What Behavioral Health Practices Should Be Thinking About Tax-Wise at the Start of the Year

(and Common Mistakes to Avoid)

January brings more than new deductibles and insurance changes. It also marks the beginning of a new financial year for your practice—one that can either feel more organized and predictable, or more stressful and reactive, depending on what’s in place now.

This post isn’t about filling out tax forms or giving financial advice. It’s about the systems and habits that make tax season easier and reduce unpleasant surprises later in the year.

Whether you’re in solo private practice or part of a larger organization, these are the things worth paying attention to early.

What to Be Thinking About at the Start of the Year

1. Keeping Business and Personal Finances Separate

This is one of the most basic—and most important—foundations.

If business and personal transactions are mixed:

• Bookkeeping becomes more complicated

• Expense tracking is harder

• Your CPA has less clean data to work with

At minimum, this usually means:

• A dedicated business bank account

• Using business accounts for business expenses

This isn’t about perfection. It’s about clarity.

2. Reviewing Last Year’s Revenue and Expenses

Before the year gets busy, it helps to look back briefly:

• Did revenue match what you expected?

• Were expenses higher than anticipated?

• Did certain months feel financially tighter?

This kind of review helps with:

• Planning for slower periods

• Adjusting fees or staffing

• Anticipating cash flow fluctuations

For organizations, this also supports better budgeting and staffing decisions going forward.

3. Understanding Estimated Quarterly Taxes (If Applicable)

Many providers are surprised by quarterly tax requirements when they first move into private practice or independent contracting.

While your CPA should guide you on specifics, it’s helpful to know:

• Whether you’re expected to pay quarterly estimates

• Roughly when those deadlines fall

• How much you may need to set aside

This is less about calculating numbers yourself and more about not being caught off guard.

4. Preparing Documentation for Your CPA or Accountant

Clean records make tax season significantly less stressful.

Helpful items to keep organized throughout the year include:

• Income reports (especially if you accept insurance)

• Payroll summaries, if you have employees

• Contractor payments (for 1099s)

• Business expenses

• EHR or billing system reports

When admin systems are disorganized, tax prep becomes harder—and more expensive.

5. Planning for Payroll Taxes and Staffing Costs

If you employ staff or clinicians:

• Payroll taxes

• Withholdings

• Benefits

…all need to be accounted for consistently.

This is especially important in group practices and organizations where:

• New providers are onboarding

• Productivity is fluctuating

• Credentialing delays can affect revenue timing

Tax planning and operational planning are more connected than most practices realize.

6. Understanding How Insurance Payments Affect Cash Flow

Unlike private pay, insurance reimbursement is delayed by nature.

This affects:

• When income is actually received

• How much is available to cover expenses and taxes

• How predictable monthly revenue feels

Start-of-year insurance changes (like deductibles resetting) often mean:

• Slower collections in January and February

• Higher balances for clients

• More billing follow-up

This is another reason tax planning can’t be separated from billing systems.

Common Tax-Related Mistakes We See in Behavioral Health Practices

Even well-run practices run into these issues, especially when things are busy.

No Bookkeeping System in Place

Without consistent bookkeeping:

• Financial reports aren’t reliable

• Planning becomes guesswork

• Problems are discovered late

Whether bookkeeping is done internally or outsourced, it needs to be part of regular operations—not a once-a-year scramble.

Waiting Until March to Get Organized

By the time tax deadlines are close:

• There’s less flexibility

• Less time to fix errors

• More pressure on everyone involved

January and February are the best time to stabilize systems—not just collect documents.

These Are Usually Systems Problems, Not Motivation Problems

Most of these issues don’t happen because providers or admin teams don’t care.

They happen because:

• Clinical work is demanding

• Admin systems grow faster than infrastructure

• Financial processes aren’t clearly owned by anyone

Strong systems reduce anxiety, prevent mistakes, and protect both revenue and energy.

Final Thoughts

The beginning of the year is a natural reset point—not just clinically, but operationally and financially. A little attention to systems now can prevent months of stress later.

Taxes, billing, credentialing, payroll, and compliance are all connected. When one area is disorganized, the strain shows up everywhere else.

Need Support with the Administrative Side of Your Practice?

If insurance, credentialing, or billing systems are creating financial uncertainty or extra stress, support can make a real difference.

I work with behavioral health providers and organizations to strengthen:

• Credentialing processes

• Revenue cycle workflows

• Onboarding and compliance systems

The goal is not just getting through this tax season, but building infrastructure that supports your practice long-term—so finances feel more predictable and admin doesn’t constantly compete with clinical work.

You don’t have to untangle all of this alone.