Taxes for Therapists: What New Private Practice Owners Need to Know

Starting a private practice as a therapist is exciting, aaanddnddd also a little overwhelming, especially when it comes to money! Figuring out taxes for therapists is one of the topics I get asked about the most!

Remember – you’re stepping into a new identity: therapist and business owner. Along with all the marketing, networking, and setting up systems — one topic often gets pushed to the bottom of the list: taxes.

But here’s the truth: understanding your tax requirements from the start is one of the most empowering moves you can make as a business owner. It reduces stress, saves money, and sets you up for long-term success.

Here’s what you need to know about taxes for therapists, especially in your first year of private practice.

Start With This Rule of Thumb: Save 30% for Taxes

As a self-employed therapist, no one’s taking taxes out of your paycheck anymore—you are responsible for setting aside what you owe. A good rule of thumb is to save 30% of your income for federal and state taxes. If you live in a state with no income tax, you might get by with a little less, but 30% is a safe estimate to avoid surprises.

Set up a separate savings account just for taxes, and every time you get paid, move that 30% over. You’ll thank yourself later. If you end up saving more than you need after tax season, even better! Use that amount to reinvest into your business or give yourself a bonus!

Don’t Forget Overhead, Retirement, and a Buffer

Beyond taxes, it’s wise to set aside an additional 5–10% of your monthly income for practice-related expenses and long-term planning. Here’s what that might include:

• Overhead: Think about liability insurance, EHR subscriptions, office space, continuing education, supervision or other things like an EMDR consultation, for example.
• Savings: For slower months, big certification courses, moving, or unexpected expenses.
• Retirement: Even if it’s just $100 a month to start, it adds up—and you’ll be ahead of most!

When you start budgeting with these categories in mind, you shift from reactive to proactive. That’s the CEO energy your practice deserves.

Pay Your Quarterly Taxes

As a self-employed professional, you’re required to pay estimated quarterly taxes to the IRS (and your state, if applicable). These payments are due in April, June, September, and January.

If you wait until the end of the year, you could face penalties and a bigger bill than expected. Paying quarterly breaks it up into manageable chunks and keeps you in good standing with the IRS.

Not sure how much to pay? This is where having a bookkeeping system (like QuickBooks Online) and a professional’s input can really help.

Use a Pro to Set Up Your Books (Then Maintain Them Yourself)

If you’re just starting your practice, you don’t need to hire a full-time bookkeeper. What you do need is a solid foundation though. I recommend working with a CPA or bookkeeper who understands therapy practices to help you:

• Set up your chart of accounts
• Choose tax-deductible categories
• Get clear on how to track income and expenses

Once you’re set up, you can handle the day-to-day yourself, and just pay a professional to review your books quarterly or bi-annually. Many accountants offer hourly consultations, which is a great way to stay on track without a monthly retainer.

Pro-Tip: If you’re looking for a tool to make all of this easier PLUS get help with the expert-setup part, QuickBooks Online is my top recommendation. It’s designed for small business owners, and it simplifies everything from income tracking to tax-time reporting.

Even better? When you sign up with my affiliate link, you’ll get:

30% off your first 6 months of the subscription AND free expert setup support for the first 30 days, so you don’t have to figure it out alone! What a deal, amiright?! CLICK HERE to grab this Quickbooks deal and get started!

Planning for Taxes Doesn’t Have to Be Overwhelming

When you’re first starting out, it’s normal to feel unsure about taxes and finances. But with the right systems and support, you can build confidence quickly. You don’t need to be a money expert, you just need to stay consistent, ask for help when you need it, and take your role as a business owner seriously. Hopefully this article helped you realize that you too, can take charge of your finances as a private practice therapist!

Your private practice deserves a strong financial foundation. The work you’re doing is too important to let money stress hold you back.

🌟Need more support building your practice? My Private Practice Blueprint course walks you through all of this—systems, setup, mindset, credentialing, billing, and marketing. It’s everything I wish I had when I started my own private practice over 5 years ago.

Check out the Blueprint HERE.

And most importantly, don’t forget – YOU’VE GOT THIS! You’ll be a money maven and savvy business owner in no time, friend!