What it is, why you need one, and how to set it up without overthinking it
If you’ve heard the term “chart of accounts” and immediately tuned out – we understand. It sounds like something meant for a corporate accountant, not a therapist in private practice.
But this one simple tool can bring a ton of clarity to your finances, especially if you’re just getting started or trying to get organized mid-year.
You don’t need to be a numbers person. You don’t need to build a spreadsheet from scratch. And you definitely don’t need a complicated accounting system to make this work.
Here’s what a chart of accounts is, why it matters for your practice, what should be in yours, and how to actually put it to use. Read below since we have a chart of accounts template for therapists as well.
What Is a Chart of Accounts?
A chart of accounts is basically a categorized list of everything your business earns and spends. It’s the structure behind your income reports, tax prep, and bookkeeping — and it tells your accounting software how to organize your transactions.
If your therapy practice is a house, your chart of accounts is the foundation. It’s not something you look at every day, but it holds up the whole system.
It’s made up of categories like:
- What you earn (session fees, workshops, insurance payments)
- What you spend (rent, software, continuing education, marketing)
- What you keep (owner’s pay, tax savings, retirement contributions)
When you (or your accountant) look at your reports, these categories help you understand where your money is actually going — not just how much came in or out.
Why Therapists Need One
Without a chart of accounts, your bookkeeping can get messy fast. You might end up guessing at expenses, skipping deductions, or relying on your memory at tax time. That’s when mistakes happen — or worse, money gets left on the table.
A simple chart of accounts keeps your books clean, your reports accurate, and your accountant happy. It also makes it much easier to spot patterns, like whether your rent is eating too much of your income, or if you’re spending more on continuing ed than you realized.
Most therapists don’t need a complex setup — just enough structure to stay organized and make good decisions.
What It Should Include
Here’s the good news: you don’t need 50 categories. In fact, most solo practices can run smoothly with 20 or fewer.
Here’s a basic list to start with. You can always expand later if your practice grows or gets more complex.
Income Categories
- Client Session Fees
- Insurance Reimbursements
- Group/Workshop Revenue
- Other Income (e.g., consulting or speaking)
Expense Categories
- Office Rent
- Software & Subscriptions
- Professional Liability Insurance
- Continuing Education
- Marketing & Advertising
- Office Supplies
- Telehealth Platform
- Banking & Payment Processing Fees
- Travel (if applicable)
- Legal & Professional Fees (e.g., accountants)
Equity & Owner Pay (if you’re tracking it)
- Owner’s Draw or Salary
- Contributions to Retirement
- Tax Savings Transfers
You don’t need to reinvent the wheel. Traktion has a pre-built chart of accounts for therapists you can download and use as a starting point.
Start Small — Don’t Overcomplicate It
The goal isn’t to track every dollar with its own category. Too many categories make your books harder to read, not more helpful. Think in broad, useful groups – “software” is better than splitting out Zoom, Dropbox, and TherapyNotes separately.
You can always refine later. For now, aim for clarity over precision. If you can glance at your report and quickly understand what you earned and what you spent, your chart is doing its job.
How To Use It (and Where It Goes)
If you’re using QuickBooks Online (or any accounting software), your chart of accounts lives in the background of your system, but it shapes everything your reports show.
Here’s how to put it to work:
- Open your accounting software and go to the Chart of Accounts section
- Compare what’s there with the categories you actually need
- Merge or delete any default accounts you won’t use
- Add or rename accounts to match your practice
- Upload or manually input the custom template you’re using
If you’re not comfortable editing it directly, a bookkeeper or accountant can help you set it up once — then you’re good to go.
Once it’s in place, all of your transactions can be categorized properly. That means cleaner monthly reports, easier tax filing, and a clearer picture of how your business is actually performing.
Download Your Chart of Accounts Template & Go
Your chart of accounts doesn’t need to be fancy or complicated. It just needs to reflect the real flow of money in your practice.
Starting with a solid template – and keeping it simple – will save you hours down the road.
And if you ever feel unsure about how to set it up or use it, Traktion works with therapists every day to make this part easier and less overwhelming. You can book a quick introductory call here.
Download the template, make a few quick edits, and let it do the work in the background while you focus on your clients.
Until next time!