For a therapy practice, monthly bookkeeping is mostly the work of making three systems agree: the EHR that knows what happened in session, the bank that knows what money arrived, and the ledger that turns both into financial statements.
Most descriptions of monthly bookkeeping are written for a generic small business, so they talk about invoices, inventory, and sales tax, none of which describe a private practice. A therapist's month looks different. Revenue arrives as insurance EFTs covering dozens of sessions at once, as card payouts from the EHR net of processing fees, and occasionally as a check from a client who prefers paper. Costs include things no generic chart of accounts expects, like credentialing services, clinical supervision, CE, liability coverage, and associate pay calculated from a caseload report. This post walks through what a monthly service should actually do with all of that, in the order we do it for the practices we work with through our bookkeeping for therapists and mental health practices.
Tying EHR payments to what hit the bank
The month starts with deposits, because in a therapy practice that is where the books most often go wrong. SimplePractice, TherapyNotes, and similar platforms can report what was collected, by client payment and by insurance payment. The bank reports what arrived. Those two numbers are almost never identical on their face.
Card payments collected through the EHR typically arrive as batched payouts with processing fees already taken out, so one bank deposit can represent several days of client payments minus fees. Insurance payments arrive as EFTs from each payer, and one EFT often covers many clients and several dates of service, with the claim-by-claim detail sitting in the electronic remittance advice (the ERA, sometimes called an 835) that comes through the clearinghouse or the EHR. The bookkeeper's job is to tie the EHR's payment report to those deposits, record the gross revenue with processing fees as a separate expense, and identify every difference. Timing differences at month-end, refunds to clients, and payer recoupments taken out of a later payment are the usual culprits.
A bookkeeper who skips this step and records each deposit as revenue is not wrong about the cash, but the P&L will quietly understate gross revenue by the fees, will not match anything the EHR can produce, and will give the owner no way to see revenue by payer or by clinician.
Recording revenue in a way that answers real questions
Once the deposits tie out, revenue gets recorded with enough detail to be useful. For most practices that means separating insurance revenue from self-pay revenue, because the two behave differently and an owner deciding whether to join or leave a panel needs to see each one. Late-cancel and no-show fees go on their own line, so the owner can see what the policy actually produces. For a group practice, revenue is also tagged to the clinician who rendered the session using QuickBooks Online classes, which is what makes associate pay and per-clinician margin possible. We cover that setup in detail in our guide to supervisee billing and comp splits.
Sliding-scale fees deserve a word here. A reduced fee agreed at intake is the price of the session, not a discount or a bad debt, so it is recorded as the revenue it is. If the practice wants to see how much sliding-scale care it provides, the EHR's fee schedule reporting is the place to look, not a write-off account in the ledger.
Categorizing the expenses that are specific to therapy practices
Every transaction in the business bank and credit card accounts gets categorized, and the value of a practice-specific chart of accounts shows up here. Rather than one catch-all for professional fees, the books separate the costs an owner actually wants to watch. EHR and telehealth platform subscriptions. Credentialing services and CAQH maintenance time if an outside service handles it. Clinical supervision paid to an outside supervisor. Continuing education and license renewals. Professional liability insurance. Associate and contractor pay. Rent for office space, kept distinct from any home-office costs, which are handled differently depending on how the practice is taxed.
Anything personal that slipped through a business card gets moved to owner draws or distributions instead of being buried in an expense account. That single habit is the difference between a P&L that shows real profit and one that understates it every month.
Reconciling every account
Every bank account, credit card, and loan gets reconciled to its statement every month. For a therapy practice that also means clearing the accounts that sit between systems. Payroll liabilities should return to zero after each payroll tax deposit. Any clearing account used for EHR payouts or insurance payments should hold only true month-end timing differences, not a growing balance nobody can explain. If the practice is an S-Corp, the owner's payroll gets recorded from the payroll provider's reports with wages, employer taxes, and withholdings each in their own account.
The reports you should get, and what to read in them
At minimum, a monthly service delivers a profit and loss statement and a balance sheet that the bookkeeper has reviewed rather than just exported. For a therapy practice the P&L should show insurance and self-pay revenue separately, and a group practice should also be able to see revenue and pay by clinician. The balance sheet is where problems hide: clearing accounts with stale balances, payroll liabilities that never clear, or an owner equity section that does not make sense are all worth a question.
