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Private Practice Startup Podcast
Episode 136: 10 Mistakes Private Practice Owners Make and How To Avoid Them When it Comes to Taxes
00:37:55
Jennie Schottmiller
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- [00:03]
A
Welcome to the Private Practice Startup, where we inspire you from startup to mastery. We chat with entrepreneurs, experts in the mental health and business arenas, and successful private practitioners to give you the tools needed to make your dream practice a reality. Visit theprivatepracticestartup.com for awesome resources, free trainings, and so much more. Here are your hosts, Dr. Kate Campbell and Katie Lemieux.
- [00:28]
B
Hey, everybody. Welcome back to another episode of the Private Practice Startup podcast. This is Katie, and I am flying solo today. Poor Kate has strep throat, so her son gave her all the love, including strep throat. So clearly she would not be. She would not be a good host today. Who knows what she would sound like? But that is okay because I am here with you guys as always, and that is the great thing about having a business partner. Last week, we hope you joined us for Melanie Taylor. What a hoot she was. Really had a great conversation talking about the breakup, the breakup you're about to have with your agency. So if you are in agency work or looking to go into private practice, or if you just want to reminisce because you were in agency work and you want to remember what it was like to break up with your agency, make sure you listen to that podcast. It was a great time. Today's guest is Jenny Shotmiller. She's an LMFT and cpa. So as you guys know, if you have been a guest and part of Startup Nation superhero family for a while, you know how much I love to talk about a topic that most people find boring, and that's taxes. The reason I don't find it boring is because I love talking about money. And your CPA is someone who really should be seen as an asset, not a liability. I know I do cry when my. My bill comes in at tax time, but I really do love my cpa and he really is one of the most valuable people on my team, and a CPA should do that. So the great thing about Jenny is she's both an LMFT and CPA. So we are going to be talking about 10 common business mistakes private practice owners make and how to avoid them. Hey, Jenny, how are you?
- [02:04]
C
I'm great. How are you?
- [02:05]
B
I'm good. As you can tell, I am very excited about this topic. But before we jump in, I just want to say if you are new to Startup Nation, welcome to the family. You are a very important guest and we have a giveaway for you. Head over to our website at privatepracticestartup.com, head over to the Resources tab and there you'll find a free HIPAA form. So this is an attorney approved, customizable HIPAA form and we wanna give that to you. Gift for you. So without further ado, let's jump into this topic. And of course, I announced you as both LMFT and cpa. And I know that people are probably wondering, is she a CPA First LMFT first. How did that all happen?
- [02:42]
C
What happened? What went wrong there?
- [02:45]
B
What happened?
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C
Right. So I actually refer to myself as a former cpa. I'm not currently practicing cpa, but I was a CPA for a number of years. And I like to say I had so much therapy, I became one.
- [02:59]
B
Was that through your clients?
- [03:00]
C
No, I mean, I was a client, you know, like I was a therapy client. I did my accounting job and then I went to therapy at night. So after my divorce, I had two years of therapy that I would say changed my life. And I left there thinking, dang, what a cool job. And also, like, I get so distracted by everything with my adhd and when I'm in a therapy session, I'm so focused. And how wouldn't that be awesome to have a job? I can be focused. So people think it's very different, but really, accounting is a system and that's all it is. So when you're a therapist, you know what an internal system is, you know what a family system is. And to me, there are a ton of similarities between an accounting system and actually, I would say an accounting system is easier to understand. That doesn't mean that people don't freak out sometimes when they look at their accounting system, but once you know all the different parts, to me, in the grand scheme of things, it's easier to understand accounting than it is to understand families.
- [03:59]
B
Interesting. And I would say with that big book of tax law, I don't know, there's a lot of stuff in there.
- [04:05]
C
Well, here's the other good news, is that most people in private practice, if you're going to do accounting and you're going to have to deal with taxes as a business person, a private practice is one of the simplest forms of business that you could have from an accounting and tax standpoint. So it's absolutely possible to learn and understand everything that you would need to know to just be a superstar running your business as a business person, not just a clinician.
