 million taxpayers.

The IRS also cancels penalties at the individual level. If you can demonstrate that an event beyond your control caused a delay in filing, you may get relief. In order to do so, you’ll need to write a Penalty Abatement letter, explaining the reason for your late filing and requesting tax relief.

In order to follow this route, your tax filings must be up to date.

Short term extension

In many cases, you can qualify for a 120 day extension on tax payments. Unlike other options, you won’t be required to sign a formal contract with the IRS, and you won’t be legally compelled to make any payments before the 120th day of your extension.

To find out whether you qualify, and to file for a short term extension online, visit the IRS payment plan application page.

Offer in compromise

If you’re an employer and you’re up to date with your quarterly tax deposits, you may be able to make an offer in compromise and have it accepted by the IRS.

When you make an offer in compromise, you’re effectively saying to the IRS, “I can’t afford to pay the full amount I owe. Will you accept this instead?”

The IRS will take into account a variety of factors, including your ability to pay, income, and expenses, before making a decision. In general, they will accept an offer in compromise in one of three situations:

  1. The IRS is unlikely to be able to collect the full amount owing
  2. There is a legitimate dispute regarding the amount you owe
  3. Collection of the full amount would cause you economic hardship, or if there are other compelling public policy or equity considerations in play

The IRS offer in compromise pre-qualifier can help you determine whether your offer in compromise is likely to be accepted—although, as always, the final decision is up to the IRS. 

Tax installment agreement

You may be able to negotiate a formal installment agreement with the IRS, whereby you pay your tax bill gradually. 

To qualify, you should owe less than $50,000 in combined tax, penalties, and interest. You should also be otherwise compliant with tax filing requirements. (Another good reason to file your taxes on time, even if you can’t pay in full.)

While an installment agreement will break your tax debt into bite-size chunks, it won’t save you from penalties. You’ll still accrue interest on all unpaid taxes remaining. Also, if you underpay or fail to pay any of your installments, you’ll technically be in breach of your agreement with the IRS.

Depending on your situation, you may be able to begin the application process for a formal installment agreement on the IRS payment plan application page. Otherwise, you can apply for an installment plan by filing Form 9465.

Currently non-collectible

If you can prove to the IRS that you’re unable to pay both your tax debt and your living expense, they may offer you an extension on the taxes you owe them.

Meaning, while you’ll still owe the IRS taxes, you’ll have longer to pay them. Typically, when you qualify for currently non-collectible status, the IRS will revisit your case on an annual basis to determine whether you’re able to pay.

If tax season is approaching, and you don’t have the information you need to file, it’s time to catch up on your bookkeeping. Learn how to catch up on bookkeeping for your therapy practice.

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

Bryce Warnes is a West Coast writer specializing in small business finances.

When to Hire an Administrative Assistant for Your Therapy Practice

When you run your own practice from day one, it’s easy to end up taking on more work than you can handle. 

Managing all your bookings, emails, and bills may not be difficult when your practice is small. But, as your practice grows, you may begin to feel as though you spend more time doing office admin than seeing clients.

Here’s how you can tell when it’s time to hire an administrative assistant for your therapy practice—plus, how much it will cost you.

Four signs it’s time to hire an administrative assistant

At the end of the day, it’s up to you to determine when it’s time to hire an admin for your therapy practice.

However, if you think you may eventually need to hire an assistant, there are four signs to watch out for.

1. You’re spending as much (or more) time on office admin as with clients

If you find you’re spending more time

  • Managing your clinical hours schedule
  • Organizing notes
  • Preparing insurance claims
  • Scheduling consultations with new clients
  • Answering emails
  • Communicating with your bookkeeper and accountant, and
  • Coordinating with cleaning services or other contractors

than seeing clients, it could be a sign you should hire an administrative assistant.

You likely didn’t go into business for yourself so you could devote most of your time to office admins. Treating clients is your practice’s raison d’etre. It only makes sense that you should devote the majority of your time and energy to providing treatment.

Hiring an admin assistant can free up time in your schedule so you can take on more clients, and give your existing clients the devoted time and energy they deserve.

2. You don’t feel like you’re earning enough money based on how many hours you work

When you run your own practice, you may find your working hours extend well beyond the standard 9 – 5. That’s particularly the case if you’re responsible for every moving part of your business, not just time with clients.

The result may be a growing sense of resentment, as you find yourself putting in more time and energy than you would at a full-time job, while earning less than you would working for someone else.

