Where to Start with Your Private Practice Finances

Where to Start with Your Private Practice Finances

“If the prospect of starting to work on your finances in your private practice and improve your relationship with money is completely daunting and overwhelming, today we’re going to start with one thing, one actual practical thing that you can do and start working on immediately that is going to improve your relationship to your finances and create more clarity for you.” 

– Linzy Bonham

In This Episode…

So many therapists and health practitioners have no idea where to even begin when it comes to their private practice finances. 

It’s totally understandable to feel overwhelmed – the majority of us were never taught about this stuff.

In this episode of Money Skills For Therapists, I’ll be giving you the first practical, actionable step that you can take towards improving your relationship with money and getting more clarity around your business finances. 

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Episode Transcript

Episode 4 Official Episode-final.mp3

 

Linzy [00:00:02] Therefore, when you started having to manage the money in your private practice, you just used the bank account that you already had, right? You had clients send money to your bank account, right. Your Venmo pointed to your account and now you’re in private practice and you’re getting busier and maybe private practice is now your full time thing or it’s getting fuller all the time and the money is impossible to understand and have any clarity about. It’s all just kind of a blurry mess because your personal money and your business money are completely enmeshed. They are like one in the same. 

 

Linzy [00:00:48] Welcome to the Money Skills For Therapists podcast, where we answer this question: How can therapists and health practitioners go from money shame and confusion to feeling calm and confident about their finances and get money really working for them in both their private practice and their lives? I’m your host, Linzy Bonham, therapist turned money coach and creator of the course Money Skills For Therapists. 

 

Linzy [00:01:11] Hello and welcome to today’s episode of the Money Skills For Therapists podcast. So today is a different kind of episode. This is my first solo episode. So our previous episodes, if you’ve been listening in order, they have been interviews, we have a coaching call with Marcuetta working through some mindset questions. We had interviews with Allison Puryear and Annie Wright, and those interviews are people who are further ahead. Therapists who have done work on money or are working actively on money. And they’re like several steps too many steps down the road, right? The purpose of those podcasts is to help you see where you can go and what’s possible and kind of open up questions and ideas and curiosity about what money could do for you and your life, like it has done for my graduates and my colleagues. 

 

[00:02:04] Today’s episode is much more practical. Today, we’re talking about where to start with your private practice finances if you have no idea what to do. If the prospect of starting to work on your finances in your private practice and improve your relationship with money is completely daunting and overwhelming. Today, we’re going to start with one thing, one actual practical thing that you can do and start working on immediately that is going to improve your relationship to your finances and create more clarity for you. 

 

[00:02:40] So something that I see a lot in students who come into the course is so often we’ve started our private practices as kind of side hustles, right? Maybe you were in an agency setting and then you started seeing a few clients on the side or you started in a group practice working for somebody else, and we’re getting paid as a W-2 or as an employee in Canada. And therefore, when you started making money in your private practice, when you started having to manage that money, you just used the bank account that you already had, right? You had clients send money to your bank account, your Venmo pointed to your account and now you’re in private practice and you’re getting busier and maybe private practice is now your full time thing or it’s getting fuller all the time and the money is impossible to understand and have any clarity about. It’s all just kind of a blurry mess because your personal money and your business money are completely enmeshed. They are like one in the same. This is like a really natural problem to have because of the way that most of our private practices evolve. But if you are in this situation, or if you do have a separate bank account, but it’s still fairly fuzzy, I’m going to unpack today exactly how to move forward with creating that clarity that’s going to be a starting point for getting your money really working for you. Because if we can’t see what’s happening, if we don’t have that clarity, then we can’t fix it. If we don’t know what’s going on, there’s no way that we’re going to be able to make improvements. 

 

[00:04:12] So you might have already guessed. The first step is to create a separate business bank account. I feel like a little bit of a broken record saying this because I say this all the time whenever I do guest appearances or workshops for other private practice builders, I always mention this because it’s such a foundational first step and it’s so easy to skip. But going out and getting that business bank account, and if you are operating as if you’re incorporated to some level, if you’re operating under a business name, then you may have to get a business bank account, which does mean you’ll have to pay some business bank account fees that are a little bit higher, but you’ll get some perks that come with that, too. If you are a solo practitioner, like if you are a sole prop, then you can actually just use a personal bank account. You can do some research online if you want to think through that decision. There’s information out there about, you know, why you may or may not want to do that. But for many people who are sole props, as far as the government is concerned, the money that’s coming into your business is your money anyways, they don’t see it as separate from you, so you could absolutely just open a personal bank account. 

 

[00:05:20] The reason that it’s so valuable to do this is it gives you that clarity that you are absolutely not going to get when your money is intermingled. When you have that separation, you are creating a boundary between your personal life and your personal money and that business. And that boundary is so important in private practice, whether you’re a mental health therapist or whether you’re another kind of health practitioner, I think already as healers and helpers, we can have blurriness around our relationship to our business because we do it from our hearts, and it’s easy to kind of feel really mixed into the work that we do. And when our money is mixed, it just makes that enmeshment and intermingling that much stronger. Creating that separate bank account and pointing all of your payments from your clients, and so all the money coming in and pointing all the money that comes out, all of your bills, having them all go through that one bank account is going to immediately give you so much information about what’s happening in your private practice. You are not going to have to guess anymore on whether or not there’s money there to pay yourself. You’re going to see that. You’re not going to have to guess whether or not there’s money for taxes. You’re going to see if there’s extra money there or not, at the end of each month. And you’re not going to have to guess if your business is making money. 

