Mastering Money Matters: A Guide to Organizing Financial Records for Mental Health Entrepreneurs

If you’re helping people with their mental health and running a business, you’ve got to keep track of your money and paperwork. It can seem tough, but I’m here to help.

What is this guide about? I’m going to show you how to organize your financial records. Just clear steps and helpful tips.

Why is this important? Keeping your financial records organized saves you time and stress. When your finances are in order, you can focus on your main job: supporting your clients.

Starting Simple: The Basics of Financial Organization

The first thing to decide is if you want to keep physical records, digital ones, or maybe a mix of both. Physical files are great if you’re a hands-on person and want to see everything in folders. Digital records, on the other hand, can be easier to search through, and there’s less chance of them getting lost. Decide what feels right for you.

Receipts, Receipts, Receipts
Every time you spend money related to your business – whether it’s buying office supplies or taking a training course – keep that receipt. They’re crucial for tracking expenses, and they come in handy during tax time. You can snap a quick photo and save it to your phone to upload into your bookkeeping at a later time or you can stash your receipts in an envelope and begin utilizing a system called Shoeboxed. Shoeboxed will scan your receipts and organize them into categories. If you ever need to produce reports for the IRS, the digital reports are approved by the IRS.

Setting Up Categories
Organize your financial documents into clear categories. For instance, have separate folders or files for:

  • Income: Money you receive from clients or other sources.
  • Expenses: Money you spend running your business.
  • Tax Documents: Anything related to taxes, like your returns or forms.
  • Bank Statements: Monthly statements from your bank.
  • Credit Card Statements: Monthly statements from your business credit card.

Having distinct categories makes it much easier to find things when you need them.

Deductions can save you a lot when tax time rolls around. Here are the top 7 business deductions specifically tailored for the mental health industry:

  1. Office Space: Whether you rent an office or have a home office, portions of that cost can be deducted. (And if you’re doing TeleHealth from home, you’ll qualify to deduct Home Office expenses.)
  2. Professional Development: Courses, seminars, or workshops you attend to enhance your skills.
  3. Clinical Tools & Subscriptions: Any tools or online platforms you subscribe to that assist in therapy or client management.
  4. Insurance: Professional liability insurance or other insurances related to your practice.
  5. Travel: If you’re traveling to conferences, workshops, or even to see clients, keep track of those miles!
  6. Employee Salaries: If you have anyone working under you, their salaries can be deducted, as well as 1099 Independent Contractors.
  7. Marketing and Advertising: Any money you spend on promoting your practice, whether that’s through ads, website maintenance, or even printed materials.

Remember, these deductions can reduce how much you owe in taxes. Make sure to document every expense and, if unsure, consult with a tax professional.

Regular Check-ins
Once a month, set aside some time to go over your financial records. It’s way easier to spend an hour or so each month than trying to play catch up at the end of the year. You can check if everything’s in its right place and if the numbers add up.

Be sure to check out my digital template the Small Business Bookkeeping Tracker. This tracker has a place for everything and is perfect if you’re not really comfortable using an online bookkeeping software platform (which can sometimes feel intimidating).

Seek Some Help
If you ever feel overwhelmed or unsure, don’t hesitate to ask for help. Consider hiring an accountant or a bookkeeper, even if it’s just a few hours every few months. They can give you guidance, answer any questions, and ensure you’re on the right track. Most also offer quarterly services if you’re more of a DIY kind of person and just want a professional to occasionally review and asses.

The Wrap-Up
Organizing your financial records might not be the most exciting part of running your business, but it’s essential. With some simple habits and tools in place, you’ll have a clearer mind, knowing that side of things is sorted. And with that out of the way, you can put your full energy into helping your clients – which is why you started this journey in the first place, right?