For perspective, try applying your hourly rate to work you do outside of office hours. After all, every hour you spend otherwise could be an hour you spend with a client.

For instance, say your hourly rate is $90. 

  • That hour you spent on call waiting, because you needed to resolve an issue with your payment processor? That’s $90. 

  • The two hours you spent responding to consultation requests from new clients, and booking them in your schedule? That’s $180. 

  • The three hours you spent researching and booking hotels and scheduling flights for the conference you’re attending? That’s $270.

Any of these tasks could be handled for you by an experienced administrative assistant. And there’s a very good chance—as you’ll see below—that their hourly rate is much less than $90.

3. You’re expanding your practice

Things are going well with your practice. You have a growing waitlist, and you can begin being picky about who you take on as clients. 

In fact, you have so many referrals who want to become clients that you’re ready to hire another therapist to join your practice.

Be warned: Hiring another therapist—whether they’re a contractor or an employee—is going to increase your office admin burden.

Once you hire another therapist, you’ll need to:

  • Start scheduling hours in the office in such a way that you can both use the space without stepping on each other's toes

  • Set up payroll. Meaning, you’ll spend extra time tracking, depositing, and moving extra cash, and coordinating with your bookkeeper to make sure it’s categorized correctly. 

  • Forward queries from potential new clients to the other therapist at your practice

The extra earnings from hiring another therapist could go a significant way to offsetting the cost of paying an administrative assistant—while saving you time and energy, too.

4. Your therapy practice is becoming more complex

You may not necessarily be at the point where you’re ready to hire another therapist to your staff, but a growing practice can still introduce complexities that eat up more of your time with office admin.

For instance, you may recently have added new revenue streams, such as:

  • Off-site workshops or group therapy sessions
  • Contracts with institutional clients
  • Online courses
  • Writing or speaking gigs
  • Clinical supervision
  • Freelance consulting and business coaching for other therapists

There are other ways therapy practices become more complex, too, like:

  • Taking on remote clients
  • Moving from subletting office space to opening your own office
  • Moving from a fully remote home office to in-person sessions
  • Subletting your current office space to generate extra revenue

All of these impact your schedule, your bookkeeping (and the information you need to communicate to a bookkeeper, if you have a professional working for you), the types of records you need to keep, and your tax filing.

So, if you find these changes are beginning to push you to the brink—in terms of stress, and extra work hours—it’s time to consider whether you need an administrative assistant to help relieve the burden.

What does an administrative assistant do?

As well as recognizing the signs you should hire an administrative assistant for your therapy practice, it’s important to understand what an administrative assistant can do for you.

An administrative assistant for a therapy practice may handle some or all of the following:

  • Scheduling existing clients
  • New client intake
  • Office upkeep and tidying
  • Scheduling cleaning and repair services
  • Paying bills (utilities, rent, etc.)
  • Communications with bookkeepers and accountants
  • Coordinating payroll
  • Renewing business insurance and licenses
  • Correspondence with contractors, landlords, insurance panels, etc.
  • Answering all incoming calls or emails
  • Greeting clients who have arrived for appointments

Exactly which tasks you hire an admin assistant to handle will depend on the role you plan for them, and the needs of your practice. 

Can you afford an administrative assistant?

For most therapists, the biggest barrier to hiring an administrative assistant is money.

Even if you’ve seen your practice grow from a small business, with just a few clients, into something much more significant, you may find you’re still stuck in the penny pinching money mindset of a new business owner.

With that attitude, it’s easy to think of hiring an administrative assistant as an extravagant expense, rather than as a smart move that could save you money in the long run. 

The cost of hiring an administrative assistant varies considerably, based on two factors: Hourly rate, and work style.

Hourly rates for therapy practice administrative assistants

According to Indeed, typical salaries for administrative assistants in the USA range from $7.25 to $30.05 per hour.

Of that range, the most common rate is $15.88 per hour.

For any administrative assistant you consider hiring, you can expect their hourly rate to be determined by experience and level of training. 

All else being equal, an admin assistant who has received a diploma or certificate in office management, for instance, may expect higher pay than one who has entirely learned on the job.

The number of years’ experience an individual has will affect their rate, but so will any specializations they have. Anticipate that an admin assistant who specializes in working with therapists or people in adjacent fields will cost more.

Work styles of therapy practice administrative assistants

“Work style” refers both to the working hours, per week, of an administrative assistant, and the way in which they do the work—whether remotely or in-house.

