Year-End Bookkeeping Checklist for Therapists: A Simple Guide to Private Practice Accounting
As a therapist, you spend your days holding space, offering care, and helping clients move through some of their hardest moments. But when it comes to the business side of your practice, especially year-end accounting for your therapy practice, it’s completely normal to feel overwhelmed, unsure, or a little avoidant.
Most therapists I work with tell me that bookkeeping isn’t their favorite part of running a private practice. And honestly, it doesn’t have to be. What helps most is having a clear, simple plan and the right support.
So today, I’m walking you through a year-end bookkeeping checklist designed specifically for therapists. Whether you’ve been staying on top of your private practice bookkeeping all year or you’re catching up before tax season, this guide will help you enter the new year with clarity and confidence.
1. Make Sure All Transactions Are Accounted For
Whether you use QuickBooks, Xero, or even a simple spreadsheet, your first step is to ensure that every financial transaction from the year is in your system.
This includes:
Business bank accounts
Credit cards
Payment apps
Any account used for practice-related spending or income
If anything looks off – a missing month, duplicate entries, or gaps, now is the time to correct it. This creates the foundation for accurate tax prep for your practice.
2. Reconcile All Accounts
Next, reconcile your accounts by comparing your recorded transactions to your actual bank and credit card statements. The balances in your system should match your December 31st statement totals.
If they don’t match, you may have:
Missing transactions
Duplicate charges
Incorrect entries
Reconciling helps you catch these issues early so your books stay clean and tax-ready.
3. Categorize and Clean Up Your Transactions
This step is all about accuracy and consistency. Make sure each transaction is categorized correctly.
This includes:
Office supplies are truly office supplies
Software subscriptions are labeled properly
Meals and entertainment are actually meals and entertainment
For example, therapists can only deduct 50% of meals and entertainment, so miscategorizing other expenses into that bucket could cost you deductions.
Accurate categorization is one of the best ways as a therapist to maximize tax deductions and support financial clarity for your private practice.
4. Review Your Owner’s Pay and Distributions
If you're taxed as a Schedule C (sole proprietor), you don’t pay yourself through payroll — you take draws or distributions from the business.
Before Year-End:
Make sure all draws are recorded
Add any personal expenses accidentally paid through your business card
Record reimbursements where needed
Most therapists have done this at least once (“Oops — that was my personal credit card!”). Just make sure everything is cleaned up before sending your books to your tax preparer.
5. Prepare Your Year-End Reports
Your tax preparer will need:
An Income Statement (Profit & Loss) for January 1–December 31
A Balance Sheet as of December 31
Optional but helpful: a General Ledger for detailed account activity
These documents provide a full picture of your financial year and make accounting for therapists much smoother and faster.
6. Gather All Tax Documents
This may feel like the intimidating part, but a simple checklist makes it manageable.
Collect:
Any 1099s you received from contract work
Your 1099-K from your credit card processor (they must send it by January 31)
Loan statements
Mileage logs
Receipts for large purchases (computers, office furniture, equipment, etc.)
These details help your tax preparer calculate depreciation deductions and ensure you aren’t leaving money on the table.
7. Review Your Reports for Red Flags
Before you call it done, take one last look through your reports.
Check for:
Negative account balance
Unusual spikes in expenses
Categories that seem too high or too low compared to last year
Expenses coded inconsistently
If something seems off, make a quick note so your tax preparer can advise you. You’re not expected to diagnose every issue — noticing is enough.
8. Create a Year-End Documents Folder
Once everything is cleaned up and organized, create a single folder (digital or physical) labeled:
“2025 Year-End Accounting”
Add:
All reports
Receipts
1099s and tax documents
Notes about special transactions
Your tax preparer will be thrilled — and you will feel so much lighter heading into tax season.
You’re More Prepared Than You Think
When you move through these steps, even slowly, you’re giving yourself the gift of clarity, the kind of clarity that brings ease into the financial side of your private practice.
If this process feels overwhelming, that’s completely okay. Therapists aren’t trained in bookkeeping or accounting, yet bookkeeping for your private practice isn’t something you can ignore. You deserve support here, too.
I help therapists with year-end bookkeeping, private practice accounting, and ongoing financial clarity every day. If you want support or need a second set of eyes on your books, reach out anytime.
✨As always, Be well
Explore My Resources:
💚 YouTube Channel: Practical videos designed to help therapists feel calmer and more confident with their numbers.🌿 Website: Learn more about services, read additional blogs, or schedule personalized support.
