Bookkeeping for Therapists: Simplifying Your Practice's Finances w/ Andrea Rotondo [Ep 17]

Welcome to the Thriving therapyneur podcast. The show for ambitious therapists who are ready to unapologetically make more money, scale their impact and build their dream coaching business. I'm Carly Hill, therapist turned coach turned CEO of a seven figure online business. I created the Thriving Therapeutic podcast because I'm obsessed with helping big hearted therapists outgrow the office and build successful and sustainable online businesses. So if you are wondering how you can continue to make an impact without sacrificing the life you love, welcome. Therapy. This is exactly the place for you. Think of it like the business school we never had. I am so excited to dive in with you. Let's get started.

Welcome back to another episode of the Thriving Therapy newer podcast. We have Andrea today and we're going to talk about money. We're going to talk about bookkeeping. We're going to talk about why this makes sense for you, you in your practice, in your business and hopefully shed some light on some gold nuggets that will help you manage your money. Better not be so afraid of money and bookkeeping, taxes, these are all things that can be daunting. So Andrea, tell us why bookkeeping? Because you have a background in psychology, right?

Yes, yes, I do. I love psychology. I have a lot of, I guess, experience in that aspect. But. But I was also always really good with numbers and even beyond numbers, being just interested in finances and money. And that was never really a topic that made me feel nervous or kind of like out of place. And when I realized that that was something that I could combine like my love and interest in psychology with those skills, I was like, this is what I have to do. Like there is a gap in this space that I know that I can help. So that's why I combined that and then I decided to focus on therapy practices.

What was the gap you noticed in particular and was it a gap you noticed from your own personal experience?

Yes. So it was kind of different factors and experiences that I saw that I was able to, I guess, land in that conclusion. So one of the things that I realized is I come from an immigrant family. I'm an immigrant myself. I moved here when I was a teenager and my dad had a business and there was not a lot of education when it came to this is how, you know, your accounting is. We had a CPA who I just kind of had to give her documents every month when I was helping my dad and his business. But there was not a lot of, like I said, education. So we were, we knew that we were compliant because we were following her instructions, but that was pretty much it. That was to the extent of our relationship with her. And later on, as I started to dive into the space and learn what was going on in therapy practices, I got kind of like the same feedback. Whether I was having one on one conversations or just reading like and Facebook groups and whatnot. It was kind of usually the same complaint of I'm not getting information from my accountant or I'm new to this. I don't come from a background in business. Nobody in my business has had a business before and my family has had a business before. So I'm just here because I'm, I want to be a therapist and I'm really good at this, but I don't know anything else. So understanding that I was not necessarily alone in that experience of having the support to stay compliant without having extra support, support and learning and then seeing that that was common, especially in an industry that doesn't really get any education, like when you're going to school for business or for finances, I was like, that's what I'm going to help. Pretty much.

Yeah. I think it's awesome that you're just even normalizing this because when I started my private practice, I mean I was telling myself the same stories. Like I'm just a social worker, I'm not a business woman. What do I do with my write offs? How do I document this? Is it too soon to get a bookkeeper? Should I get a bookkeeper now? Should I just do one of those online portals? Should I crunch my numbers in a spreadsheet? Like part of me actually felt, I want to say, like a little embarrassed that I didn't know these things, even though nobody teaches us these things. So I think you normalizing and then also providing the education to let your clients know that it's okay that they don't know these things and that's exactly what you're here for is incredible. And not all bookkeepers carry that empathy. Maybe it's just because of your background that makes you the perfect fit for working with therapists. But can you talk about this for a second? Like the emotions that come with hiring a bookkeeper and maybe being embarrassed about money and not knowing things.

Yeah, absolutely. I was talking to a friend. Well, she actually posted this. She's a financial therapist and she posted this in her social media yesterday. Like, hey guys, I just want you to know, like it's okay to hire the person that you actually feel okay with. Like if you are working with a professional right now, that is Making you feel terrible, that is not necessarily providing the space for you to ask questions, or if you ask questions, they're not necessarily answering them or making you feel bad for not knowing it's okay to look for somebody else.