- [04:27]
B
And this is where I say that your CPA really should be an asset to help teach you those things and really be part of your team just as a lawyer or someone else because it's really essential. Taxes are the biggest expense we pay. A lot of times people think it's our mortgage, but depending on what we make, taxes are pretty expensive. And so it's really important to know the ins and the outs. And interestingly enough, like I read tax books, quote unquote for fun. I'm not, I will not confirm nor deny that if anyone asks me. But yes, that is true. And I really love to learn tax law and information because it really helps us as business owners. So I'm really excited for you to share about your topic today. But before we dive into that and you and I had talked a little bit about before, one more time. You and I had talked a little bit before we hit record about the question that people ask like is it okay to be a sole proprietor versus LLC or PA or all that other stuff. Now I will say, I know in the state of California, private practitioners I think are required to have I'm not going to say because I don't remember, but I don't think they can be sole proprietors. Definitely not.
- [05:28]
C
They can be sole proprietors. They cannot be llc. LLC in the state of California. And there's at least one other state that begins with an M. So maybe someone can say in the comments which one that is, that you cannot be an llc. In some states you can't be an llc, but you can be a PLLC Professional llc, which is basically the same thing as an llc, just need to be registered properly, a professional licensed person. But in the state of California you can be a sole proprietor or your other option is you can be a C Corp. And a C Corp can always elect to be taxed as an S Corp. So a lot of clinicians in California are C Corps, PCs, professional corporations. PCs taxed as an S Corp. Because the S Corp structure tax is a little more advantageous than a C Corp tax. It's not necessarily more advantageous than a sole proprietorship. It depends on your circumstances. So a little work has to be done. If you have the choice in your state to be a sole proprietor or a taxes and S Corp or an llc, you really need to have someone walk you through all of your facts and circumstances to understand what is going to save you the most in taxes.
- [06:35]
B
Exactly. And talk a little bit about the difference. And you and I were talking about the question where people talk about is it okay to be a sole proprietor and why and why might you not want to?
- [06:45]
C
So when we talk about an llc and again, the California people are like, yeah, it's nice if I could be llc, but this actually applies to. To clinicians who are C Corps, who are taxed as S Corps. The S Corp structure, the same as an llc, is a limited liability structure. So to understand what that means, you need to know what are the limits of the liability. And nothing at any time is going to protect you from your own misdeeds. If you do something inappropriate or unethical, you will be personally sued and your personal assets are at risk. What the LLC or S Corp structure tries to do is protect you from any debt. So that if you did have a credit card or a debt and you default and something happens and you're not making money anymore, the theory is, is that whoever you owe can only come after your assets in the business. They could come take my couch and they can take that little credenza and the mirrors and try to sell them and pay offense. Right? Like, yeah, exactly. I mean, I get some cute stuff, right? But whatever. However, banks know this. So if you are a small business person and you go to get a loan or you take out a credit card, if you pay attention, one of the things they will have you sign is a personal guarantee that puts your personal assets at risk. And it's important to know. We all want to know what we're signing, but it might, you might not realize that when you do personally guarantee something alone as a. As a business, you are circumventing that limit of liability, which you're probably going to need to do because the bank's not going to lend it to you otherwise. They know that businesses go out of business all the time and they want to make sure they collect their money. So that's why they ask you to do it. And it's fair and reasonable. However, there's times where being an S corporate LLC is really, really beneficial. And that is if you're going to have any employees. If you ever think in the future you want to be a group, even if you're not now, because the employees or the people that you're working with could get sued. And it's nice to have that structure, that they get sued and the business gets sued. And hopefully you don't get sued if you didn't do anything wrong yourself. So that structure is really useful. But if you're just on your own, then the LLC or the S Corp structure doesn't give you much in terms of limit liability. As always, feel free to run that information by your accountant or your attorney and verify it. But that's kind of that's the rundown of it.
- [09:02]
B
Right. And it's really important, like you're saying, and I like that you say that it's really looking at your longer term goals. And of course corporations and stuff like that can be changed, right. At any time depending on, you know, what's happening and how you grow and whatnot. So that's always. And this is why again, why an accountant really should be part of your team is because as your business changes, so don't your needs and all that stuff. So it's really important to have a good relationship with your accountant. Obviously you can tell a big proponent for having good relationships with your accountants.