Broadly, work style can be broken up into three categories:

  • Full-time, in-house. Your assistant works 35 - 40 hours per week, out of your office. If you have a solo practice, it’s unlikely you will hire an assistant like this. But for larger group practices, an in-house admin assistant may make sense.

  • Part-time, in-house. Your assistant works in your office less than 35 hours per week. How you do this can vary considerably: Your assistant may come in 8 hours per week in order to do some admin work and tidy the office, without ever interacting with your clients; or they may work 30 hours a week, serving as front desk person while you see clients and fulfilling other administrative duties.

  • Part-time, remote. Your assistant handles admin tasks online, from their own office or home office, without interacting with clients or fulfilling any other in-office duties. If you only need a few hours of admin work completed per week, this may be the best choice. Many fully remote admin assistants have multiple clients, working just a few hours for each client per week.

There’s a fourth option: Having an administrative assistant who works both in-office and remotely. In that case, they may only come into the office when they’re needed in-person—for instance, to greet clients on days that you’re working—while handling other duties remotely. 

Budgeting for an administrative assistant

Unless you’re hiring them to complete a short-term contract, you will likely need to hire your admin assistant as an employee.

That entails setting up payroll. You can learn more from our article on payroll for therapy practices.

You’ll also need to create a new budget item. Your assistant’s salary is a recurring expense that needs to be accounted for. And, like most other recurring expenses—rent, utilities, and your business license—it’s one payment you simply cannot afford to miss.

Not only is an assistant you fail to pay unlikely to keep working for you much longer, but it could land you on the wrong end of legal proceedings.  

When you have a salary to pay, cash flow becomes important. Cash flow is the rate at which income earned (by billing clients or filing insurance claims) becomes cash in the bank. You can learn more from our article on cash flow from therapists.

Before hiring an assistant, talk to your accountant about the realities of having an employee on payroll. They may be able to recommend some best practices to ensure you’re able to meet your obligations as an employer, as well as some support you can put in place—such as a line of credit, or business savings—in case you don hit a cash flow gap.

When you’ve got an employee to pay—whether it’s a remote assistant working a few hours per week, or an in-office admin for your group practice—you need to be sure you have the resources to do so.

Meaning, if you’ve been putting off creating a budget for your therapy practice, or your current budget is out of date, now is the time to tackle it. Get started with our guide to budgeting for therapists.

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

Bryce Warnes is a West Coast writer specializing in small business finances.

How to Plan for Maternity Leave as a Therapist

When you have your own therapy practice, the idea of taking maternity leave may be scary. Not only do you have clients who depend on you for treatment, but you need to find a way to balance the books and keep the lights on while you’re away.

But anxiety about taking maternity leave doesn't need to overshadow the anticipation, excitement, and joy of having a child. Conversely, stressing over finances and client referrals doesn’t make morning sickness easier to endure.

Smart planning now will free you up to focus, when the time comes, on welcoming your new little one into the world. Here are seven steps to plan maternity leave at your private practice.

Decide when to tell clients 

When it comes to your practice, there are two groups of people with whom you should be prepared to share news of your pregnancy: existing clients and new ones.

Many pregnant people feel comfortable sharing the big news around 12 weeks in, but you will want to identify a timeline that feels best for you.

Telling existing clients you’re pregnant

You may find it’s more difficult to stick to your chosen timeline for announcing your pregnancy when it comes to telling clients.

Morning sickness, aka any-time-of-the-day sickness, affects every person differently. But you should be prepared for the possibility that you’ll need to cancel on clients, often at the last minute, due to nausea.

In fact, you may find yourself suddenly excusing yourself in the middle of sessions with clients because you’re about to puke. Therapist Allison Puryear discusses this very issue in her guide to maternity leave for therapists.

If you haven’t yet made a public announcement about your pregnancy, but it’s beginning to affect how you serve clients, it’s up to you to decide how much you’re willing to share. You may feel comfortable telling some clients you’re in the very early stages of pregnancy, and dealing with morning sickness; or you may prefer to keep it vague.

Whatever approach you take, try to create a communication plan before your pregnancy starts to affect you at work, so you’re prepared when it’s time to talk to clients.

Once you’ve reached the 12 week mark—or whatever point you set for sharing your good news—inform all of your clients that you are pregnant and planning to take maternity leave. 

At this point, it’s a good idea to have a clear idea of how much time you’ll be taking off, and steps you may take to refer clients who need ongoing therapy while you’re away. The “script” for informing clients is covered below in Step 5.