So how about people over complicating their bookkeeping system? So we know about the emotions that can come with it and they can feel embarrassed and how important education is. And it's just like when we're hiring a therapist for us or people are hiring us, like it's all about the right fit, right? So finding a bookmaker, that's the right fit for you. But how often do you see people overcomplicating their bookkeeping?

I see that all the time. And it's usually because there's a lot of information. There's a lot of little nuggets of, you should do this, you should do that. But they're all really scattered. And a lot of that information is not necessarily for therapy practice owners. So there's a big part of being in therapy practice that doesn't necessarily apply to other business, which is HIPAA compliance. So that is so important to be mindful of that and intentionally build your financial systems from the beginning. And what I see often is trying to grab this piece of information, this piece of information, but there's a disconnect when it comes to applying it and actually putting those pieces together. We end up with a spreadsheet for this and a software for this one. And then I didn't really like that software, so now I'm going to try this one. So I have some information here and then the other one over here. And I'm accepting payments from this platform and this one and this one that's really, really common for people to try to avoid merchant fees, for example. So then they try a million other free options and then they end up with a gazillion more admin tasks on their plate. So little things like that that could maybe come from a good advice, just not knowing how to apply it end up in having this huge mess.

Can you talk about maybe the stages of when it makes sense to hire a bookkeeper? Because, I mean, for the longest time, I actually really enjoyed being my own bookkeeper in my private practice. And so I got so busy that I didn't make sense for me to keep up with the admin work. But there was something about the journey and the relationship with money of actually checking my bank accounts in ways that I never have before, crunching my numbers at the end of every week and every month. And recognizing charges that I forgot to cancel or that shouldn't have been there. I feel like it really actually helped my relationship with money to track everything on a spreadsheet. So is there a right or wrong answer or right time and place to hire a bookkeeper? Or does a lot of this come down to personal preference?

I would say it comes down to personal preference, especially in the beginning. Right. What I have seen is many therapists are not necessarily eager to spend money. They're not necessarily excited to spend money on whatever, whether it's a new equipment for their office or in a new service. So what I have seen is that it's common and normal to start doing everything on your own. But I also see that in therapy practices it's common to stay in like a bootstrapping stage for a really long time when it's no longer serving you. So I would say being aware of, number one, how your relationship with finances are, does that make you feel so nervous or overwhelmed to the point that you're actually not getting things done? Then maybe that would be a good idea to talk to somebody, even if it's like a one off call. Maybe you're not ready to hire them because of your budget, but maybe just getting things set up correctly from the beginning and making sure that you understand what you're expected to do. Right. Or perhaps you really like spreadsheets and this is something that you want to do. Like you were saying, it kind of solidified that relationship with finances. It was beneficial for you. That's another thing that I would say pay attention to that, how beneficial it is to you, how good you are at it, at that process. And if it's actually helping you with the process that you have in place, is it making it easier for you to get it done? Or is it so complicated or you just don't like it at all, or you're just not really good at it, so you never really do it. And the other aspect I would say is what stage in your practice you are. If you're new, you just launched it. Perhaps there's not a lot of budget for hiring an ongoing service, but maybe occasional like troubleshooting calls or like ask my kind of like pick my brain and sessions like that to help you stay on track. And then once you are either ready to hire team members, you have payroll in place, or if you have a whole new business, for example, for coaching, that's going to be a separate entity. Maybe that is when you want to look at hiring somebody to help you keep those separate to make sure that you are keeping everything in place, that you're not mixing things up. And truthfully, at that point, most likely your time is going to be better spent doing other things than in the bookkeeping.

Very well said. Lots of things to just consider so you can make a decision that's best for you. I want to go back to something you said a little bit earlier about the HIPAA compliance. Yeah. Can you expand more on what you mean by the HIPAA compliance? Because all of the listeners are therapists, right. And we always want to abide by all of our ethical regulations and rules. So what do you mean by HIPAA compliance and bookkeeping? Can you explain more in detail?