- [09:28]
C
And I would add to that having a relate accountant that you trust because I can't tell you the number of times that I have talked to someone and they said, well, my accountant said that this is okay or that I need to do this and it's not accurate. Sometimes it's difficult to know whether you're getting accurate information when it's not anything you are familiar with or you have never worked in that world before. When you get a really good accountant, that person can be an excellent business partner as well as to do the taxes and accounting. But if you don't have someone who is on top of it, they're doing their own continuing education, they're really on top. Especially with all the changes in the new tax law, it can be incredibly frustrating and difficult. Some people find themselves with a tap, with a business structure that isn't right for them or problems with their taxes. So you know, that's important. Get a quality one. Just, just like you need a quality therapist, you need a quality accountant.
- [10:22]
B
Yeah, and I was gonna say too is just like therapists, accountants also niche. I know that our accountant, he's done so much real estate himself and we do real estate as well. So it was important that we have a really right fit for someone who's been there, who's walked the walk and also knows a lot about this area. So interview your accountant. I know this is not what this topic is about today. Let's talk about those mistakes. But before we jump into the 10 common mistakes, let's take a quick break for our sponsor.
- [10:48]
A
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- [11:39]
B
Legal, ethical and competent paperwork is overwhelming, time consuming, and let's face it, expensive. We're clinicians, not lawyers. We put in 100 plus hours of work scouring through the laws and ethics and paid thousands of dollars in expensive attorney's fees so you don't have to save yourself time, money and headaches.
- [11:57]
C
We're Kate and Katie from the private.
- [11:58]
A
Practice startup and we invite you to experience the quality of our paperwork with our HIPAA form as our gift to you. Go to privatepracticestartup.com head over to our resources tab and download the free HIPAA form today. You can also shop our a la carte and paperwork options under the paperwork tab. Enjoy.
- [12:18]
B
All right, Jenny, let's jump in.
- [12:21]
C
Okay, great. So I'm gonna run down top 10 mistakes that business owners, especially in private practice, clinic, private practice, tend to make so that you can avoid these 10 mistakes. So these are my top 10 and I'm just gonna run down them.
- [12:35]
B
Should we go from the bottom up like David Letterman or something like that?
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C
You know, I don't know that I have like a big bang one like David Letterman. Like that would be nice, but I don't know. I'm gonna go in order, but I don't have as big zinger. And I don't know if you're gonna laugh, but you should take notes because this is important stuff.
- [12:55]
B
And also if you miss anything like say you're in the car or something like that, it's going to be on our show notes page.
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C
So you'll take notes if you're driving?
- [13:01]
B
That's correct. Don't take notes if you're driving, but make sure you not only take notes, but apply the knowledge. That's the most important part. Go ahead.
- [13:11]
C
I think if you know what the rules are and what the mistakes are, what the pitfalls are, then hopefully you're going to make the right choice. My job's I'll put it out there and then, you know, think about what's going to be the right Choice for you. Okay, so number one, that I see people doing all the time, they start their private practice and they do not have a separate bank account for their business transactions. Ideally, you would have a business checking, maybe a business credit card, and a couple of business savings accounts so that you can really manage all the cash flow. But at a bare minimum, you need to have a separate business account. And it's not from a liability standpoint. It's because it's a big headache. That's the main reason. It's a huge headache. If you ever are audited, you do not want an auditor going through all your personal accounts trying to figure out, was it a check from a client or was this your grandma's birthday money. You don't want that. Right.
- [14:00]
B
And what happens if you do mix funds?
- [14:03]
C
So if you occasionally accidentally mix funds, there's a way in an accounting system to fix that. You can fix it. You don't have to worry about, oh my gosh, I made a mistake, and nothing's ever going to be okay again. It's not that kind of a thing. It's that you just want to have a structure and a system that I have a business bank account and I pay my bills out of my business account, and I have a personal account, and I pay my bills out of my personal account. That's. You just want them because when you go to check or look or something or you're trying to use an accounting system, you want all those transactions to be coming from an account with the no personal transactions in it. And you don't want to be forgetting to deduct something because you forgot because you paid it with your personal card.
