Starting a Business
Why have a separate business account?
Therapists, like other business owners, should have a business bank account for their LLC for several important reasons:
Separation of Personal and Business Finances: Keeping personal and business finances separate helps protect the therapist's personal assets by maintaining the limited liability status of the LLC. Mixing personal and business funds can lead to "piercing the corporate veil," where the LLC's limited liability protection is disregarded.
Simplified Bookkeeping and Accounting: A dedicated business bank account makes it easier to track income, expenses, and cash flow, which simplifies bookkeeping, accounting, and tax preparation.
Professionalism and Credibility: Using a business bank account enhances the professionalism and credibility of the therapy practice. Clients, vendors, and partners may perceive the practice as more legitimate and established.
Accurate Tax Reporting: A separate business bank account helps ensure accurate reporting of income and expenses for tax purposes. This can prevent issues with the IRS and make it easier to claim legitimate business deductions.
Ease of Financial Management: Managing finances is more straightforward with a business bank account. It allows for better budgeting, financial planning, and cash flow management, which are crucial for the sustainability and growth of the practice.
Overall, having a business bank account for an LLC helps therapists maintain financial organization, legal protection, and professional integrity.
What kind of business account should you get?
That is totally up to you, but I went with Chase business checking because at the time there was a cash offer for signing up. Some things to consider while you shop around include:
Annual Fees: I wanted a card with no fees, which is why I went with a checking account.
Startup Money Required: Different cards and accounts may ask you to make an initial deposit of varying amounts. How much you have saved to invest in your business (or not—don’t worry if not, Bluevine may be a good option for you) will affect the account you choose to open.
Bonuses: Do any of the accounts offer bonuses for banking with them? What are the conditions of the bonus and can you reasonably meet them?
Credit or Debit: Long term it may make sense to set up a credit card for your business, especially since there are so many with catchy bonuses but before then you may want a checking account to pay your credit card from. The more separate your business finances are from your personal finances, the better your financial liability.
What to charge to your business account and why to set it up early?
The reason I recommend setting up a business account early is that you can start charging things as business expenses immediately to your new account and avoid complicated first year tax write offs, as well as the hassle of having to change the card on file with all your other partners later. If you have an LLC, you will need your Articles of Organization which can be found by searching your business with the secretary of state and then requesting a document.
I won’t go through a full list of expenses, but here are a few you may want a business account for early on.
Licensure Fees: Yes, you can set up your LLC and business account pre-graduation even and use it for requesting your transcripts for licensure, as well as fees with your licensing board and any licensure exams you may need to take.
HIPPA Compliant Phone and Email: Unfortunately, HIPPA compliance is not free. I encourage you to shop around for your best options, be it a separate pay by the minute phone or a HIPPA compliant email provider. I went with Google Workspace and signed a BAA (Business Associate Agreement) in order to have a Google Voice number and email that are both HIPPA compliant because Squarespace offers a discount to users and I just really like gmail. Also check to see if your chosen EHP offers an email for you.
Website and Marketing: If you plan on setting up a website, you may want a business account to buy your domain, pay for any website design software, and even business cards. You may also want an account to pay for a Psychology Today listing or another therapist website listing to market your practice.
EHP and/or telehealth: I will talk more about EHPs in the last modules, but EHP stands for electronic health platform. These systems are used by healthcare providers, including therapists, to manage patient records and streamline various administrative tasks. You will probably want one long term to help organize billing, scheduling, and notes. Many EHPs also offer telehealth software, or you may want to buy separate telehealth software like Zoom.
