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Strengthening the Financial Health of Your Private Practice with Cas Tyagi

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 “Bookkeeping tells you about the financial health of your practice. Bookkeeping is just a way of tracking your income and tracking your expenses that you had during a specific time period, typically a calendar year because that is what the tax rules require. It’s just kind of writing down how much income did you make, how much did you spend on specific types of expenses, and then you being able to see at the end of the day: how much money do I have left over?”

~Cas Tyagi

Meet Cas Tyagi

Cassandra Tyagi, CPA, founded Tyagi Group in 2020 after having an amazing experience with their health team and wanted to give back to the health industry.

While their Chiropractor was talking about opening up their own clinic, Cas couldn’t stop talking about all the things they had learned through CPA training that they knew would help the business operate better⁠!

Tyagi Group works with over 200 Canadian Health Professionals ranging from multi location clinics to individual sole proprietors. The team has expanded to include CPAs with different backgrounds so that the firm can collaboratively learn from each other while helping clients in the best way possible.

In this Episode...

Do you feel a sense of dread when thinking about bookkeeping and budgeting? Guest Cas Tyagi shares with Linzy about how bookkeeping, or looking back, and budgeting, or looking forward, can bring about positive transformation in your private practice business.

Cas talks about budgeting and bookkeeping in a way that may help shift the stories we tell ourselves about these topics. Cas and Linzy dive into specific strategies to put into practice today to move toward more financial ease, and Cas also shares some tax tips from an accountant’s perspective. Listen in to hear how to feel more empowered with your finances. 

Connect with Cas

Get Cas’s FREE Bookkeeping template: https://mailchi.mp/tyagigroup/bookkeeping-template-freebie

Connect with Cas on Instagram: https://www.instagram.com/tyagigroupaccounting/

Want to work with Linzy?

FREE Money Momentum Challenge 

Are you avoiding your private practice finances, because you feel completely overwhelmed by them, and you have no idea where to even begin?

I’m hosting a FREE, live, 4-day Money Momentum Challenge from June 18th to the 21st, where you’ll get my support and guidance to step out of avoidance, take real action, and create ease and flow around your private practice finances.

In just 5-10 minutes each day, you’ll complete one small task that will help you move from money avoidance to financial clarity. And as a bonus for participating and completing the simple daily tasks, you’ll be entered into a draw to win daily prizes. Plus, one lucky therapist or health practitioner who completes the challenge will have a chance to win the grand prize of $500 cash!  

Are you in?

I can’t wait to see you inside! Sign up for the FREE Money Momentum Challenge HERE.

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Today’s podcast is brought to you by Mentaya. Mentaya is a tool that allows American clients to easily claim their out-of-network benefits when they work with a therapist who does not take their insurance. Mentaya is here to help.

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Episode Transcript

Cas [00:00:02] Bookkeeping tells you about the financial health of your practice. Bookkeeping is just a way of tracking your income and tracking your expenses that you had during a specific time period, typically a calendar year, because that’s what the tax rules require. And it’s just kind of writing down how much income did you make, how much money did you spend on specific types of expenses, and then you being able to see at the end of the day, how much money do I have left over? 


Linzy [00:00:28] Welcome to the Money Skills for Therapist 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. Hello and welcome back to the podcast. So today on the podcast we have Cas Tyagi. Cas is a Canadian accountant who has a firm that specializes in working with therapists and health practitioners. Today on the podcast, Cas and I get into some real nitty gritty financial stuff. We got into bookkeeping, what it means, how to think about bookkeeping, why it’s worth your time to bookkeep as you go. And then we also look at the kind of sibling to bookkeeping – bookkeeping is about the past – budgeting, which is about the future. I know budgeting is not everyone’s favorite topic, but it’s so, so helpful to really start to be able to think about budgeting and what it means in terms of not only money and planning ahead for money that’s going to be coming in. But Cas talks about using your budget to also plan your time by looking at the past, by looking at bookkeeping. You can also look to the future and look at what numbers are going to look like and actually plan your year, plan your practice to fit the way that numbers tend to work in your practice, work with what is a really helpful perspective on budgeting and planning forward into the future so that you can build a practice that works for you and meet your needs and is actually going to be realistic. And then we also get into taxes. So as you can hear, lots of nitty gritty stuff today, but I think you’re going to find Cas to be really accessible, really down to earth, and their love for helping therapists understand these things and make them work for us really shines through. Here’s my conversation with Cas Tyagi. So, Cas, welcome to the podcast. 


