Accounting and Tax Services for Psychologists Across Canada
Ask psychologists the number of clients they saw last month, and they will respond in seconds. But numbers don't always tell the entire story. Once you account for no-shows, insurer processing delays and hours spent on notes, intake calls and scheduling aren't counted; the numbers become less certain.
That's what you're not prepared for when you're running a practice. With clinical work, it is obvious: the client arrives at your workplace, and you know how they went. Finances aren't like that. But a hectic quarter can still result in a smaller deposit than anticipated, a payroll payment for a new employee whose numbers aren't as expected, or a tax instalment that requires cash flow the practice doesn't have.
None of that means that the practice is not struggling. Typically, it indicates that the books are not in line with the way the practice actually operates. Online Accountant works with psychologists throughout Canada to fill that gap, so the numbers tell you what's going on before tax season does.
Private Practice Has Evolved
Your Accounting Should Too
Psychology in Canada has definitely evolved past the individual office having a paper appointment book. Demand for mental health services has been steadily increasing, and virtual sessions have enabled building an out-of-waiting-room practice. There are psychologists starting out on their own who are now seeing associates, administrative support, or a second location.
That growth has the potential to alter accounting functions. The primary requirements for a solo practitioner are reasonably manageable tax reporting requirements and clean books. The multi-practitioner clinic has to be paying out correctly, see profitability of the providers and have a good handle on cash flow; not all privately paid sessions, extended health billing, and insurer options will come in the same way.
Built Around the Systems
Your Practice Already Runs On
Most psychology practices operate using a mix of practice-management software, online booking, and a payment processor, and payroll becomes essential when more staff or associates join the practice. It's usually the best indicator of the practice's performance, but it seldom speaks for itself. It's synced into your financials without a manual re-entry step in between with Online Accountant's Xero and QuickBooks Online integration.
Where Psychology Practices
Actually Lose Money and Sleep
The Tax Bill That Shows Up After the Money Is Gone
The tax situations of incorporated psychologists and sole proprietors are different, and neither can be resolved with the benefit of hindsight during the filing season. A proactive planning strategy, instalments, deductible expenses and a planned process for owner compensation replace the year-end surprise of a number you saw coming.
GST/HST is indeed more complex than ever before for this profession. Numerous clinical psychological services are not covered as health care services, and a number of psychotherapy and counselling services are also exempt if they meet certain licensing requirements. But exemption isn't automatic; assessments and reports, for instance, are not included, and other work that is not clinical is not included (except in the case of certain services, and this depends on the type of services, not on a general rule).
Revenue on the Books isn't Cash in the Bank
There is a gap between what you earn and what you can spend, especially when you're between bill cycles and invoices have not yet been paid by your clients or the insurer processing them. But not all services, providers, or hours will be the ones that actually carry the practice with overhead; that's something that total revenue alone won't tell you, and that's even more true with every associate added to the practice.
Solo Practice to Clinic is a Different Kind of Complexity
Adding associates and administrative employees means you've got to deal with payroll compliance and, frequently, some employee/associate/contractor relationships that must be appropriately managed from the get-go, which is another area where practices need a stronger foundation.
Waiting for Year-End Costs: Your Options
There is little time to act after decisions were made in March regarding the year ending in December. Monthly visibility ensures that these choices are always in front of you and you have time to do something.
The Numbers Worth Watching
in a Psychology Practice
The numbers of sessions and billings are only part of the picture.
These are the numbers to monitor rather:
What Working With Online Accountant Actually Looks Like
It takes accurate, timely bookkeeping as its foundation, which is a prerequisite for all the things downstream. The clean books allow for tax planning rather than getting caught up in reactive situations, thereby eliminating the element of surprise and making decisions with numbers rather than guesses.
In practical terms, it involves bookkeeping centred around how your practice is earning, incorporating status and tax planning, installing and processing payroll for associates and staff, and maintaining your flow of receivables, plus continuing profitability analysis, and not just documenting, but helping you plan the next hire or tax year with confidence.
Where Your Practice Data and
Your Books Actually Connect
Your practice management exports, payment information and payroll records will all be in one live set of books, rather than separate systems that are only reconciled in April, so you will be far less likely to make mistakes, can check your numbers anytime, and will not have to dig through a shoebox of receipts in April.
Is Online Accountant the Right
Choice for Your Practice?
A strong fit for psychologists who:
Run a practice alone or as an owner of a single practice (incorporated or not)
Are expanding from the one-practitioner model to a multi-practitioner clinic
Make use of administrative personnel or work cooperatively with associates.
Desire proactive tax planning, not an at-the-last-minute filing discussion.
Need real knowledge about which parts of practice are profitable.
Turn Your Practice's Numbers
Into a Business Advantage
Better bookkeeping, smarter tax planning, and a clear insight into cash flow aren't back-office details only. These are the reasons that you make confident decisions and not reactive ones.
Connect with Online Accountant to discuss where your practice stands today and what a proactive accounting relationship would change.
Contact Online Accountant