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Do you need reliable accounting software? What does it take to make informed decisions about your finances as a therapist? How much money do you want to make?
In this podcast episode, Joe Sanok answers Emily Ross’ question about what accounting software to use in private practice.
Podcast Sponsor: Noble
Our friends at Noble believe in using technology to enhance, not replace, human connection.
With Noble, your clients will gain access to between-session support through their automated therapist-created Roadmaps, assessments to track progress, and in-app messaging. These tools help you and your clients gain a better understanding of their progress between sessions – how they are feeling, and what areas may need more focus – so you can tailor your one-on-one sessions to their needs more effectively.
Not only will Noble help you offer your clients the most transformative experience possible, but you can also earn passive income while doing so. Learn more and join for FREE at noble.health/Joe.
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In This Podcast
- Accounting for small businesses: Try QuickBooks
- Use tools that help you make informed decisions
- How much money do you want to make?
Accounting for small business: Try QuickBooks
For a solo practice owner, consider using QuickBooks. Enjoy structures and services such as:
- Separated business and personal expenses
- Maximized schedules
- Quarterly estimated taxes
- Mileage tracking
I also recommend downloading the QuickBooks app to your phone because then you can take receipt pictures quickly which is nice to do and [to] have all in one spot. (Joe Sanok)
Use tools that help you make informed decisions
Keeping track of numbers can feel monotonous but it is necessary to help you to make the right decisions for your business.
- Keep a profit and loss statement: how much money comes in and goes out.
- Have a basic idea of how many clients you see per month and at what average rate.
- Know how much you pay for marketing and general business expenses per month.
- How many sessions do clients come to on average?
How many clients a month do you need to see to break even? Say you have an office that costs you $1000 a month … maybe to just break even you should know, “I need to bring in $1500 a month”. If you are charging $150 a session you have to do 10 sessions just to have it not be a hobby. (Joe Sanok)
How much money do you want to make?
Start with how much you want to earn, how many weeks off you want in the year, what your expenses are, and divide that up into how much money you need to be earning per week or month to achieve your goals.
Money travels fast, so looking at these kinds of numbers can help you to decide where you need to spend less, earn more, or change something so that your practice has the space to breathe and grow.
Running some of those numbers and [asking], “how does this affect my life?” is important. It may mean that you need to have a side gig while you’re building your practice, it may mean that you need to add some clinicians to build extra income outside of yourself. (Joe Sanok)
Useful Links mentioned in this episode:
- Join Noble for free!
- Ask Joe a Question
- Practice of the Practice Quick Books discount: receive 50% off for $7 a month
- Join The Audience Building Academy
- Visit the HoofNHorn Therapy Website
Check out these additional resources:
- John Howard — More Than Words: deepen your Relationship Connection | PoP 669
- Apply to work together
- Sign up for Next Level Practice – next cohort opens in March 2022
- Events – click on the event’s dropdown
- Sign up to join the free webinars and events here
- Podcast Launch School
- Practice of the Practice Podcast Network
- Free resources to help you start, grow, and scale
- Apply to work with us — decision-making matrix for your next steps
Meet Joe Sanok
Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners that are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.
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I’m Joe Sanok, your host, and welcome to the Practice of the Practice podcast. For a little bit here, we are doing four episodes a week. We have had so many content questions and ideas and just stuff coming out that we’re not doing four episodes a week. John Lee Dumas says to make the bar so high that it makes it that the competition can’t even keep up. I’m not trying to dominate this space. We just have so much content and this is all I do. I no longer have my private practice, so I can spend all my time going full tilt towards Practice of the Practice. I think that’s just a Testament to when you really hyper niche and find something you just love.
I mean, recording these Ask Joe’s, for me, I love it. It’s so exciting to hear people’s questions and think about you all struggling and saying, wait, I’m just going to ask Joe. I’m going to go over to practiceofthepractice.com/askjoe and leave a question and get some help and be able to just move forward faster. I mean, we are in the implementation age, we’re out of the information age. To find somebody that you can just trust and work with whether that’s just listening to this podcast or being part of our membership communities, when you find your people it’s so magical.
We see this all the time. At Killin’It Camp, whether it was in 2019, when we did in-person or 2020, or 2021, or Slow Down School or any of the events that we do, when people get together, either virtually or in-person, it’s like, oh my gosh, you’re my people. I love that connection side of this work. I love connection all over. Just the other day I went out for coffee with somebody that’s a new therapist in town and she was talking about, oh she’s doing this thing called Carvan and she’s renovating a bus and going to be doing this mobile kids therapy clinic. It’s a super cool idea. We were just chatting and she didn’t know a whole lot about what I did.