- [14:44]
B
So that hurts my heart.
- [14:46]
C
Right. You know, you bought a printer or something, and that. That's a couple hundred dollars off your taxes of your taxable income. You don't want to miss that. Put it all in your business account and you won't miss it at tax time.
- [15:00]
B
That's why I love just a credit card. Because, like, everything is in one spot every month. And I go through the transactions, explain exactly what they all are. I know it's there. I don't cash. What's that? I don't know who uses cash for the business. Maybe people do. And I think I write one check for rent a month and then that's it. So it's pretty simple, right?
- [15:16]
C
Right. And I'm going to come back to that because one of mine is about writing a check for rent. So it's just fine. It's good to do. But there's another thing that happens with that sometimes. Okay, so number two is not having an accounting system. An accounting system does not have to be QuickBooks. It can be a spreadsheet. If you're just on your own, you just have to have a system. So think of a system the way that we know that a system is as a clinician, it's a way of having things be structured and organized with. With boundaries and processes. So you need some way to track your income and expenses so that you know what's what. Because if you're running a business and you don't know what's what, it's very difficult to run that business very well. So that's number two. Number three.
- [15:56]
B
One of the things I went through a year of business coaching back in 2015, and one of the places I was not strong in was tracking and measuring. And so accounting is also part of a process of tracking and measuring. Right? Being able to forecast your needs, being able to see how you're growing or not, where to put your money. So think of accounting, and we always like to reframe things, right in the sense of a relationship, is that it's also going to help you improve your business. So this is not just like, I have to do something and track it on the spreadsheet or QuickBooks or whatever. It's how can I use this information to be useful? One of the most important things that we talk about is marketing referrals. You want to track where your money is going and the bang for the buck that you're getting. So if you're on 10 different therapy directories and you don't know where, you.
- [16:43]
C
Don'T know where to put your advertising dollars because you don't know what's paying off, not only where do you get the most calls from, but who's giving you the most money, which clients are staying with you the longest. So I kind of think it's. My list is kind of broken down to hit on all three components of running a business. Accounting is just keeping track. Taxes, necessary, evil and evil. Given that, you know, it does benefit the world and we have roads and things because of taxes. It's not necessarily evil, but, you know, feel like it's evil when we're paying them. And financial analysis. So what I do when I'm helping other clinicians is I look at all three of those accounting, tax and financial analysis, and all three are really critical. So my top 10 mistakes hit all three. So we're gonna loop back, but I 100%, 110% agree with you on that. So the third one that I have on my list is not keeping detailed receipts. So you don't. Your accountant might want to see your receipts in order to just know that, yes, you're deducting things appropriately and they have to do their own due diligence. If you were doing your own taxes, then no one's going to look at your receipts until. Unless you get audited of audits. Pretty small. But you do not ever want to be caught on an audit and not have backup. And that means you need to have some place that you keep track electronically hold on to those receipts. And the receipts need to be of sufficient detail to just say what happened. So if I have a credit card statement and it says Amazon, that does not tell an auditor what I bought, I need to have something that says what I bought. Now, if I have it, if I have a bank statement that says Psychology Today, clear, I bought a Psychology Today. It's a monthly subscription. It's the exact same every month. We don't have any questions. But if I have bought something at a furniture store, then I need to know that I didn't throw in two couches, one for me and one for my house. And that's the kind of thing they'll be looking for. Also, if you do any networking meals and you deduct any meals on your taxes, you want to have enough detail the date, the purpose of the business meeting, and who you are eating with in order to deduct that business meal.
- [18:43]
B
And what are some of your favorite ways to keep track.
- [18:47]
C
So I just keep my receipts in a file. I have a file cabinet, and I just. I have 2018. I throw them in. I don't need to look at them again. I don't need to worry about it. But I know that I always keep them there. I buy something, I come to my office, the receipt goes in the. In the file cabinet. I think it's great for people who can keep track electronically. And QuickBooks, I believe, actually does allow you to scan them in. And my brain doesn't want to get that. Get in the drawer. Good. But you need to have a system that works for you. So you can always ask yourself. And we do this all the time as clinicians, but sometimes we don't think to do this for ourselves as business owners. What's going to work for you? Is it going to meet the rule? And how is going to be. What process is going to be effective for you as an individual business owner? Because that's when you Rock it is when you have something that works for you, it doesn't have to work for the therapist next door.
