For therapists and mental health professionals, the end of the year is a chance to tie up loose ends, plan for the future, and avoid any financial surprises down the road.
Whether you’re reviewing your expenses, preparing for tax season, or adjusting your retirement contributions, tackling these tasks now can save you stress later.
In this post, we’ll go through a checklist for mental health practices to wrap up the year with confidence and start the next one on solid financial footing.
Why mental health practices need a year-end financial checklist
Running a mental health practice means juggling a lot more than patient schedules and treatment plans.
There’s also a business side that demands your attention, and wrapping up the financial year properly is a big part of that. A thorough year-end review helps you maintain compliance, avoid unexpected tax headaches, and position your practice for a strong start in January.
Mental health practices face unique financial hurdles. Insurance billing can be a maze of delayed claims and partial reimbursements, client fees may not always come through on time, and ethical considerations — like sliding-scale rates — can complicate your income planning.
And let’s not forget the emotional toll: managing these details can feel overwhelming, even for seasoned professionals. But as we like to say, even therapists need therapy — financial therapy!
Essential items on your year-end financial checklist
Review and reconcile accounts
Start by taking a deep dive into your practice’s financial records. This includes reconciling your accounts receivable and payable, making sure everything balances between your practice management software and bank statements.
Any discrepancies you spot now are much easier (and cheaper) to fix than letting them snowball into the new year.
Mistakes happen — missed invoices, duplicate charges, or untracked payments can sneak in during a busy year. That’s fine! Think of this step as cleaning up your financial “headspace” so you’re not haunted by errors when tax season arrives.
Evaluate your billing process
Billing is often where a practice’s cash flow meets its biggest hurdles.
Double-check that all insurance claims have been processed and resolved. Insurance delays are frustrating, but now’s the time to follow up on outstanding claims to avoid losing money you’ve earned.
It’s also worth reviewing client billing records. Were there missed or unpaid sessions? Address these before they fall too far behind. When your billing is in order, everyone benefits from a smoother experience.
Assess tax obligations
Taxes are unavoidable, but a little preparation goes a long way. Make sure you’ve set aside funds for federal and state taxes, so you’re not caught short in April. As a mental health professional, you likely have several deductions available that can significantly reduce your taxable income.
These might include home office expenses if you see clients virtually, training costs for certifications, or even supervision fees. Take advantage of these deductions to save money and reinvest in the long-term health of your practice.
Setting financial goals for the new year
The start of a new year is the perfect time to set fresh financial goals for your practice. These goals are important in creating a clear vision for where you want your business to go and how you’ll get there.
Analyze practice performance metrics
Take a closer look at key metrics like income vs. expenses, session profitability, and year-over-year growth trends. Are you meeting your financial expectations? If not, it might be time to adjust your strategy.
For instance, analyze which services bring in the most revenue and whether certain session types are more profitable than others.
From there, consider goals for session volume or practice expansion. Maybe you want to increase the number of clients you see each month, hire another therapist, or even open a second location. The numbers you analyze now will serve as a foundation for those next steps.
Budget planning
A solid budget is your financial roadmap for the year ahead. For solo practitioners, this might mean streamlining expenses while allocating funds for continuing education or upgraded technology.
For group practices, budgeting could include planning for team salaries, office improvements, or marketing campaigns to attract new clients.
And don’t forget to budget for operational improvements that can save time and stress, like new practice management software or telehealth tools. Think of this process as creating a vision board for your wallet — dream big, but keep it grounded in reality!
Compliance and record-keeping for peace of mind
Financial peace of mind starts with strong compliance and meticulous record-keeping. This isn’t the most glamorous part of running a practice at all, but it’s critical for avoiding legal issues and maintaining trust with clients, employees, and contractors.
Secure and archive records
Make sure all client and financial records are stored securely, whether digitally or on paper. HIPAA compliance is non-negotiable, so double-check that your systems are up to date with current privacy standards. When storing records digitally, encryption and secure backups are key to preventing data breaches.
Keep a well-organized archive of receipts, invoices, and other financial documents to avoid scrambling if you’re ever asked to provide proof of expenses.
Employee and contractor reporting
If you work with a team, now is the time to verify W-2s and 1099s for accuracy. This is also a chance to build trust with employees and contractors. Clear, accurate reporting shows that you’re invested in your team’s financial well-being and avoids surprises when tax season rolls around.
Tools and resources to streamline your year-end proces
With the right tools and professional help, wrapping up the year doesn’t have to feel overwhelming. Let technology and expertise do the heavy lifting so you can have more time to run your practice and help your clients.
Utilize financial software and tools
Financial software can simplify practice management by a lot. Tools like QuickBooks and Xero are great for general bookkeeping, while platforms tailored to healthcare professionals can help with billing, appointment tracking, and expense management.
Consider automation options for recurring tasks like client billing or monthly reporting.
Consult with professionals
Just as you’d encourage your clients to seek support when they need it, don’t hesitate to work with a financial expert.
An accounting advisor who understands the unique challenges of mental health practices can provide invaluable insights, from optimizing deductions to ensuring compliance with IRS requirements.
Think of it this way: if you’d recommend therapy for your clients, why not apply the same principle to your finances? A trusted financial advisor can offer clarity and strategies to keep your practice on track.
Staying financially healthy year-round
Year-end planning is important, but true financial health comes from habits you maintain throughout the year.
Create a quarterly review schedule
Rather than saving all your financial tasks for December, schedule quarterly reviews to check in on your practice’s progress. These reviews allow you to adjust your budget, address discrepancies, and plan for upcoming expenses before they become overwhelming.
Regular check-ins also have mental health benefits. When your finances are in order, you can focus more on your clients and less on looming uncertainties.
Build a financial safety net
Emergencies happen, and having reserves can make all the difference in how your practice weathers unexpected events. Whether it’s an office closure, a sudden drop in session volume, or a personal emergency, an emergency fund is your financial safety net.
Start by setting aside a percentage of your income each month or opening a separate account for emergency savings. Even small contributions add up over time, giving you more stability and less worry when life throws you a curveball.
Preparing for a thriving year ahead
As the year comes to a close, taking the time to review, reconcile, and refresh your financial goals sets the stage for a successful new year.
Now, it’s time for action. Download a year-end checklist to stay organized, schedule a consultation with a financial expert, or explore tools that can make managing your practice easier. The work you do now will pay off in the months ahead.
And remember: a sound financial plan isn’t just self-care; it’s business-care! So give your practice the attention it deserves, and step into the new year ready to succeed.
We can help with your financial blues — Leichter Accounting Services specialize in accounting, bookkeeping, and tax care for professionals like you.