Yes, for sure. So for example, I'm gonna use QuickBooks as the example because that the tool that most therapy practices use, QuickBooks itself is not HIPAA compliant. And usually there's a question of can anybody tell me a software, like an accounting software that is HIPAA compliant? And the answer to that is your billing and your bookkeeping are separate. So anything that is related to your client information, phi and charging their credit cards or receiving payments, all of that falls under the umbrella of billing. And that should always be, you know, through a platform that is hipaa compliant, like EHRs and whatnot. After you receive all of those payments, those are going to come into your bank feed in QuickBooks. You categorize them and it's just not going to show any names. So for example, if you're using simple practice, you're using Stripe as the built in payment processor. Once you make those payouts in your bank account, that bank detail or bank description, it just says like payout and then a whole bunch of names and letters and whatever. Not names, letters and numbers, but not client names. So the person that you're hiring to do your bookkeeping doesn't come in contact with any phi, any client names. You're not sending invoices to your therapy clients from QuickBooks. You are not keeping track of who has paid you and who hasn't. In QuickBooks, that's all going to be in your EHR and why it's so important. Like I said, QuickBooks is not HIPAA compliant. And there's kind of like a journey that those transactions have. If you were to accept a payment, for example, from like a Zelle transfer that shows the name of the person, it comes into your bank details, then that moves into your QuickBooks and then now you have your bookkeeper or whoever is helping you with that or, or if it's just you you're still having those names in QuickBooks where they don't belong, that they have already said, hey guys, like don't use us for these sort of transactions. We're not HIPAA compliant, we're not going to take care of this. And then now you are at risk for that and you have to know how to address it. So that's why it's really important from the beginning to start your process of accepting and charging your payments in a way that you're not going to put at risk that information to be seen or treated as just any other name rather than what it is.

Yeah, that makes perfect sense. Thanks for explaining that. And I know a lot of my listeners too are therapists turned coaches. So we talk a lot about the ethics because we, we don't lose our ethics when we are coach. Right. Like we still have to abide by them. But this is not my opinion. This is coming straight from an attorney. Having a HIPAA compliant. Well, you don't need an EHR when you're a coach because you don't have to write notes. Right. You usually have something more like a CRM system, a customer relationship management system where you can also write notes in there. And whether that is HIPAA compliant or not is totally up to you. Right. So don't get confused if you're listening to this. Like what we're talking about now is specifically for therapists in private practice, seeing therapy clients, not therapists, turn coaches running a coaching business and doing their bookkeeping.

Right, exactly. And that's why it's so beneficial to having not only for all the other reasons that you have already gone over in your previous episode, but for accounting purposes. It's also really beneficial to keep those two entities separate and having two separate QuickBooks account for each one of those businesses because they're going to be treated differently. Even though categorizing is the same for any business, reconciling is going to be the same for every business. The actual workflow and type of even communication that you can have with your bookkeeper is going to be different for both of them. And one, maybe in the beginning of your coaching program, if you don't have a platform, for example, where you're selling your courses, maybe you're selling like a one on one in the very beginning of your journey, you can use QuickBooks to send out invoices. Maybe if you're also doing consulting and you have corporations and other companies hiring you to do a speaking engagement, you can send invoices to them from your QuickBooks. And that's going to be totally fine because that business is different, it's separate. It's not the same thing as your therapy practice. So it's really beneficial to have them separate. Not only you have to because they're separate businesses, but in the accounting process it's really important to remember that you're going to manage them differently.

Yeah, it's going to make your life so much easier. And I hear from therapists all the time, well, my CPA says don't separate it. And it's like, well, your CPA is trying to save themselves some time and make it easier on themselves. So you should most definitely keep everything separate. Separate business entities, separate bank account, a separate accounting and bookkeeping. So, yeah, absolutely. Very crucial component of your businesses. So what about some common misconceptions for therapists when it comes to bookkeeping? What do you see most often?

