The Financial Foundation - Basic business setup for starting practitioners

When you were training in your modality, whether you are an RMT, Naturopath, therapist, etc., or have multiple disciplines, how much time and attention did your training give to the business side? 

All too often, the answer is: very little.

So here you are, eager and excited to step into your new role or expand your offerings. You are great at what you do and will get even better with experience!

But what about the money? What about your business? Do you know how much you are charging? Will you work in a clinic and have to work on a split? If so, what do you get as part of that? How will you find clients and patients? Will you need money for advertising? And once you have some clients, how do you manage your money then? Have you thought about how much to pay yourself? What about your expenses? And, oh gawd, taxes!?

There is so much to consider!

Let me simplify this for you. There are two aspects to your business:

1. The work you do serving your clients.
2. The work you do serving your business.

You have trained to serve your clients. But have you trained to serve your business? Let’s take a look at some considerations.

Firstly, how will you structure your business? Will you be a sole proprietor or incorporated? 

A sole proprietor means that all income and expenses for the business are reported on your personal tax return. You can register a business name as a sole proprietorship but it is still just you.

Incorporation, on the other hand, is its own entity. You become a shareholder of the corporation. This provides legal protection and can give your business legitimacy. However, it is more expensive to set up and maintain. The corporation has certain legal obligations, as well as its own tax filing requirements.

If you are unsure how to proceed, talk to an accountant about your specific situation.

Once you have established your business structure, you will need to ensure your professional licenses and certifications requirements are met.

You will also need to determine what types of insurance you will require for the type of work you are doing. Does your governing body or professional association have a preferred provider? You may need to compare rates and negotiate the best coverage for your business.

Do you need a physical space to see clients/patients or will you be working virtually? Either of these options could be a rental space of your own or within a clinic, or within your home. Please consider the differing regulatory requirements for each of these options.

How will you manage and store client/patient information, schedule appointments, maintain records, and do intakes? Do you prefer a manual system that you manage? Or do you need to demo some Client Management Systems to see what meets your current needs, and potential future needs.

What security - physical and cyber, do you need to consider? What are the requirements for your modality and country? This could also have implications for your insurance, as well so it is vitally important to be well informed in this regard, considering the world we live in now.

Marketing efforts like a website, social media, and email lists are vitally important to establish early on to give your business legitimacy. Networking and referrals from others within the wellness industry is golden, as these are often very low or no cost and don’t require a huge amount of time and energy.

And then there is the money! On the revenue/income side, how will you accept payments and what type of processor do you need? Remember to keep security in mind when evaluating this. Other considerations are the reporting features to track your income and taxes. Does the processor integrate with bookkeeping software?

Your expenses will be comprised of start-up costs, many of which are detailed above, as well as ongoing monthly and yearly expenses. What are these expenses and how much revenue do you need to make to cover them all? Remember to consider what you will pay yourself as one of your expenses and don’t forget to set aside funds for taxes. Pro tip: put tax funds into a different bank account.

Bookkeeping is the system you will need to track your income & expenses. Will you do your own or will you hire someone? There are many user friendly low or no cost solutions. Can you start with a simple spreadsheet template? Or do you need a more robust solution? How much knowledge do you have about bookkeeping and what do you need to learn? How many hours a week/month do you need to spend on your financial management? And when will you schedule time to complete that?

Many of the items I have discussed above have to be done once or annually. However marketing and financial management need a consistent system to maintain your client base and your financial obligations.

I’ll leave marketing to those experts, but trust me, ignoring your finances until tax time will only result in a very large bill from an accountant or bookkeeper. Not to mention the nagging stress of knowing that it is the thing you need to do but keep ignoring. Besides, knowledge is power. If you take the time to know your numbers, like you know your clients, you will reduce your stress, be empowered to make good business decisions, keep your expenses low, and be able to show up for your clients as more balanced, healthy, and effective.

Keeping your business in good financial health will keep you, the practitioner, more balanced, which will lead to thriving clients. And thriving clients will send you more business and the cycle continues. Beautiful.