Every February, the same conversation happens.
A practice owner forwards her CPA's request list to her bookkeeper and asks how long it will take to pull together. The CPA wants finalized numbers. The books have not been closed since September. Two of the contractors who left in June never turned in a W-9. There are eleven personal charges sitting in the business checking account that nobody has sorted out.
None of that is a crisis on its own. Together, in February, with a filing deadline in the way, it turns into three weeks of reconstruction work and a bill for it.
Here is the part worth sitting with: every one of those items was fixable in October for almost no effort. They only became expensive because they waited.
That is what a year end checklist for therapy practices is really for. Not tax preparation, which is your accountant's job. It's the short list of things that get cheap when you do them early and get costly when you do not.
What a year end checklist for therapy practices actually covers
Most checklists you'll find are written for generic small businesses, and they're mostly tax filing tasks dressed up as a to-do list.
The useful version is narrower. It covers the work that has to happen inside your books before anyone downstream can do anything with them.
Think of it as two separate jobs with a handoff in the middle. Your books answer whether the money that moved this year got recorded correctly. Your CPA answers what you owe on it. The second job cannot start until the first one is finished, and the first one is entirely within your control.
Almost every February scramble traces back to that handoff happening in the wrong order.
The five things to square away before December 31
These are in order of how much they cost you when they slip.
1. Get every account reconciled through November.
Not reviewed. Reconciled, meaning the ending balance in QuickBooks Online matches the ending balance on the statement, for every bank account, credit card, loan, line of credit and merchant account you run.
Do this in early December and you are chasing one or two missing months. Wait until February and you are chasing five, with a bank that only keeps twelve months of statements online for some account types.
The practical move is to reconcile everything through November in the first week of December, then close December in the first two weeks of January. Splitting it in two keeps either half from becoming a project.
2. Pull personal expenses out of the business accounts.
Almost every practice has some. A conference that was really a family trip, a phone bill, a few Amazon orders that went to the house.
Sorting these in December while you still remember what they were takes an afternoon. Sorting them in February means guessing, and guessing on the tax side is the part that actually creates exposure. Co-mingling personal and business finances gets harder to unwind the longer it sits, which is the whole argument for doing it now.
3. Chase down contractor paperwork before January.
If you paid anyone as a 1099 contractor this year, you need a current W-9 on file for each of them, with a correct legal name, address, and taxpayer ID number.
The ones that hurt are the contractors who left mid-year. They have no reason to return your email in January and every reason to have moved. In December you still have a live relationship and a reason for them to respond.
One detail worth knowing before you plan the work: the IRS requires electronic filing of 1099-NEC forms from anyone filing ten or more information returns in a calendar year. A group practice with a handful of contractors plus any other reportable payments crosses that line faster than owners expect, and finding out in late January is a bad time to learn it.
While you are in there, it is also a reasonable moment to confirm the people you are treating as contractors are actually classified correctly. Our piece on 1099 contractor compliance for therapy practices walks you through the test. This one has real edge cases and real consequences, so it is a conversation to have with your CPA rather than a call to make alone.
4. Settle owner pay and distributions while you can still change them.
This is the item with the shortest window and the biggest swing.
If you take a W2 salary from the practice, your final payroll run of the year is the last chance to adjust it. Once the year closes, your W2 is what it is. The same goes for any distributions you meant to take, retirement contributions tied to payroll, and shareholder health insurance if that applies to you.
In December these are decisions. In January they are history. That is the entire reason this item sits above tax planning on the list.
What the right number is depends on your entity, your profit, and what you have already taken, which is genuinely a CPA question. Our post on how to pay yourself as a therapist covers the mechanics so you walk into that conversation knowing what is being decided.
5. Fund the fourth quarter tax payment.
The Q4 estimated payment is due in mid-January, and the IRS estimated tax rules treat each quarter as its own period, which is why skipping one and catching up later does not fully undo the penalty.
If you have been saving for taxes in a separate account all year, this is a transfer and takes ten minutes. If you have not, December is when you find that out, which is still far better than finding out in April.
The three things that are not your job
This part matters as much as the list above, because a year end checklist that quietly hands you your accountant's work is how owners end up frozen.
Filing anything is your CPA's job. Your return, your entity election questions, your payroll tax filings. Your job is handing over books that are finished and correct.
Tax strategy is a conversation, not a checklist item. Whether to buy equipment before December 31, whether an S corp election makes sense, what your reasonable compensation should be. These depend on facts a checklist cannot see, and the honest answer is that you need someone looking at your specific situation.
Chasing unpaid claims is billing work, not bookkeeping. If your revenue looks lower than it should, the question of whether the right amount of money arrived is a billing question. Bookkeeping answers whether the money that did arrive got recorded correctly. Those are two different reviews, and confusing them is why some practices spend December auditing the wrong thing. If your accounts receivable aging looks wrong, that is worth an outside billing review once or twice a year, with a clear ask: contracted rates against actual reimbursement, denial and rework patterns, and anything unposted or misposted.
Sorting a problem into the right lane is not a disclaimer. It is most of the work.
The first two weeks of January
A few things do not belong in December, and trying to force them there just creates rework.
- Close December once the last transactions have cleared, usually by the second week
- Send 1099-NECs to contractors and file them, due by the end of January
- Run a full year profit and loss statement and compare it against financial benchmarks for therapy practices, with cost of services around 50 to 57 percent of revenue, operating expenses at 20 to 25 percent or less, and profit margin in the 15 to 20 percent range
- Hand your CPA a finished set of books rather than a login and an apology
That third item is the one owners skip, and it is the only one on this whole list that changes what you do next year. A full year view is the cleanest read you will get on whether your splits are working and whether clinician profitability is where it needs to be. Twelve months smooths out the noise that makes any single month misleading.
Year end checklist for therapy practices: the short version
The year end checklist for therapy practices that actually matters is five items, and none of them are tax filing.
Reconcile every account through November in early December. Pull personal expenses out while you still remember what they were. Chase contractor W-9s before those contractors stop answering email. Settle owner pay and distributions before the final payroll run, because after that they are history rather than decisions. Fund the Q4 payment.
Then in January, close December, send the 1099s, and read your full year numbers against the benchmarks before you hand anything to your accountant.
The thing tying all five together is the handoff. Your books answer whether the money that moved got recorded correctly. Your CPA answers what you owe on it. Every one of those items is cheap in December and expensive in February, for the same reason: the people and records you need are still within reach.
If your books are not close to ready and December is looking uncomfortable, a free cleanup assessment will tell you honestly how far behind you are and what it would take to be current by year end. No pressure either way, and knowing the size of the gap beats guessing at it.
Nate
Related reading: Bookkeeping cleanup for therapy practices · Saving for taxes in private practice · Chart of accounts for therapy practices · 1099 contractor compliance for therapy practices · Financial benchmarks for therapy practices
Straight from the source: the IRS's own page on forms and associated taxes for independent contractors, which states that filers of ten or more information returns in a calendar year must file them electronically. Worth checking against your contractor count before January.
