Bookkeeping for therapists in private practice comes down to three income streams and a short list of costs. Insurance deposits are matched to the payer's remittance, client card payments are recorded gross with platform fees as an expense, and licensing, supervision and rent are coded monthly. A brief close then keeps the books ready for tax time.
Insurance payments on a therapist's bank statement
An insurance payment on a therapist's statement is usually one deposit covering many sessions, sometimes weeks of them. The bank line names the payer or a clearinghouse and gives a total. The remittance advice from the insurer, or the practice management system's payment report, lists which sessions the deposit paid and what was adjusted.
Record the deposit as insurance income under the payer's name. If the therapist bills several insurers, a separate income account per major payer shows who pays slowly and who pays the most. Smaller payers can share one account.
The remittance matters for one more reason: it shows what was denied or reduced. Those amounts never reach the bank, so they leave no line to code, but the therapist needs them to chase unpaid claims. Ask for the payment report each month and keep it with the statement.
Client payments and platform fees in a therapy practice
Client payments in a therapy practice usually come through a card processor or the practice software's payment feature. The processor deposits a batch, net of its fees. Record the gross session payments as income and the processing fee as an expense, so income matches the session records and fees are visible.
As an example, a weekly payout of 1,452.60 might cover 1,500.00 in copays and private-pay sessions, less 47.40 in card fees. The payout report gives both numbers. Coding the 1,452.60 straight to income understates revenue and hides a cost the therapist can compare across providers.
Some therapists also see clients through an online therapy platform that pays them per session. Those payouts are income too, often with the platform's share already taken. Give them their own income account. Businesses with many small member payments, such as a fitness studio, run into the same netting; gym bookkeeping shows it at higher volume.
Licensing, supervision and training costs for therapists
Licensing, supervision and training costs are what a therapist pays to keep practicing: license renewals, board fees, professional association dues, continuing education, clinical supervision or consultation, and malpractice insurance. Put them in a few named accounts rather than one "professional" bucket, because the therapist will want each total at renewal time.
A short set of accounts for a solo practice:
- Licenses and board fees
- Continuing education and training
- Clinical supervision and consultation
- Professional liability insurance
- Practice software, for the scheduling, notes and billing system
- Office rent, or a share of a home office, which the tax preparer sets
Newly licensed therapists often pay a supervisor monthly. That is a recurring payee, well suited to a rule that codes it automatically.
What belongs in a therapy practice's monthly close?
A therapy practice's monthly close is short: get the statements, code the lines, match income to the practice software, reconcile and note anything unusual. For a solo therapist it becomes a short routine once the client rules are in place. The checklist below is an example order.
A monthly close checklist for a solo practice
- Collect the checking statement, any card statements and the processor's payout report.
- Collect the practice software's monthly payment report, split by insurer and client pay.
- Convert and code the statements, then review any line the rules did not recognize.
- Gross up processor payouts so fees appear as an expense.
- Compare insurance deposits for the month with the payment report. Note any gap.
- Move personal spending to owner draw.
- Reconcile each account to its closing balance.
- Send the therapist a short note: income by source, total fees, and claims still unpaid.
Practices that bill families, such as child care centers, follow a similar routine with tuition instead of sessions; daycare bookkeeping covers that version. AutoBankConvert can run step 3 on a monthly schedule for each therapist, with uncertain lines sent to a review queue.
Should a therapist's bookkeeper see client names?
A therapist's bookkeeper rarely needs client names and never needs clinical detail. The books need amounts, dates and payers. Session notes, diagnoses and the reason someone is in therapy are confidential health information and have no place in a ledger, a memo field or an email to the bookkeeper.
Some detail can slip in by accident. A client who pays by bank transfer may appear by name in the deposit description. A memo typed by the therapist may mention a session type. Keep descriptions as the bank printed them, do not add client detail when coding, and ask the therapist to send payment reports that show totals rather than session lists where possible.
If you are setting up a bookkeeping practice that serves health professionals, think about secure file sharing early. The guide to tools for starting a bookkeeping business covers that choice. AutoBankConvert encrypts statement files in transit and at rest and lets you choose how long originals are kept after export.