Cas [00:02:40] Thanks, Linzy. I’m really excited to be here today. 


Linzy [00:02:43] So you have the distinction of now being the first Canadian accountants that we’ve had on the Money Skills for Therapist podcast. 


Cas [00:02:52] You know what, it’s funny, when we were speaking before, that actually didn’t surprise me because I know a lot of accountants in Canada are just very generalist with anyone who will come to them and they help you in tax season and then they typically go to you for the rest of the year as well as. So excited to be here and help some therapists to understand their finances a little bit better. 


Linzy [00:03:12] And since you are Canadian, you know, some of the things we might talk about today might be just specific for Canadians and we can try to like make a note of those when we do talk about those things. But also as we chatted about just a little bit before we started recording, a lot of the principles of accounting or ways to manage money apply all over the world, literally. So a lot of what we talk about will apply to everybody today as we think about accounting and therapists. So let’s get started. I want to hear your pitch, because a lot of folks who listen to this podcast, they’re listening because, like, maybe money is not their best friend or they’re working on having a better relationship. And when you’re still working on your relationship with money, often it’s hard to stay on top of it, right? And it’s hard to like actually be tracking or yeah, keeping track of or knowing what to do. So from your perspective as an accountant, Cas, why is bookkeeping important for therapists to be doing and what should people be keeping track of in terms of their bookkeeping? 


Cas [00:04:12] Great question. And it’s so funny because I find that a lot of clients that we work with, they kind of come to us and they’re like, Oh, sure, I haven’t done my bookkeeping. So we take a very hands-on approach with our clients to help them actually through this journey because it is really overwhelming until you know what to do. When you know what to do, it’s a lot easier, right? Maybe when someone says, Give me your bookkeeping, it’s kind of like a deer in the headlights moment. I’m like, What does that even mean, right? How do I even do that? I don’t know what the thing is, but bookkeeping tells you about the financial health of your practice. Bookkeeping is just a way of tracking your income and tracking your expenses that you had during a specific time period, typically a calendar year, because that’s what the tax rules require. And it’s just kind of writing down how much income did you make, how much money did you spend on specific types of expenses, and then you being able to see at the end of the day, how much money do I have left over? You know, did I have a big sales month or a small sales month? Did I spend more money than I earned this month? And kind of breaking it down into those categories so you can really understand how much should I spend on a new laptop, how much should I spend on regular monthly recurring costs, the management software, how much did I spend this month on advertising for that one-time cost? But now I don’t have to spend that money going forward, so I can know that that was a big investment into my business. And so it’s really just looking at also like the cash flow is coming in and out of your business and gives you that really great high-level picture of what is your financial health, of your practice, where did you spend money and where did money come in? 


Linzy [00:05:39] Right. Yeah, Yeah. You’re putting together that big picture or small picture, I guess depending on the period of time to understand what happened because bookkeeping is historical. Is that a fair thing to say? 


Cas [00:05:51] Actually, bookkeeping is what has happened up until today. It has happened so far. And we’re going to talk a bit about budgeting as well, I think, a little bit later, too. And that’s kind of the exact opposite. It’s what is going to happen in the future. But when you think about bookkeeping, it’s kind of writing down that, you know, in the month of August, how much sales did I make. You can do some really cool things with bookkeeping as well, because it’s not just necessarily about your sales, right? Money comes into your bank account and that’s a great number. But maybe you invested in a new Google ad about couples therapy. So breaking out your income into individual sessions versus couples sessions could be something really cool to put into your bookkeeping so that you can see how profitable or how much money are now making from those couples sessions and see if that specific ad is now working, right. So break it out by different practitioners if you’re a clinic owner. You maybe want to track how each of the practitioners that you work with are trending and making sure that they’re progressing in the way that you would want them to from a sales perspective so that they’re increasing their sales and you’re also getting value out of having them on your roster as well in lots of different ways that you can breakout your income to actually see really interesting information, even new versus returning patients. How much money do you actually get from your new patients every single month? What is that looking like? Is your practice still building or is it kind of stagnant now means so you’re only doing returning patients. 