I was like, “Oh, you need to meet my friend Caroline. She has head and heart counseling. Oh you need to meet my friend, Chris, he’s the new psychiatrist over at the hospital,” and just to connect people. Then I was like, “Wait a second. You don’t hardly know anybody. I’m hosting a campfire tonight at my house and there’s going to be a bunch of people there. You guys should come.” They came and they had an awesome time. It was great to get to know her and her husband and they made some new friends. It’s just, when people connect so much in adulthood, we don’t get to have those deep friendships and connections.
To find new friends is often hard. So I feel like the work I get to do reflects that just posture towards life of enjoying people, of finding almost everybody. There’s a couple people I don’t find interesting, but for the most part, I find most people pretty interesting. So it’s just so fun to do this and now to test out four shows a week, we’re testing out three and that was going great. Now we have more questions coming in over at practiceofthepractice.com/askjoe. So keep them coming. We’re going to keep helping you out.
So today’s question comes from Emily Ross with one of the coolest names I’ve heard for our practice, Hoof and Horn Music Therapy Studio in of course, Portland, Oregon. My brother lives right down the road over Newport, Oregon, love coming out west when I can. My brother has specifically Pacific, which is this business that has the federal trademark for Highway 1 1 on clothing. So you get all this 101 clothing through specifically Pacific. So Emily check it out and all the rest of you West Coasters. Support my a brother.
Emily wants to know accounting software. She says, “I use an older version of Quicken for years. I’m a solo practitioner. I’ve been forced to update. Now it’s useless to me. I need to switch.” All right, I’m going to talk about what I recommend you use and then what numbers you should also know and a few other things in regards to working with an accountant to make sure you’re optimizing your tax situation. I’m going to say I’m not an accountant or an attorney. Find your own. I’m just sharing from my own point of view. I’m not liable, blah, blah, blah, all that stuff.
So accounting software I love using these small business QuickBooks. I actually use the upgraded version with my bookkeeper but for where you’re at, I mean the $9 a month one I think we have a discount code. Let me go, give me just a second here. I’ll just listen while I type away. We could edit this out, but we’re not going to. So let me just see if this redirects to give you that discount. Oh yes, practiceofthepractice.com/quickbooks. You’ll get 50% off. Cool. Looks like it’s $7 a month now. Look at that. I think we may get an affiliate for that. I don’t know. I don’t remember QuickBooks paying us for that. I think it was just went towards our account or something.
Anyway yes, seven bucks a month for a solo practitioner you’ll have separate business and personal expenses, maximize schedule C quarterly, estimated taxes, mileage tracking. I also recommend downloading the QuickBooks app to your phone, because then you can just take receipt pictures really quick, which is really nice to be able to do that and have that all in one spot.
[NOBLE] Our friends at Noble believe in using technology to enhance, not replace human connection. With Noble, your clients will gain access to between session support through their automated therapist-created roadmaps, assessments to track progress and in-app messaging. These tools will help you and your clients gain a better understanding of their progress between sessions, how they’re feeling and what areas may need more focus so you can tailor your one-on-one sessions to their needs more effectively.
Not only will Noble help you offer your clients the more transformative experience possible, but you can also earn passive income while doing so. Learn more and join for free at www.noble.health/joe. Again, that’s www.noble.health/joe.
[JOE SANOK] Let’s see what else. So a couple things when you’re thinking about your finances is I like to have the things I keep track of be things that help inform decisions I make. The idea of keeping track of numbers just to keep track of numbers seems stupid to me. So a profit and loss statement, how much money comes in, how much goes out, having a basic idea of how many clients a month do you need to see to break even? So say you have an office that costs you a thousand bucks a month, and then you put in a hundred bucks a month into social media. You have a website, so maybe just to like break even, you should know, I need to bring in $1,500 a month.
That means if you’re charging $150 a session, you got to do 10 sessions just to have it not be a hobby. So understanding, okay, what are some of my basic numbers? So for me to make the amount that I want to make in a year, I need to probably bring in X number of dollars per week or per month. So if we just pull out our phones, let’s just pull out your phone, couple ways to think about this is to give yourself an extra 50% beyond what you want to take home as the cost for taxes and running the business. So say you want to make $80,000 a year. We’re going to multiply that times a factor of 1.5, meaning you need to bring in $120,000 a year. Then we can say, well, how many weeks a year do we want off? Two, four weeks off, six weeks? Say we go, let’s go big, we say, we want six weeks off a year. Okay, so that means we’re going to divide this by 46 weeks, $120,000 divided by 46 weeks, means you got to bring in $2,608.70 cents per week to break even.