- [19:37]
B
You know, I love that you say that and I think that's so important. And when Kate and I talk about marketing, that's exactly what we talk about, is that it has to work for you and build on your strengths. If it's not working for you, don't do it. But like, does it fit the rules? Excellent. And it's so funny because I'm such a tangible person, right? I'm very kinesthetic, I'm tangible. And this year for the business I'm like, alright, we definitely need receipts electronic, but I still use a paper calendar. I'm not electronic. I use electronic for the private practice startup. But I love to just open my calendar and see everything erase. Not whatever, it's just, it works for me. I try to go electronic, but no.
- [20:12]
C
And we know not to like, you know, think about I should and I should and I should. When we're talking about relationships or our own well being and then we don't know because we're afraid that we're going to screw it up or we're going to do it wrong. And oh my gosh, I'm a business owner so there's one right way, there's not. There's rules. You want to follow the rules and then you have freedom to do what's going to work.
- [20:30]
B
That sounds celebrating empowerment, right?
- [20:33]
C
It's all about empowerment.
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B
On to number four.
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C
Number four, spending cash rather than depositing it. Just because someone gave you cash does not mean it's tax free. And even if you don't get caught, that's not a good reason in my mind not to follow the rules. So it also mixes up. You can't. One of the biggest reasons is if you don't deposit your cash and you're later looking at your results of business, you're not, you don't know. Well, I don't know what I really did because I spent some of that money on shoes and it's not in my spreadsheet and not in my accounting system. So deposit your cash so you really know how much are you making, are you growing? And also so that you pay your taxes because it's just not worth it to not pay all of your taxes. The headache is. And the risk is just, it's just not, don't do it. That's all I got to say about that. Number five, failing to pay estimated quarterly taxes because quarterly taxes can kind of upset people or throw them off or. Or make them concerned. And the fact is, is it's just an estimate. Your own tax returns tell you what your tax rate is. And if you have a little bit of information to figure that out, or a really good collaborative CPA to help you with that, or one that wants to help you do that, you could figure that out based on what you're making. If you know what you're making. If you're tracking and you're keeping and you know what your results are, it's not hard to figure out what you owe and then just pay it in. It's not. It's not. You don't have to. It doesn't have to be exact. It's an estimate. Quarterly, estimated taxes. Make your estimate, pay them in. It's just a big headache at your end. If you have to pay a big tax bill, it makes the whole process more stressful.
- [22:14]
B
Totally. And I think a lot of times people don't plan for that.
- [22:16]
C
Right.
- [22:17]
B
And what you're talking about is really planning in a system, and it's so, so, so important.
- [22:21]
C
Yes, it is exactly part of the system. The system that says, if I made money, I don't get to take it all home. I pay my bills, I pay my taxes. And then I see what I mean. So if you have that mindset from the start, it's so much easier than trying to adjust your mindset later when you realize, oh, my Gosh, I owe $25,000. What, like you don't want to be in those shoes?
- [22:42]
B
No, definitely not.
- [22:44]
C
So number six, knowing when you need to issue a 1099, we tend to think about 1099 as something we pay independent contractors. But 1099s as a business owner are also something you have to pay to vendors or landlords. So if you write a check to your landlord and your landlord is not a C corporation, then you are expected at your end to give your landlord a 1099. And the process is fairly simple. You ask for a W9 from your landlord. You issue a 1099 to your landlord at your end. Any other, if you pay your supervisor with cash or a check, if you pay them. And I'll give you the rules in a second. Anybody else that you pay as a business, any business expenses, you need to be thinking, do I owe this person a 1099? And at the end of the year. And the factors are, if you pay more than $600, you paid by cash or check. And the business you're paying is not a C corp. If you ask the vendors or people that you're paying for a W9, you get the W9 back and you'll see immediately if they're a C corp, it'll say on there that they're a C corp. If they're a C corp, you don't have to issue it if you pay by credit card. Things you buy on Amazon. If you buy furniture for your office and use a credit card, you do not have to issue a 1099 because the credit card companies have to do what's called a 1099 K and so you're off the hook. But cash check over $600 for the year and the person is a sole proprietor LLC or S Corp. You need to be issuing a 1099. For people who don't, it might be going, oh my gosh, I never knew this. Nobody ever told me. The other accounts that I network with say it's about the equivalent of getting a ticket for not wearing your seatbelt. Don't want to do it. Definitely good to put the seatbelt on. But if you get caught, there's going to be a way you're going to pay a small penalty probably and then you're going to go on forward, always doing your 1099. But if you just haven't done it in the past, then make 2018 the year that you get that. Right.