Linzy [00:07:14] Yes, right. Yeah. Like what I’m hearing, you know, the way you’re talking about it, there’s – for some reason this has never occurred to me before, but as we’re thinking about as historical, it almost makes me think of keeping a diary, right? Where it’s like you’re recording what happened. And by recording what happens, you get to take some perspective and reflect and make sense of what happened. Right? And it happened no matter what. But by stopping to record it, then you can look at it. And then as you’re saying, you can see these cool things of like, yeah, your return on investment. This ad you paid for, did it make any difference? Has your amount of couples sessions improved or like what’s happening with this particular person that you hired? There’s a story there that you can pull out if you put that information together by bookkeeping. 


Cas [00:07:55] Absolutely. And if you think about it, you know, without having that stuff written down, you have no idea where to even start to make better financial decisions for your business because you just you don’t even know where your money has been going or how your money has been coming in. Yeah. If you sit down and you think, oh, you know, I think I had a lot of sales this month. But then you look at it and it’s perhaps shorter sessions instead of 90-minute sessions. You did only 60 Minutes, You were super busy, but you’re not earning as much. I mean, 90-minute sessions are going to be a little bit more profitable, right? So, yeah. So that gut feeling versus seeing it on paper and maybe it’s aligned, maybe it’s not. And if it’s not aligned, that’s where the issues come out. Right. 


Linzy [00:08:34] And I think that’s such a helpful point because our emotional experience, our emotional story about money can be so strong sometimes, but it’s not necessarily correlated to what’s actually happening with those numbers. Right. And I always tend to think about like the wisdom is in the middle. The wisdom is like in that balance between like, yeah, what was that emotional experience like of making that money? Because if you have a month to use your like 45 session versus 90-minute session example, if you have a month where you do a ton of 90-minute sessions, you only do 90-minute sessions and you’re so, so busy and you’re so tired and you feel so drained and you feel like you can’t catch up, right? But then you look at your numbers and it’s your best month ever. It’s like, Yeah, it’s your best month ever. But emotionally, the cost of doing that, like that’s not sustainable, right? And so like those two things really, I think, work together to tell us what is strategic in our business. But we can only know that – I’m hearing from you – by actually having those numbers that you put together. 


Cas [00:09:28] Exactly. And writing them down. Honestly, we recommend to all of our clients to do it, at least on a monthly basis. And I think, Linzy, you’ll probably have it in the show notes. But we have a free bookkeeping template that would be for Canadian and U.S. listeners as well. If you just need to start. The U.S. one there’s a couple of little tweaks that need to be made. But if you have questions, you can always reach out. And this template we also have some emails and helping you just to understand how to get set up for success as well. But tracking this on a monthly basis and just kind of seeing what happens, I think it’s also important to understand that sometimes you make big investments into your business, like building a new website. And so in that month it probably feels like, Oh my gosh, I’m so frustrated, I have no money left over, how am I going to pay my bills or I have to take out some debt or different things? But getting to that point and then looking back and saying, Oh, well, that’s how I feel that way – it was marketing. It’s not that my sales were less. It’s a big expense. And so that can be okay because I expect it to pay off for me in the future as well. 


Linzy [00:10:24] Mmm Yeah, really lets you take perspective and understand what’s actually happened. So then thinking about the, the flip, so you know, bookkeeping is that looking back on the past, is that like diary keeping. So now let’s talk about budgeting for folks who are listening. How can they start to not only, then, think about the past, but also think about the future and plan through budgeting. 


Cas [00:10:48] So I always say that budgeting is what you expect your bookkeeping to look like at the end of the year. It’s sitting down at the end of the year and saying, okay, in 2024, what do I expect to make? When do I expect to have these big expenses like a new website? You know, I already know that I’m going to pay for that in February, so you’re just kind of slotted in and you mentally reserve that cash or mentally know that maybe February you’re going to have a different month. You know, you’re thinking about your sales pattern. So especially when you’re going to be tracking your sales by month, you can start to see maybe January, February are quite busy and then March starts to trail off. And then if you take vacation in the summer, you already know that maybe July of 2024, you’re not going to earn that much income because that’s when you always take vacation. Yes. You know, but it’s going to be coming and you can plan around that and think about these the sales profile as well, these big expenses that come up and just kind of know that they’re coming and think about this best as you can. 