What I often see is that this is what I hear. Well, my finances are so easy or they're very minimal, so I don't really have to keep track of it. I just give my, my statements to my accountant at the end of the year to file taxes. And to that I always say it's kind of like two separate things. Like, of course I want you to file your taxes, of course I want you to be compliant in that aspect. But that is a once in a year event. Right. You're filing your taxes in April. We always know when they're going to come. However, you're missing out on a lot of information year round. Not only you could avoid the surprise, it's usually, oh, my accountant told me I owe this amount in taxes and I was not expecting that. Usually if you have some sort of bookkeeping in place year round and you're checking in and you're putting money aside for your taxes, you're paying your quarterlies and whatnot, the taxes should not necessarily be a surprise. There's going to be some fluctuation. Maybe you're expected to pay a little bit more than what you were hoping or a little bit less. But it should technically never be a surprise as long as you're keeping track of that and by having bookkeeping, however simple, even if it's just you, especially for solo clinicians, that's what I hear. Often it's just me. It's not a lot going on, it's just the payouts, a few subscriptions and payments every month. I still want you to have that opportunity to connect with your finances, to get comfortable into checking in your bank account, to Understand your profit. Where is your profit coming from? For example, this Summer said, it's typically slower. Are you actually seeing that in your practice or you're just assuming that because that's what everybody says, or even just embracing the fact that you're a business owner? I have also seen that kind of, like, misconception or myth, like, well, I'm a therapist that has a business, but it's not. I am a business owner, and I feel like there's a lot that can be done to bridge that gap, because the more that you embrace that part of being a business owner, not just a therapist that just so happens to have a practice, but you are a business owner. It helps you with that mindset of addressing it like a real business and thinking about it and thinking about strategies, showing up in different places, in different rooms, in different conversations, looking towards the future with a different mentality. And it all comes from, this is a real business. This is not just something that I do.

I'm an example girl. Can you think of any examples of clients maybe who said, you know, thank God for you and your services. Thank God I was taking care of my bookkeeping, because if I didn't, XYZ could have happened. Or maybe the flip side where they got themselves into a pickle because they weren't doing things properly, and then they came to you in a bind.

Yeah, I can think of different examples. I can give you two. I met with a client recently, and when we finished our meeting, she was like, oh, my gosh, can you imagine, like, me having this conversation with myself? Because we got really deep, like, what do you want your revenue to look like? She has a couple of different offers. So ideally, what do you want percentage wise? Do you want to be spending more time in this offer, or do you want to be spending more time in this other offer? What would be the percentage of that? And then in that conversation, we realized that she was actually already there in one of the offers that she had. So without giving much detail, that was like, light bulb moment. I don't have to do a lot of changes and tweaks for this thing. I just have to focus on this other thing. And then at the end, she laughed and she was like, this is why I love working with you. Like, I can't imagine having these conversations on my own. And then I can think of another example where it was a solo clinician, too, and he was working with a bookkeeper before, but things were not necessarily done right in the books for interest and loans and things like that. That they were not charged correctly and he had to actually do an amendment to his return. So basically, after he filed taxes, he realized the mistake and he had to redo the whole thing. So that's never a pleasant experience to have to do your taxes, know that you did it incorrectly to the fact that you had to pay more in taxes and then refile everything. So, of course, he was extremely happy with how things are going on now and his CPA as well. So it's different types of kind of like benefits that you can get. And it always goes back to you as the leader, as the CEO, as the. The leader, the head of your practice. What is more important to you instead of just letting your bookkeeper or your accountant dictate that for you? Like, this is it. Of course we have deadlines and things to abide by, but ultimately, I'm more interested in you as the person and what is important to you. For some, it's just knowing that their numbers are being correctly categorized. We check things in, and that's pretty much it. And then for others is, I want to have these conversations. I want to understand this percentage. What does that mean? How does that compare to other practices? Let's talk about it. And sometimes just having the opportunity to talk about it and say things out loud is what they need, is what they're looking for. And that helps also with kind of like accountability as well.

Yeah. And it allows you to customize, customize how you're working with clients because all of their needs are completely different and they're at different stages in their therapy journey as well. They could be a solo practice or maybe they have a large group practice. And finances look different at each stage in their practice. Their education may be different.

Exactly. And their needs as well for a group practice, you know, payroll is one of the, if not the biggest, expense. So we want to make sure that their cash flow is there. And if it's not, if it continues to be negative, what's going on? Where is that money going? That's not necessarily a conversation that we're going to have with a solo clinician, which. That doesn't mean that the solo practice is less important or it requires less connection with our finances. We all require that connection with our finances for our business to stay profitable. But it's going. The practice of that is going to be different.