 

[00:06:36] Sometimes in our private practices, what can even be happening when we’re getting started is that our business is leeching money from us. It’s actually having negative returns and that is completely normal at first and seeing that is painful. There is kind of this, like I said, I want to say like anesthetic quality to having that enmeshment, which is that we don’t actually have to think about how our business is doing or not. And we don’t actually have to face whether or not we are making money or not and whether or not we can pay ourselves or not, because it’s all just kind of blurred together. And so that lack of clarity in some ways can be a kind of avoidance. But when you do make that separation and you have that clarity, you’re going to have to get real pretty fast about what’s happening in your practice. Now I will say, when you’re starting out, it is normal that your business is losing money. So if that’s what you discover when you do start to create the separation in this clarity, that is par for the course. But what it can let you do is actually make an informed decision about “how much money do I want to lend my business?” “How much money do I want to give my business as a start up fund?” And then you’re making a conscious decision about that rather than the business just taking money from your home and kind of just stealing money from you and the money that’s supposed to be for your kids activities or for your vacation or, you know, your spouse’s fund to buy a truck or whatever. You are going to be able to make conscious choices about giving your business a loan into that personal bank account rather than just having it eat your personal money, which is so easy to happen, especially if you’re into doing lots of trainings, which I will have to talk about in a further episode about therapists in our relationship to professional development. 

 

[00:08:17] So steps to do that, let’s get really concrete. If you do not have a separate business bank account… number one: start to look around and see what your best options are. If you have a bank that you already like and trust, then just walk into that bank and talk to them about what their options are for business bank accounts. That is a great place to start. It can be helpful to have your business bank account actually at a separate institution from the one that you usually use. So not the same bank that has your personal accounts if you have a tendency to kind of steal money from yourself and if you know the boundaries need to be stronger, then it is strategic to set up that separate bank account at a different bank, not the one that you usually use. But it can be another bank in your city, could be a credit union if you want to support credit unions, or there are now a lot of online banks that are really easy to get accounts. And if you’re not usually going into your bank, you can just use an online bank and just do it all from home and go through that process of submitting necessary paperwork, which sometimes is a little, sometimes is a little bit more to get that started. 

 

[00:09:24] Once you have that set up, once you have an account, which sometimes can take a little while and I want to normalize that – if it takes a few weeks because it takes you a little bit to organize your paperwork or it takes you a little bit to decide which bank or if it takes them some time to approve the account or to get your debit card to you, that kind of thing – that’s totally normal. Don’t think that that’s about you. I want you to resist the temptation to have that add to your negative money story if you have a negative money story that like money is difficult or that you can’t do these things, you’re not effective, I want to take the wind out of that negative money story’s sails and say it does take time to set up a bank account, that’s normal. 

 

[00:10:00] But once you get that ball rolling, once you have that account set up, then taking the time to make sure that you’re pointing all of your payments, taking that half an hour or one hour of time to make sure that all of your client payments are now going into that account and all of your bills are coming out of that account. It’s going to take probably about an hour of your time to do both of those, maybe an hour and a half, depending on how complicated it is. But the clarity that that’s going to give you, the ease that that’s going to create at tax time when you don’t have to go chasing after transactions in your personal bank account and your personal visa and and trying to figure out what’s business and what’s not, but rather having it all in one place. Honestly, if that’s the only thing that you do for yourself around your business finances this year, that’s a huge step. You are going to thank yourself at tax time so much when already all of your transactions are in one place, which is in that bank record for that business bank account. 

 

[00:10:59] So that is the first actionable step, setting up that separate business bank account. Now if you find that that feels really daunting and difficult, listen for future episodes where we’re going to talk about more of the mindset and emotional blocks that can come up around money. Because if that does feel completely impossible, it might be that other things need your attention first, and I was kind of in a toss up debating over what topic to talk about in this very first podcast episode of Where to Get Started, because this is the first practical step. The first practical step is creating that separation. Getting that business bank account. But the first emotional and mindset step, which we’ll talk about later, is starting to really understand what’s happening for you. What are those stories? Starting to create that distance and curiosity about those stories so they don’t run you and stop you from doing practical things like this… Like getting your business separated from your personal finances so you have clarity and ease at tax time. 

 

[00:11:59] So get that business bank account underway, take those first steps in this direction. I cannot overstate how grateful you will be to yourself at tax time. How much your future self is going to appreciate this if this is not a step that you’ve done already. And if you do have a separate bank account, but you don’t have it completely separated, if you’re say, I see a lot of cases where, say your insurance payments, if you’re an insurance panels, your insurance payments are still going to that old bank account even though you’ve set up that new bank account. Take that hour of your time and point those payments towards your new bank account. It takes a little while. It can create… like a little bit of a hiccup or a gap in your payments. But it is absolutely worth it for the time that you’re going to save later and the headache that you’re going to save yourself later. 

 

[00:12:47] If you want to hear more from Money Nuts & Bolts, you can follow me on Instagram. You can find me at @moneynutsandbolts. We’re putting out free money content there all the time. And if you are interested in learning more about Money Skills For Therapists the full course, this is where I walk you through step by step in nice little bite sized chunks how to go from money confusion and shame to calm and confidence. We walk you through mindset pieces of working through those emotional blocks that can make money so difficult, but also very practical pieces to actually have you set up a financial system that makes sense for you and your brain and can help you really get money working for you in your private practice and your life. Not just the basic things, but next level things like being able to support the life you really want and saving for those bigger, more important goals. If you’re interested in learning more about the course, you can check out my masterclass. We’ll put the link in the show notes. It’s called the Four Step Framework to Getting Your Business Finances Totally in Order. Thanks for joining me today for our first solo episode and jump over to Instagram and let me know when you have that business bank account all set up. 

Hi, I'm Linzy

Hi, I'm Linzy

I’m a therapist in private practice, and a the creator of Money Skills for Therapists. I help therapists and health practitioners in private practice feel calm and in control of their finances.

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