Linzy [00:11:43] Yeah, that’s that’s a really helpful. Piece to zoom in on, because I think a lot of times when folks think about budgeting, they think about expenses. Right. And spending. And I will say and acknowledge that for many folks listening right now, probably talking about budgeting is like, look, it’s really nobody’s favorite thing. But I love what you’re zooming in on here is like it’s not just thinking about what you’re going to spend or not spend or any of those things. It’s also thinking about like, what are your earnings going to look like based on the plans that you have? Right. So as you’re saying, like if you’re not going to be working in July because you’re going to be taking time off and that’s going be amazing planning ahead. So that means you’re gonna have half the income in July because realistically, that’s what happens when we only work half the time as we have half the income. So putting that into your your projections and plans rather than it having being a surprise or being disappointing because it’s going to happen. 


Cas [00:12:36] Exactly. It’s almost like it’s your roadmap for what your cashflow is going to look like next year. And just to plug in, since I am an accountant, you can also better save for income taxes. Once you know what next year is going to look like, you can come up with a really good amount to be able to save and set aside. We typically talk about a specific percentage or a level, so then you can plan and prepare and just kind of know what that will look like instead of scrambling in April every year to pay, Right? 


Linzy [00:13:02] Yeah, because you’re going to plan forward for times that you’re working, more times that you’re working less and have a better guess of what that number is going to be, because that’s something that I find folks guess on. And there’s some forgiveness to guessing because once you figure out your percentage, you know, as long as you’ve picked within the right tax bracket ish, but it can feel like a big guess as to what your actual take on income is going to be. But I’m hearing that budgeting is a way that you can think about it more accurately. 


Cas [00:13:28] Yeah, exactly. Because you’re already planning for, let’s say, one of your business goals next year. Maybe with this example, you work so many 90-minute sessions and now you’re exhausted and you’re like, Oh my gosh, I never want to do that again. I’m going to scale back. I’m only going to do 15 sessions per week. Maybe Last year you did 20 sessions per week. And so even now, this big income tax bill with this big income tax percentage and now you’re saying, oh, no, scaling back is going to be a better fit for me. I’m going to maybe manage expenses or something like that. You know, what is your sales going to look like If you scale back five sessions per week, how does that work when you actually put it down on paper? What does that impact your finances? So then you can plan your personal life as well, right? This leads so much into your personal, you know, how will you continue to pay your mortgage or afford other things? Right. Right. You can plan in. Oh, well, if I scale this back, then that means maybe I have a virtual assistant. Maybe I’ll scale back the virtual assistant because now I’ll get more admin time as an example to kind of make up that difference. But it’s really to do with your business goals and it’s like, okay, at the end of this year, what do I want to do next year? You know, this year is great or not so great or in the middle. What do I want next year will look like? Where do I want that to go? And planning that out and looking at that cash flow so that you can make some really good decisions today for what you think will end up happening. 


Linzy [00:14:43] So for people who are listening, who might not have a system in place yet and maybe aren’t tracking yet, how can they start to budget? What would be a starting place to start to build this skillset? 


Cas [00:14:57] Yeah, so I’m sorry, everyone listening, but step number one is doing your bookkeeping. 


Linzy [00:15:03] It’s a trap, right? 


Cas [00:15:04] I’m sorry. It’s a trap. It really is. Bookkeeping is going to tell you what has happened so far and it gives you a good idea of what to expect in the future, like expenses that you have in August for Owl and for Zoom and for other things. They’re likely going to happen again next month and next month and every month for the rest of your career. Right. You also already know when you’re going to have to pay your accountant every year. You know, when your membership dues are going to be payable as well. So looking at your bookkeeping and into the past is going to help you to say, okay, this is most likely what’s going to happen in the future. Now, if your rent has increased or your accountant has increased their fees, that’s going to change things. You kind of have to think strategically about, well, how much do I think that will cost next year? But it opens up this conversation for, okay, in February I had to spend $1,000. Do I think that’s going to happen again? Yes or no? What does that look like going forward? 


Linzy [00:15:54] Right. Yeah. And do you suggest that folks do this like on paper spreadsheets? Like what do you suggest to people who are just maybe starting? 


Cas [00:16:04] Yeah, I’ll say whatever works best for you and gets you to actually do it would be the best system, right? Yeah. For me, I’ll be honest, our bookkeeping template that we use, we also use that essentially the exact same template for budgeting for our clients as well. The same ideas, right? Once you do your bookkeeping, you can almost copy it and now call it your budget and then just tweak it a little bit for what’s gonna come. 


Linzy [00:16:24] Yes. 