Telling new clients you’re pregnant

Once news of your pregnancy is public, make it a habit to give new clients a disclaimer during your consultation call. Then, based on their needs (whether a short course of therapy, or longer-term treatment) and preferences, they can make an informed decision.

Tell new clients when you’re planning to begin maternity leave, and when you expect to return. You may also wish to let them know about any plans you have to refer existing clients to other therapists while you’re away.

Set your boundaries for leave

Setting boundaries around what type of work you’ll do, and your availability in terms of communications, gives clients a clear picture of what to expect while you’re on leave.

Without clear boundaries, you may find work creeping into your life at a point when you aren’t ready to return to practice. The time you take before you have your baby in order to prepare, and the time you take afterwards to recover, is important. If you don’t set boundaries, you could be jeopardizing your mental and physical health.

Set precise dates for when:

  • You will stop seeing clients for regular sessions
  • You hit pause on accepting new clients
  • You will no longer be available to answer emails
  • You will no longer be available to reply to texts or phone calls

Naturally, you should also set dates for when you will resume client sessions, accepting new clients, etc.

You can communicate these cut-offs to clients with pre-written emails (covered below).

Anticipate recovery time

Six weeks. That’s the minimum postpartum recovery period, regardless of how you give birth.

Keep in mind, that’s just for physical recovery. Ask any new parent, after six weeks, how they’re feeling, and it’s unlikely they’re back to 100%. An interrupted sleep schedule, hormonal chaos, and the mental and emotional demands of caring for a newborn may all help to delay a return to the workplace.

If it’s your first time giving birth, it can be difficult to anticipate how much time you need off. This is when it’s a good time to take a survey of the moms in your life, to get an idea of what they went through while recovering from their first pregnancies.

However much time you anticipate needing, err on the side of caution and give yourself the maximum amount. It’s better to have some wiggle room, in terms of timing. Planning a gradual return to work can make this easier.

Plan your return to work

When you resume seeing clients, going from zero to sixty isn’t realistic. Your best bet is to plan a gradual return to work, so you can pick up the rhythm of running your practice again—and back off to take extra time away if needed.

You may wish to phase in telehealth sessions first, followed by in-person appointments. If your practice is 100% telehealth or 100% in-person, consider which of your clients you’d prefer to start working with first, gradually increasing the number you see per week.

Here’s an example back-to-work schedule for a new parent running a solo therapy practice:

From… To… Workload per week
Two weeks before due date Six weeks after delivery None. No phone calls with clients, no office work, email is set to auto-reply.
Six weeks after delivery Ten weeks after delivery Two telehealth sessions
Ten weeks after delivery Twelve weeks after delivery Four telehealth sessions
Twelve weeks after delivery Sixteen weeks after delivery Four telehealth sessions
Two in-office sessions
Sixteen weeks after delivery Twenty weeks after delivery Six telehealth sessions
Four in-office sessions
Twenty weeks after delivery Resume full caseload

This is just a template to work from. Your own schedule will be different.

Alternatively, you may wish to set a “check in” date. For instance, Dr. Marie Fang explains how, during her first pregnancy, she took two months off, with the option to take four. After two months, she checked in with clients to let them know whether she would be returning to work.

As she explains in her debrief, Dr. Fang ended up taking all four months—and, for her second pregnancy, scheduled four full months away right off the bat.

Whatever schedule you set for your return, it’s important to set it now. It will affect what you tell clients, and how you budget for your time away.

Referring clients to other therapists

Decide now whether you will refer your clients to other therapists while you are away.

For some clients, this may be unnecessary—the break from therapy will not seriously affect their treatment journey. Others may need to see another therapist in order to keep up with their goals.

This is the time to do some matchmaking between your client list and your network of colleagues. For each client, create a list of therapists you believe would be a good match, and be prepared to make introductions. Therapist Allison Puryear explains how she used a simple spreadsheet to plan referrals for her maternity leave.

Create a script for clients (including emails)

There are two parts to your maternity leave prep script: Telling clients in person, and sending emails.

Telling clients in person

When you tell clients in person, be prepared for reactions that may make you uncomfortable. 

Your clients may:

  • Express resentment, disappointment, fear, or anxiety about your absence
  • Ask awkward or personal questions
  • Offer unasked-for advice
  • Decide to leave and see another therapist

As a professional, you need to set boundaries around how much of your personal life you’re willing to share with clients. The most important thing is that your clients know when you’ll go away, and when you’ll be back. Beyond that, it’s up to you to decide how much you’d like to share about your pregnancy. 