- [24:41]
B
Interesting. I didn't know that and I know that's what you're talking about. And so if you pay with credit card, your CPA or something like that, then are you covered?
- [24:51]
C
It's cash or check. And really what it is, is the IRS just trying to make sure that if I am paying someone as a business, that that business owner is reporting the income and paying tax on it. And if you use a credit card, there's lots of tracking of the credit cards, but cash and checks aren't tracked so well. And so they want to make sure that your landlords are reporting all of their income.
- [25:12]
B
Awesome. That was a good tip. Thank you.
- [25:15]
C
And a lot of people don't know that, so that's why I wanted to put that on here. One of my top 10 mistakes, number seven, taking on too much debt. There are, there's no right way to start your private practice, but there is a way to go slow and build slow. And you don't need a lot of debt to start a private practice. So if you find that you are charging a ton and ton and ton and ton on your credit cards, that's the time to say, you know what, maybe I need a cpa. Maybe I need a financial advisor to help me stay accountable, to keep this reign in. Maybe I need, you know, someone like Kate and Katie to help me feel like, okay, am I doing this the right way? Am I really developing and starting my private practice with the right kind of mindset so that I am focused on abundance and not as a scarcity mindset. Sometimes the scarcity mindset, which I know you talked about recently, is drives you to just go and like, okay, I just got to buy all this stuff, I got to buy all this stuff and then it'll be okay. And that's not, that's not going to lead you to being a very successful private practice owner. So taking on too much debt is number seven. Think about it. And if you find yourself doing it, just get a partner, get an advisor, get a mentor, get a coach, get somebody to help you out with that.
- [26:23]
B
One of the things that I think is really important and you know, I always say if I could go back and do it over again, is that I would have a clear plan, a six month plan and a year plan. And one of the things I think that we think is the illusion of, and Kate talks about it, the field of dreams mentality. It's like, but it's easy to be a therapist. I'll just hang my shingle and hey everybody, crickets. And one of the things I think a lot of times therapists do is they start creating their dream office first rather than their dream practice and really understanding how to market and wait till their marketing system is secure and is producing. And a lot of times I see, unfortunately, like therapists, they'll buy all the new furniture, get a lease for seven years and now they're stuck. And one of the most important things is really, you know, rent somewhere that's either by the hour or at a really low cost, use someone else's furniture until you really get prepared and understanding what it means to be a business owner. Because being a therapist and a business owner, not equal. Definitely not equal. Different sense. Similar, but different.
- [27:20]
C
And if you have your own cash to fund building your dream, you know, creating your dream office and you know that you can carry yourself for a year. If you're not making a lot of money, go for it. But if you don't, don't use debt to get you there. If you don't have the money to fund it for yourself, then go the slow way and build slow and you will be so much better off for it. Awesome.
- [27:43]
B
What's our next one?
- [27:44]
C
So eight, number eight is not saving for emergencies. We don't get paid if we don't work. We're business owners. There's nobody giving us pto, I like to say, just like we do with our personal accounts as we, you know, although I don't know how many people actually do it. We say we need to have at least two months worth of bills and savings. It's the same for your private practice, but it's even more important for your private practice because that's your income and you don't want your business to dry up. There's so many things that can go wrong. You can get a family member that gets really sick. You can get really sick yourself. You could just have a crisis in the family that requires a lot of your time and energy. And you don't want to add to that the stress of, I don't think I can pay my rent or my Psychology Today profile, and this whole thing is going to blow up and I have to go now get a job, because who wants to go back to that after being a private practice owner?