Cas [00:16:25] Yeah. And then you have all of this really great useful data from last year, like your busy periods and your slow periods, right? Maybe for you, things to pick up in September, maybe not. Maybe if you’re working predominantly with kids, things will pick up till October because parents are still dealing with the back to school thing, right? 


Linzy [00:16:40] Yes. 


Cas [00:16:41] Maybe September is actually a low month for you because of that. But now you can plan and prepare and you know that all. Also look at the large expenses. Your sources of growth if you’re breaking things out. Right. Good one could be adults, couples and children’s therapy in which what are you pushing? And maybe each of those have different types of profiles as well. Right. Couples therapy is probably going to be a lot more popular in January and then maybe trail off, whereas individual therapy tends to be a bit more consistent and then kids all around the school schedule right. So, yes, prepare for that. 


Linzy [00:17:10] Yeah. Yeah. I love it because it’s so clear. Like often what happened in the past is what’s going to happen again unless you’re planning to do something drastically different. Right. And an understanding of ebbs and flows. One of the many benefits I can think of that is it’s not an emotional surprise. It’s not a financial surprise, but also it’s not an emotional surprise when you’re like, Yeah, it’s July and I work with kids, so nobody’s around because kids are off at camps and they’re away with their families, right? Like it allows you, I think, to be real and reasonable about your expectations rather than it being a shock when your numbers look a certain way. 


Cas [00:17:46] Absolutely. And looking at these ebbs and flows, let’s say, you know, if you’re in your first year practicing, you’re just working as much as you possibly can, and then you start to see these natural ebbs and flows. Well, now you should start building out a vacation schedule for yourself. You’re not that busy in July anyway. Why not take time off in July, right? 


Linzy [00:18:02] 100%. Yes. And this is this is like something that I find I have renewed conversations with myself literally every summer. This summer it’s a different conversation because also as your life evolves. But I’ve noticed for me, like even teaching, it’s like folks folks are not as engaged in the summer and it’s kind of like we’re all kind of like, like I’m teaching a new program Money Skills for Group Practice Owners, which is going super well. It’s really fun. And at the same time, people like some of my my repeat students have been kind of like giving me a hard time about like, why are you running this in the summer? You know, my kids are like, why are you doing this to me? And I’m like, I am so sorry, but this next year I’m like, Yeah, I’m going to actually structure my life in the future – because I have a child – around the fact that he’s going to be off school and things are going to look different and our routine, at the very least, it’s going to be different. And just building that into next year’s schedule so that I’m not kind of like fighting against the season, like doing work when other people are not really around or doing work like that. I’m seeing what’s happened in the past and making a note of it means you can like go with the flow and do what makes sense for you in the future rather than repeating the same thing next summer or next holidays or whatever the thing is. 


Cas [00:19:09] Exactly. To the extent that you can, because sometimes your family wants to take a big vacation in July, and even if July is a high month, still go and enjoy that vacation. But now you know that it’s happening. 


Linzy [00:19:19] Mmhmm. 


Cas [00:19:20] And you know what that income loss is going to look like so you can better plan and prepare for that trip that you’re now really excited about and then going to be coming back in August. If that’s a low month for you, maybe, you know, block off Mondays and use that as an admin day so then you can really enjoy your evenings instead of having to chart every single day. You just chart on Mondays as an example. 


Linzy [00:19:38] Right right. 


Cas [00:19:39] Figure out different ways to take on seasonality. 


Linzy [00:19:42] Yeah I like that. I like that creativity too, right, of thinking it can look so many different ways. Working with- by looking at the past and how things have worked and how they’re going to tend to look. You can then tweak the way that you’re working to make it fit the actual situation. 


Cas [00:19:57] Luckily, I would say more people should be excited about what’s going to happen than what has happened in the past. Right? Like I just came back from vacation. I don’t even remember the fact that I was on vacation, but I’m really excited about my next vacation and I’m already planning for that. 


Linzy [00:20:10] Right? Right. 


Cas [00:20:11] Oh, sitting down now. Or, you know, maybe it’s a Christmas exercise or whatever that looks like and going, Oh, hey, what am I doing next year? What I have to be excited about. Just kind of gone through the fall and it’s been busy. You know, Jan and Feb are still going to be busy, right? Yeah. Get yourself excited about what that will look like and then start thinking financially about, okay, how do I afford that even if it’s six months down the road? So that means months. You already maybe have some money set aside so you don’t have that pinch from not working. 