Insurance receivables are a special case. Most practices run their accounts on a cash basis, and the true picture of what payers still owe lives in the EHR's aging report, not in the books. A good bookkeeper looks at that aging each month anyway, because a claim stuck at a payer for ninety days is a cash-flow problem long before it is an accounting one.
What changes at year-end
Year-end is when a year of monthly work pays off. Every account is reconciled through December, contractor payments are totaled from the contract labor account for 1099-NEC filing, and the books are handed to the tax preparer in a state that does not need rebuilding. For practices whose returns are prepared by our affiliated CPA firm, PizzelloCPA, PLLC, that handoff happens under a separate tax engagement. The practices that get into trouble at tax time are almost always the ones where a monthly step was skipped, and we wrote up the most common patterns in the signs a therapy practice's books aren't tax-ready.
What monthly bookkeeping does not include
Bookkeeping is not billing. Submitting claims, working denials, and posting ERAs in the EHR is the job of whoever does the practice's insurance billing, whether that is the owner, an in-house biller, or a billing service. The bookkeeper uses the output of that work but does not do it.
Bookkeeping is not payroll processing either. A payroll provider such as Gusto runs the checks and files payroll tax returns, and the bookkeeper records the results.
And bookkeeping is not tax work. Tax planning, S-Corp decisions, reasonable compensation, and preparing and filing returns are CPA work. At bookkeepz, LLC those services are performed by PizzelloCPA, PLLC, a licensed CPA firm, under its own engagement.
How to tell whether your current bookkeeping is doing the job
Ask your bookkeeper whether the revenue on last month's P&L ties to your EHR's payment report, and if not, what the difference was. Ask where your EHR processing fees show up. Ask what is sitting in any clearing or uncategorized account right now. If you run a group, ask for last month's revenue by clinician. A bookkeeper doing the work described here can answer each of those in a sentence. If the answers are vague, the books are probably recording deposits rather than keeping books.
Our packages start at $199 a month for monthly categorization, reconciliation, and reports, with group practices that need receivables tracking and a custom chart of accounts typically on our $349 Grow package. Full details are on the services page, and the software side of the question is covered in the best accounting software for therapists.
Common questions
What does a monthly bookkeeper actually do for a therapy practice?
They tie your EHR's payment report to the insurance EFTs and card payouts that hit the bank, record revenue in enough detail to separate insurance from self-pay (and by clinician for a group), categorize every expense, reconcile every account to its statement, and deliver a reviewed profit and loss statement and balance sheet each month.
Why doesn't my SimplePractice or TherapyNotes revenue match my bank deposits?
Usually because card payouts arrive net of processing fees, one insurance EFT can cover many sessions and dates of service, and some payments cross month-end. Refunds and payer recoupments also create differences. Monthly bookkeeping ties the two together and records the fees as an expense so the P&L matches what the EHR says you collected.
Does my bookkeeper handle insurance billing and claims?
No. Submitting claims, working denials, and posting remittances in the EHR is billing work done by the owner, an in-house biller, or a billing service. The bookkeeper uses that data to record revenue and ties it to the bank, but does not bill payers.
How should sliding-scale fees and no-show fees be recorded?
A sliding-scale fee set at intake is simply the price of that session and is recorded as revenue at that amount, not as a write-off. Late-cancel and no-show fees are recorded on their own income line when collected so you can see what the policy produces.
Is tax preparation included in monthly bookkeeping?
No. Monthly bookkeeping keeps the books ready for a tax preparer. At bookkeepz, LLC, tax planning and return preparation are performed by our affiliated CPA firm, PizzelloCPA, PLLC, under a separate engagement.
How much does monthly bookkeeping cost for a therapy practice?
Our packages start at $199 a month for categorization, reconciliation, and monthly reports. Group practices that need receivables tracking, a custom chart of accounts, and quarterly reviews typically fit our Grow package, which starts at $349 a month. Pricing is published on our services page.
Keep reading
The hub for everything we do with mental health practices is our page on accounting for therapists. Group practices should read supervisee billing and comp splits next, and psychologists who do assessments will want recognizing testing battery revenue. If you are comparing providers, our page on what bookkeeping costs for a therapy practice lays published prices side by side, and Heard alternatives for therapists covers who each option fits.
Not sure what your books are missing?
Book a free 30-minute consult and bring last month's EHR payment report and bank statement. We will show you whether they tie, and if they do not, where the difference is coming from.