- [28:29]
B
Totally.
- [28:30]
C
Yeah.
- [28:31]
B
I think that's so important. And what's interesting is Kate and I follow the profit first system. And we actually did a podcast with Mike McCann, the author, and we'll put that on the show Notes. But one of the things that's interesting is he talks really about that emergency fund. And, you know, being an online entrepreneur, you don't. I mean, you have bills, but not that much because you don't have a brick and mortar. And what's really interesting is back in 2017 now I believe we had Hurricane Irma, and interestingly enough is that we actually had a supervision training. And a lot of times our supervision training yields about $18,000. Well, Hurricane Irma came right at the time of our supervision training. And so we had not $18,000 saved, but we had about $5,000. Thank God. We had a. Thank God, first off, that the state did a great job at getting everybody back up and running. And it wasn't that bad in some areas. Of course it was in some other areas. But we had another month where we were able to refund those people who couldn't come to the next training. But also then market, so we kind of broke even. But I'll tell you, having that emergency fund made me breathe a little easier than wondering, how in the world are we going to pay all these people back? Like, that would have been really scary. So emergency fund so important.
- [29:39]
C
Yes. And you can think of it as peace of mind and a necessity because it really, it really is important. And then, you know, if you don't need it, you build it up and it's growing. And then you can be like, you know what? I can afford an extra training this year. I can go to the training I really want to take because I was really good at my savings. So even if you're not a good saver in your personal life, be a good saver as a business person and.
- [30:04]
B
Then it'll probably, you know, transfer over.
- [30:07]
C
Yeah, hopefully. Right. You're more disciplined and you're developing those skills. Just like you can come into the therapy room and you learn some new skills and they transfer to other aspects of your life. So exactly the same process. So that's number eight. Number nine, not setting financial goals or using a budget. People don't like the word budget. Even accountants. Even accountants don't like the word budget. Budget boring. And it's even more snooze than accounting. But all a budget is, is just a financial plan. That's it. And it doesn't have to be overly complicated. I like to make things super simple because I think that we do them better when they're simple. And all a budget is, is what do I think is going to happen? You could even just call it a what do I think is going to happen? Spreadsheet. Just what do I think is going to happen?
- [30:53]
B
Are you saying that you're allergic to the word budget?
- [30:56]
C
People seem to be allergic to the word word budget. And it's. It's just as important no matter what you call it. So you could just say what restricting.
- [31:04]
B
For people like they feel like limits. Maybe that's what it is.
- [31:07]
C
Yes, you're exactly right. Is it right? That's. That makes so much sense that you budget is something what someone else puts you on and then you try to rebel against. That's not how you're going to use it. You're the owner. No one's going to tell you what to do. But you still want to know what's going to happen and you still want to plan for the future. And it's not hard because you know your rent's the same every month. You know that psychology going to charge you the same every month. You kind of have an idea what trainings you might want to sign up for. And if you've been in business for a little bit, you'll start to get a sense of what your income is going to look like and how you want to grow it. And when you do a budget and you go, how did I do Compared to what I thought was going to happen, it's actually not as frustrating and as boring as one might think. It can be kind of exciting when you beat your budget. I think I'm going to make 10% more next month and you make 12% more. Let's go out for dinner.
- [31:58]
B
Exactly. Reward yourself.
- [32:00]
C
Yeah. So when you have a budget, so much more becomes possible. And when you have budget, you're gonna have goals because it's a natural part of the process. When you think what's gonna happen? To say, what do I want to happen? What do I think's gonna happen? What I want to happen. Merge those together and then see what you can do.
- [32:17]
B
Awesome. And number 10, I feel like I should ring the bell. We're there.