Linzy [00:20:36] Yeah. And I think too, you know, folks that are listing many will be mental health therapists. Some people are, you know, manual practitioners or speech language pathologists. But regardless of the type of helping work that you do, it is also heavy work. And I think it’s good for us from a mental health perspective to have a break, to look forward to, you know, whether that’s going to be like having an extra day off in the summer or actual time away or staycation, whatever it is like. I think that’s so important to bake that in to the way that we do business in the helping professions, because it’s essential to make it sustainable that we actually have that quality time off. And I’m hearing from you as an accountant that that’s something that can be planned from an accounting perspective, that should be part of how we think about our year. 


Cas [00:21:21] Yeah, exactly. And then you can kind of see where the finances are going to end up going, but also get, you know, that almost mental clarity of, okay, what are the finances going to look like? Because it can be really intimidating. So if you’re in your first year of practice, you’ve just been working for the whole year, and the idea of taking some time off is feeling really intimidating. You can plan for it and then all of a sudden just knowing that you already have that plan and setting some money aside in the months before you end up. Going on vacation just feels a lot less intimidating to be able to take. 


Linzy [00:21:49] Yeah, absolutely. Okay. And then speaking of setting money aside, the other question that tends to float around for folks, especially when they’re newer in practice, but also if their financial picture has been changing, right, if their practice has been growing or decreasing – is taxes. That’s the other budgeting piece that like, you know, taxes are inevitable, but sometimes it’s hard for folks to really hone in on how to save. So what do you generally suggest people should be saving for taxes? 


Cas [00:22:19] Yeah, great question. So I’m going to get a little bit Canadian centric. So if the US listeners, you know, saving for taxes, one of the most important things is saving sales tax that you collect. So HST, depending on your province, saving your actuals, the actual amount that you collected. But then by doing your bookkeeping on a regular basis, again, this is a trap all leading you back to bookkeeping or bookkeeping on a regular basis. You can have that number really easily accessible to be able to file. And also when you’re registered for sales tax, you actually get to claim the GST or HST that you paid on purchases as a deduction against the sales tax that you collected. So I’ve seen a lot of health professionals who save their full 13%. If you’re in Ontario and so much money leftover at the end of the year, which is nice because then they feel like they get a bit of a bonus, but it could also be nicer to just save the appropriate amount throughout the year and have a little bit more to spend on groceries, you know, because 2023 inflation, things a little bit too much. 


Linzy [00:23:15] It is a lot. Yeah. Okay. Yeah, Yeah. So that’s a great example of like if you save as you go. So this is for folks who charge sales tax. So for Americans listening to sales tax, it might also apply to you. But yeah, if you’re able to write off your purchases against, you know, the money you’ve collected, you might end up actually owing a lot less than you think you do. But you’re only going to know that if you’re tracking as you go. 


Cas [00:23:35] Exactly. And you know, there are some other things. You know, in Canada, we have what’s called the quick method for sales tax. So if the government, the full 13% so, you know, I don’t want to say never save the full 13%, but you never end up having to pay that because if you work with a good accountant, they should be able to help you get that down pretty significantly. 


Linzy [00:23:51] Yeah. Okay. Okay. And then what about income tax? 


Cas [00:23:56] So income tax, again, we encourage our clients to do that on a monthly basis just to see what’s your taxable income for the specific month. And then you’ve got the cash in your bank account and then you set the amount aside. And we talked a little bit earlier, Linzy, about the percentage model, and that’s what you have to talk about within our client base as well within our firm. And to give you some good examples in the province of Ontario, if you make $50,000 of taxable income, you’re looking at 25%. If you make 100,000, you’re at 29%. So that’s actually don’t change that much. 


Linzy [00:24:27] Yeah, it’s such a smaller jump than you would think between those income brackets. 


Cas [00:24:34] Exactly. Now, the dollar amount is huge, but you know, some people come to me and they say, oh, I’m saving 30% but they’re a new grad who’s never worked. And so you might have some carryforwards. That doesn’t really make sense because you don’t need that much. Right. But the difference between that 25 to 29% from a percentage perspective, it’s really small from a dollar amount, though it can become really big. So if your goal is to grow your business, let’s say last year you made 50,000 and then this year your goal is to make 100,000. You want to double this year. Well, if you only save 25%, you’re actually going to have a pretty big amount of cash to make up at the end of the year. Right. So it’s always best to err on the side of caution, go for that little bit higher number. But as you’ve already set up your budget in place and you have a really good idea of what your income, after all of your expenses will look like, then you better estimate what your percentages are. Let’s say you with $70,000, or you can take somewhere between 25 to 29%, Save that throughout the year. And that’s going to be a pretty reasonable percentage for you. 