Let’s say you only want to do 22 sessions a week. Say you’re going to have one no-show or reschedule a week. Let’s say we’ll divide that by 23 scheduled sessions. Actually know we’re going to do it by, yes, we’ll do it by 23 schedules. So that means you need to have a minimum of $113.42 be what you bring in per session. This helps you figure out what do you need to charge? It helps you figure out should I be on insurance, because if you’re on an insurance that pays you $91.12 cents per session and you need to bring in $113, that means your private pay has to make up that difference or other insurances have to, or other services you offer have to.
That’s one way to do it, is say how much money do I want to make per week? Well, we could also say, okay, I know that private pay, I’m doing $145. That’s about half my client load. Then I’m going to say the other half, the insurance I’m getting 90, which means that if I divide that my average is $117.50 per session and on average I do say 15 clients a week and I’m going to say, I’m going to work eight weeks a year, so that’s $84,000, $84,600.
Say from that original example, we know that you have $1500 a month in expenses. Multiply that times 12. So that’s $18,000, which means that we’re going to take the $84,600 minus $18,000, which means we’re making $66,600. Now, if we think of maybe wanting to put money into taxes, we have to pay our taxes and other things. So maybe we’re going to multiply that times a factor of point, say six, five to give ourselves 35% towards those other things. You’re taking home $43,290. If we divide that by 12 months, that’s only $3,600 a month.
So it’s like, oh, I got to change some of those numbers. I got to make more procession. I got to see more clients. I got to add other streams of income. Those numbers are very functional because they affect your daily life. If you’re only bringing in $3,600 a month and your mortgage is $1,600 or $2,000 whatever and then you’re also thinking about a number of other things that money goes away pretty quickly. So running some of those numbers and saying, how does this affect my life is really important. It may mean that you need to have a side gig for a while, while you’re building your practice. It may mean that you need to add some clinicians to build extra income outside of yourself.
I’d also say some other numbers that you’d want to know is on average, how many sessions does your average client come? So if you’re super short term and people come four sessions and you know that they’re going to spend $150 a session, okay, well then we know the lifetime value of that person is $600 and then if every 10 people maybe send a person your way, that means that that’s an extra $60. So the lifetime value may be only $400 versus if you’re doing EMDR and you know that they come for two years, that lifetime value is different.
By knowing that lifetime value of your customer, of your client, then you can know how much money you can put into paid advertising, because if people come and you only make 400 bucks off of them, if you spend $500 for an ad and then you only get one new client that doesn’t even make it worth it. Whereas if you spend 500 bucks an ad and people come for years and they’re worth like $3,000, and I’m saying, I’m not saying people are worth money, but I mean, you know what I mean, then that allows you to say, okay, I can put more money into advertising because I know the lifetime value of my client is much longer.
All right, we got some numbers, got some accounting, covered some things there, hopefully that really helped you. So we’re covering a lot of stuff with these Ask Joe’s and some other things. We’re trying to do four of these a week. So hopefully that’s going to really be helpful for you as you grow, as you launch, as you have your group practice. Again, we have tons of services over at practiceofthepractice.com that we can help you with everything from starting a practice with Next Level Practice, that’s going to be a practiceofthepractice.com/invite.
We’ve also got Group Practice Launch and Group Practice Boss. Just do forward slash group practice boss, group practice launch. We also have our new audiencebuilding.academy that you can learn more about over at audiencebuilding.academy. We’re building that out as well to help people that want to build multiple streams of income, all sorts of awesome stuff.
The last thing is that we are so excited to have Noble come on as a new sponsor this year. Our friends at Noble believe in using technology to enhance, not replace human connections. With Noble, your clients will gain access to between session support through their automated, therapist-created roadmaps assessments to track progress and in-app messaging. It’s pretty dang amazing. You got to check this app out. You can learn more and join for free over at noble.health/joe. Again, that’s www.health/joe.
Special thanks to the band Silence is Sexy for your intro music. We really like it. And this podcast is designed to provide accurate and authoritative information in regard to the subject matter covered. This is given with the understanding that neither the host, the publisher, or the guests are rendering legal, accounting, clinical, or other professional information. If you want a professional, you should find one.