- [32:24]
C
The bell. Alright. Number 10. Not making time to look at your results regularly. One of the mistakes I see people making all the time is because they don't have an accounting system, because they didn't have a separate account because it's too much and too overwhelming to look at that they're sitting at the end of the year and they don't know what they made. And that is a very disadvantaged position to be in. At the end of the year. You don't have to look at it every week, you don't have to look at it every day. But at least once a month you should be going through these things, making sure that you've tracked everything, compare it to your budget and see how you did. Because that budget, that plan, those goals can be constantly adjusted and revised based on what's happening. But if you don't have what? If you don't know what is happening right now, what happened? It's April 3rd within. By April 7th, everyone watching should know what happened in March because it's information. And with information you can make better business decisions. And who doesn't want to make better decisions? So know what you did and make better decisions.
- [33:32]
B
I feel like that's a mom sign off. Know what you did and make good choices.
- [33:37]
C
Right? But you know what, Think about it. We grow up and we sometimes we grow up and we didn't know how to parent ourselves because we weren't parented well and we got to figure out how to parent ourselves. And if you're a good business owner, you are a good parent to yourself in your business because you're holding yourself accountable, you know what's happening and you're thinking things through and making good choices.
- [33:58]
B
Well, I'm so glad that the CPA world gave us you in the therapy world. With all this great information and energy, Jenny, what do you want to make sure people take away from your message today?
- [34:08]
C
Okay. A couple things I think are really important to take away is there's no right way, but there are rules. Follow the rules and then figure out what's going to really work for you. And the goal here is for you to be an empowered business owner, not a scared business owner. You know what you need to do as a clinician, you didn't get to private practice without doing a lot of work to develop yourself. So put a little bit of time and energy into developing yourself as a business person. You can do it. This isn't rocket science. You're capable, you are smart enough, and you can do it.
- [34:39]
B
That sounds like.
- [34:40]
C
What is it?
- [34:40]
B
Greg Smythe from Saturday Night Live?
- [34:43]
C
Yeah.
- [34:46]
B
Well, these are awesome tips. And again, I love talking about numbers and taxes. And even if you are bored by this conversation, the way that you deliver the information, Jenny, was so invigorating and energizing and empowering that you guys will take this information and look, even if you just do one thing to get started and make one change this month and one change next month, this is so important for the health and wealth of your business. I can't stress that enough. It's really important. I think I'm in my bank account numerous times a day. I love looking at the money and moving it and seeing what's going here and percentages and tracking it, and I just really enjoy that aspect. So take this information and do something with it. Apply it. Jenny, I know that you have a giveaway for our audience. What is that?
- [35:30]
C
So I have a free tax checklist. If you are wondering if you have captured all the information to give to your cpa, you're wondering what is deductible. I have a free tax checklist specifically for clinicians in private practice. So this does not have all the things that all businesses can deduct. This is for private practice to give you a sense of there's a lot of deductible expenses. And so that is can be found on my website, my simple profit.com. i also have a Facebook group, Simple Profit, where that's available. But go to my website and check it out and you'll have. You can see all the information there.
- [36:02]
B
And I definitely recommend getting in your Facebook group because if you're a private practice owner, you're going to pay taxes. You need accounting, so do that. Awesome. So we hope you guys join us next week with Maritza Barrera where we talk about authenticity as a tool to grow your practice and we just wanted to give a Startup Nation superhero shout out to a very special person to me, Francesca Fontes, who used to be my intern but now licensed and living in the world of private practice, she says Loving the podcast. They're inspirational. Include valuable information for anyone considering private practice or already on that journey. The questions they ask professionals about what they've learned from their experience is the best. Thank you so much Francesca and we wish you the best in your private practice. So Startup Nation, thanks for hanging out with us. Feel free to show some love anywhere on itunes. Google Review Send us an email. We always appreciate that. Don't forget to check out our facebook group@privatepracticestartup.com and we will see you there. Everything that we talked about today will be on our Show Notes page. So so if you were driving, we hope you didn't take notes and just visit the Show Notes page in the link and you'll get all that information. So thanks for joining us Startup Nation. Thank you as always for allowing us to inspire you from Startup to mastery. We'll see you later.
- [37:17]
A
Thanks for joining us on the Private practice startup. Visit theprivatepracticestartup.com for awesome resources, free trainings, attorney approved private practice paperwork and so much more.
- [37:29]
C
SA.