Linzy [00:25:30] Right. And to clarify, with that number Cas, does that include their their employer portions of like, you know, in Canada, CPP and E.I. in the U.S., it would be like the self-employment tax. So does that include those portions as well? When we’re talking about 20- those numbers as examples, 29% or 25%. 


Cas [00:25:50] So that includes CPP, the employee and the employer portion. But individuals who own their own business, especially sole proprietors, you don’t have to pay into E.I. Unless you’ve opted in. 


Linzy [00:26:01] Yes. Okay. Okay. So that does include those numbers. Great. 


Cas [00:26:03] Exactly. And just for context, I think in 2023, the number for CPP employee plus employer contribution is $7,500. So it’s not nothing, but it does max out at around $70,000, which is why the percentage doesn’t change too much when you go to 100,000 because you drop off that 11% contributing into your CPP. Right. 


Linzy [00:26:25] Okay. So there’s a tax there that disappears once you pass a certain income bracket. Yeah. Yeah. And that is very helpful to think about, you know, like really looking forward and thinking like, exactly how much are you going to earn because that allows you to set that percentage. And as you say, like even though it’s not a big percentage jump because your income jumps a lot, it would be, you know, several thousand dollars you’d be having to find. It is just nicer not to have to find those if you don’t have to. 


Cas [00:26:49] It’s better to have that as an extra bonus after being processed than to have to magically come up with that amount of money. 


Linzy [00:26:56] Yes. And one tax mistake that I feel like I do need to mention, Cas, because I hear this a lot and you probably hear this from your clients as well, is for a lot of therapists. I know there is a confusion on what number to save that, let’s say 25%, what number to save about 25% on. So for folks who are listening, can you clarify exactly what numbers should they be looking at to save 25% of. 


Cas [00:27:20] Your income after you deduct all of your expenses. So that net income number. Not on the gross big number that you bring in, because you might have a lot of expenses during the year, right? You might be paying rent and you also get to deduct your home office if you’re in Canada or perhaps your vehicle as well, depending on the type of work that you’re doing on your cell phone and other things like that, that you get to bring that really big sales number down a lot smaller. And that’s what you pay tax on. 


Linzy [00:27:45] Yes. Okay. So it’s your earnings that you take home after you’ve paid to run your business, because I many, many times encounter therapists who are saving 30% of everything that they bring in. And then they’re kind of like, why do I have no money to get paid? And it’s like, Yeah, because that’s a lot of money you can end up paying, especially if you’re paying a lot of business expenses. 


Cas [00:28:05] Exactly. Well, and you know, that can be an exercise that you do with your accountant. If you’re not comfortable with thinking about that net number, if that’s something that will jibe with you. I’ve worked with some clients who are like, okay, just give me the number of my gross. Right. The sales coming in, what do I do with that? And so you can get accountant can help you to back into that. But it should really be a lot smaller than 25% in sales tax. 


Linzy [00:28:30] Yeah. Yeah. And in Money Skills for Therapists – because we eventually teach profit first and many folks opt into profit first. That’s where you do take a number off of everything. But it’s a smaller number, right? Like we have an equation to reduce it, so you’re not saving 25% of everything that comes in the door. You might only be saving 15% or or 18%, depending on how much you’re spending to run the business. But I think that’s where I think that’s really added to confusion is people know that profit first exists and that you take percentages off of everything and so they just take their full tax number and take it off of everything. But yeah, I’m hearing from you like if you have questions about this and if you want to think about it, like, how much do I set aside of every dollar? A good accountant can help you figure out that number. 


Cas [00:29:09] Absolutely. And it should be pretty easy for them to be able to help you to figure it out as well. 


Linzy [00:29:13] Yeah. Awesome.


Cas [00:29:14] Some of the other things that can also impact how much you have to pay in taxes are your RRSP contributions. So those additional contributions that you’re making into retirement savings. And for Canadians, I’m going to give you guys a little tip. For 2023, there’s a tax bracket at $106,000. So if you catch up all your bookkeeping, you’re like, oh my gosh, I’m going to be making more than $106,000 this year. Please contribute to your RRSP because you got a 40% savings on that. It’s really significant. 


