Profit First for Therapists by Julie Herres

Author:Julie Herres [Herres, Julie]
Language: eng
Format: epub
Publisher: GreenOak Press
Published: 2023-02-25T21:05:51+00:00

I’m not an attorney, but you can see how important it is to consider the previous questions before mixing two businesses together.

If you decide to separate the businesses legally, you’ll want to separate everything else as well: state registration, IRS Employer Identification Number (EIN), bank accounts, accounting records, etc.

From a tax perspective, if you start a second business under the umbrella of your established business using a DBA, the profit from both businesses will be reported on one tax return.

If you’d like to add an income stream but don’t have an established second business yet, give yourself a budget and a separate OpEx bank account where you’ll transfer the allocated startup funds. For example, if you are creating online training courses for sale, the expenses for your new venture should be paid from a new Training – OpEx account. Let’s say you want to launch an online training program for millennials dealing with career changes. You’ll need a course-hosting platform to manage the content, registrations, etc. When you sign up for the platform, the expense should be paid by your Training – OpEx account. If you’re using your practice email or existing software subscriptions to get started, these expenses can stay entirely in the practice. No need to split hairs; just the new expenses get paid from this account.

If you use a separate account during the “testing” phase and regularly transfer funds from your private practice or personal account, you’ll have a much better sense of how much money you have invested, and whether or not the venture is profitable.

When your investment amount is a deliberate decision, you won’t feel guilty about spending money on software, design, or marketing to get the project off the ground, and you’ll see clearly how much money is left.

Once your training program is ready for sale, it’s time to open a Training – Income account. When revenue comes in for course sales, deposit the funds to this new account.

Kanesha had been steadily adding funds to her Expansion account for just that: growth. When she first opened the account, she didn’t have a specific plan; she just knew that she would want to grow the practice at some point. When she decided to open a therapeutic yoga studio in addition to her group practice, she looked at the account as a sort of bank for the new business that would complement her private practice. Kanesha took a small portion of the funds in her Expansion account to launch the new business and bypassed a bank loan altogether. She used the funds to pay her yoga instructors for meetings and training and to get the infrastructure set up for the online studio. What a great feeling!

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