Sending emails

You may also want to write in advance and schedule your own version of these five emails:

  1. An email notifying clients of your maternity leave, to be sent when you begin to share the news with clients. (It’s a good idea to send it to all of your clients, even if you tell them each in person, so they have a written record of when you will be away and when you will return to work.)
  2. An email notifying clients that you are going on maternity leave in X weeks. If they need referrals to other therapists, or would like to schedule extra sessions, now is the time for them to get in touch. You may want to send a personalized email to each client notifying them of when their last session will be before you leave.
  3. An email notifying clients you have begun maternity leave and will no longer be available to take calls or respond to emails.
  4. An auto reply, set for the duration of your leave, letting anyone who emails you know that you will be out of the office until such-and-such a date.
  5. An email notifying clients when you return to your regular work schedule.

You may also need to email clients to check in—for instance, if you are taking two months off, with the possibility of taking four. In that case, you won’t be able to write the email in advance, but make a note in your calendar so you aren’t frantically writing it at the eleventh hour.

Set two budgets for your time away

You’ll need to set two budgets for your maternity leave:

Setting your personal budget

Your personal budget is fairly self-explanatory—it covers all the personal expenses you will need to cover while you’re off work. 

What makes it different from your typical personal budget is your income. Since you aren’t actively earning income while you’re on maternity leave, you need to decide how you will pay yourself.

That could either be in the form of savings you’ve set aside to cover your personal expenses, or a recurring owner’s draw from your practice’s retained profits.

Using savings makes the most sense if all of your income is active income—that is, you aren’t earning money unless you’re seeing clients. In that case, your business revenue during maternity leave is effectively zero. So long as you’re able to plan your expenses effectively, you can just withdraw money from a lump sum to cover them.

Giving yourself an owner’s draw during maternity leave makes the most sense if you’re earning passive income while you’re away. For instance, you may offer online courses that generate a steady stream of revenue. In that case, you may wish to pay yourself every two weeks with an owner’s draw consisting of your passive income and a portion of your practice’s retained earnings.

Setting your business budget

The most important part of your business budget while you’re on maternity leave is your overhead.

Your overhead is the cost of staying in business. It includes expenses like:

  • Rent
  • Utilities
  • Software subscriptions
  • Business licenses (typically renewed annually)
  • Insurance premiums

While technically not part of overhead, you should also anticipate any quarterly tax payments due during your maternity leave.

In addition to planning your overhead costs, you will need to plan your weekly income between now and when you go on maternity leave, so you can put together a savings plan.

Short-term disability insurance and maternity leave

If your health insurance plan covers short-term disability, you may be able to get paid while you’re on maternity leave.

Short-term disability coverage that includes maternity leave typically pays out a percentage of your average income for a set number of weeks while you’re away. In order to get this money, though, you’ll need to apply through your insurer.

If you’re reading this article because you anticipate being pregnant in the future, but aren’t pregnant yet, now is a good time to consider either upgrading your insurance (to include short-term disability coverage) or to confirm that your short-term disability coverage includes maternity leave. You won’t be able to sign up for coverage and qualify for maternity leave if you are already pregnant. 

Put a savings plan in place

Looking at your average weekly income, and the number of weeks you have left until your maternity leave, you should be able to determine how much you can withhold each week as savings. 

If you’re planning to pay yourself from your practice’s retained earnings while you are away, earmark a portion of it as a future owner’s draw. Your bookkeeper can help you categorize this money.

If you plan to draw from a lump sum in personal savings, then take the money as owner’s draws or salaries now, and stash it away for when you need it.

Your goal should be to save enough money that you can cover all of your expenses while you’re on maternity leave. That may seem like an intimidating task. 

But the sooner you get started, the more leeway you have—and the easier it will be to prepare for your time off.

Having a child is a huge life event. Don’t let stress about money distract you from it. Our article on creating a budget for your therapy practice can help you plan for the impact of maternity leave now.

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

Bryce Warnes is a West Coast writer specializing in small business finances.

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Transparent plans for your practice

We offer two annual plan options for solo and group practices, billed monthly or annually.

  • Talk to an accountant who knows your practice
  • Track your practice's financial health
  • Get your federal and state income taxes done right
  • Tax-deductible and pays for itself within months
  • Quarterly and yearly reviews with a CPA
Solo Practice
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in annual savings
*Up to 10 therapists