Linzy [00:29:41] Oh, wow. Okay. Okay. And for Americans listening, I will say an RRSP is our retirement. Registered retirement savings plans that, you know, you don’t have to pay taxes on the money you contribute there. So for Americans, I believe that that is 401K’s are the ones that are like pretax folks who are listening. You probably know the answer you probably already know. So I’m not going to clarify and pretend to be an American investment specialist, but that’s what Cas’s referring to there. So that’s that’s a great tip for Canadians listening is if you notice, you’re going to cross that 106 line. Making an RRSP contribution can bring you back down a tax bracket. 


Cas [00:30:16] And not that it’s ever a bad thing to contribute into your RRSP, even if you’re making $50,000, contributing $100 per year, it does compound interest. And is still a good thing to start making those investments. But actually after that $106,000, just the return on it for that decrease? So if you contribute $10,000, you get a $4,000 decrease in your income tax bill. It’s pretty significant. 


Linzy [00:30:38] That’s significant. Yeah, that’s great. That’s a very good tip. Thank you. Yes, thank you. Thank you so much for joining me on the podcast today. And for folks who are listening, how can they find out more about you? Canadians that are listening, especially, and folks who might be, you know, looking for an accountant who specializes in Canadian therapists who are very few and far between, I will say, where can they find you and and what do you have for them? 


Cas [00:31:02] Yeah, absolutely. So we have a very active social media presence on Instagram. I’m on there with reels three times per week, giving lots of great tips, which has lots of information for you. So follow at @tyagigroupaccounting, it’s going to be a really good place for you. Can also ask us any questions that are idioms. We’re happy to connect you with some good resources and we also offer free discovery calls for any potential clients as well. So if you’re looking to switch accountants or you’re listening to this call and you think that you want to work with an accountant, that’s cool. Instead of just, you know, an accountant, that’s a little bit boring. We have a fantastic team of CPAs on roster, so you can book in at tyagigroupaccounting.ca/book or the link is also on our Instagram bio as well in case you don’t want to try spelling that one of these free discovery calls. And then we always start our clients off with a free one hour onboarding strategy calls so that we can review your financial situation. Although I will give a warning that you have to have bookkeeping completed for us for review as well, but we’re there for you to ask questions and help you along the way and then just get prepped and prepared for next tax season. It’s never too early to start doing that. We actually onboard most of our clients in the fall season because the clients that we work with are people who really want to start understanding their finances and taking it pretty seriously and wanting to just get education, knowledge, understanding and have a good CPA on their team. 


Linzy [00:32:21] Awesome. Thank you so much for coming on the podcast. Cas. 


Cas [00:32:24] Well, thanks, Linzy. 


Linzy [00:32:39] I have a lot of folks ask me if they need to work with an accountant. And my answer is yes. And the reason my answer is yes is for tips like the one that Cas just gave at the end of the conversation where they just shared, you know, this certain tax line in Canadian taxes, you know, where if you cross over $106,000, if you can put money away in your tax-sheltered investments, you can save up to like $4,000 if you can put away a chunk of money. That kind of knowledge of the way that taxes work, the way that different investments work, that is that really specialized niche knowledge that accountants have. You know, the way that I like to talk about it is we should have people on our team who are really geeky and excited about things that we do not like. And most of us don’t read tax code for fun and haven’t done all the research on, you know, these little like tips and advantageous points where if you do a certain thing, you can save a bunch of money, but accountants do. So having someone like us on your team to guide you and being able to make these great choices and answer your really specific questions that are specific to your province or your state is really, really valuable. We don’t know what we don’t know. And I think the conversation with Cas shows that, you know, there’s people who are really excited about the things that we don’t know and it’s worth it to invest and have those folks on your team, whether they’re doing your bookkeeping for you or whether you’re meeting with them periodically or getting your taxes done by them and having those end of year conversations. They add knowledge to your business that you don’t have. If you want to follow me, you can find me on Instagram @moneynutsandbolts. And if you’re enjoying the podcast, you know what I’m going to say? Please jump over to Apple Podcasts and leave me a review. It is the best way for other therapists and health practitioners to find us and be part of these conversations. Thanks for listening today. 

Picture of 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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