I love it. So we've shed a lot of light on a lot of different topics. What tangible takeaways and strategies or tools can we provide to the listeners right now? If they are in A position where they're not really taking care of their finances, maybe as they should. Like what's one thing that they can do today? Very simple, maybe prior to hiring a bookkeeper where they can just start to make baby steps to improving.

Yeah, I think that the first thing to do or that would be really beneficial is to analyze your financial systems. What I mean by that is anything that is related to how you manage your money, anything that is a tool, a process. If you have tasks added in a project management software, the banks that you're using, if you have an EHR to receive payments. So any tool, like I said, resource process that you have in place, I want you to take a few minutes, maybe 20 minutes, and just map that out. Like just write it down on the computer, on a piece of paper. Whatever works best for you, just map that out. The most beneficial beginning step would be for you to have clarity around that process, what is going on. Once you have that already mapped out, I want you to try to kind of like go through it, like navigate through it and see if you can find something that is not working out or something that could potentially be better. We can start for example with how you're charging your payments. Can we make a change in there to make that better? Like I mentioned earlier, we try or I see often different methods to receive payments to avoid merchant fees. Even though we are reducing the merchant fees. You're also making it more difficult for you to track who has paid you, making it more difficult to reconcile those payments at the end of the month, making it more difficult to stay on top of who owes you money. So it's not that beneficial. Sure the dollar amount is less, but the admin load on you grows. So maybe that's something that you can look at, or the current banks that you are using, or credit cards or any other company that is holding your money, are you happy with them? You know, sometimes we just have the bank that we have always had and we don't even consider the possibility of switching banks that could give you a better product. So navigate through that journey that your dollars coming in are going through up until you pay yourself and try to find places to make tweaks to optimize a process with the intention of making that process itself less involved that that it would require less of your involvement, but that would also give you more benefit. And by more benefit I mean not just being ready to pay your taxes at the end of the year, but also for you to have that information available to you on a month to month Basis or on a quarterly basis.

Yeah, I love it. This is. This is so helpful for everyone that's listening. Get clarity. Familiarize yourself with the process. Take some time to map it out, just improving that relationship with how all of your systems work and know that there is help and professionals who can help you. You don't have to do this alone, even if you're not hiring somebody. It's about educating yourself, releasing the shame. Because we're not taught stuff in school, which is crazy, right? Because I feel like most therapists do go on to be business owners and we need to educate ourselves. We need to almost go to school again to learn these things. We're really skilled at therapy. Right. That is our area of expertise. But running a business is a whole different ballgame. So I thank you for the work that you're doing, the education that you're providing, the services that you're providing for therapists to help them with their finances. Bookkeeping. Where can people find you? Where do you hang out? How can people get their hands on your education?

Yeah, you can find me mostly on LinkedIn. You just find me with my name, Andrea Rotondo. And you can also find me in my website, Liquid Sense, bookkeeping.com and to the last thing that you mentioned, I wanted to add something and is I really, truly believe that therapists are extremely well and amazing candidates to business ownership because of the curiosity that comes with, you know, the nature of being a therapist. Right. There's a lot of digging deeper and finding things that are just beyond what we see in front of us. And I think with business ownership, especially with finances, that is incredibly helpful. We want to look at what num1 number, let's say, from your report. And there's so much behind it. So to the whole feeling of, you know, I'm not good in this space. I'm not entirely sure I was not educated in this. One of the hardest things is to look at something and try to find more information behind it. And that's something that you're most likely already really good at. So it just takes a little bit more of education and guidance for you to feel comfortable in it. So I'm excited to connect with you guys. Like I said, I'm on LinkedIn and in my website. Feel free to send me a message or an email and I'm happy to connect with you.

Incredible. Thank you so much, Andrea.

Thank you.

Thank you so much for listening to the three Thriving Therapy Neuro podcast. I hope that this episode has inspired you to reduce burnout work smarter and see the freedom potential you have as a therapist. We would love to have you inside the Therapist to Coach Accelerator Facebook group where we have live trainings and cheat sheets on all things marketing, sales and adding coaching ethically and legally. I am here cheering you on and I'll see you around.

SA.