Episode 146: Essential Tax and Business Structure Tips for Therapists [featuring Daniel Rowe]

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I would also like to thank The Receptionist for iPad for sponsoring this episode.

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I want to thank Web Therapia for sponsoring this episode.

In today's competitive healthcare landscape, establishing a robust online presence is crucial for attracting new patients and expanding your practice. Web Therapia specializes in tailored digital marketing solutions specifically for doctors and therapists. From professional website design to effective search engine optimization (SEO) strategies and ADA compliance, they ensure your practice stands out in local and telehealth markets.

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Transcript

PATRICK CASALE: Hey, everyone. You are listening to another episode of the All Things Private Practice. Today, I have a really cool guest who is a CPA and a tax attorney in Charlotte, North Carolina. Daniel Rowe is also an autistic ADHDer, OCD, as well, which I think is quite the combination when we're talking about, like, a lot of you have reached out to me asking, "Do you know any neurodivergent affirming tax professionals?"

Well, here we go. His firm advises large and small businesses that operate in the space of making people feel good, moved. And this includes focusing on therapists, doctors, coaches, and others who sell their time and their expertise to help improve their client's lives.

So, Daniel, I'm really excited to have you on here because it's a very unique perspective to have both the CPA and tax attorney advice and thought processes. A lot of our guests who listen own small businesses. And I think a lot of them would say like, "I'm not really a business owner, or I'm not equipped to be a business owner because I didn't learn anything about it in school." Which is the case for so many medical and mental health professionals.

So, can you tell us a little bit about anything I missed in your bio that you feel is important. And also, just why you decided you really wanted to focus on this demographic in your business.

DANIEL ROWE: The one thing I will add that kind of goes along with my bio is another area I practice in is estate planning. And I do that with a lot of people that own their own businesses, own their own practices, have young children. So, that's something I do for people in North Carolina and California where I'm licensed to practice law.

PATRICK CASALE: Oh, so…

DANIEL ROWE: Yeah, going to the question overall, I guess, I can step back for a second and say that I'm recently my own business owner, it's been a little over a year and a half since I started my practices. And before that, I spent all my career working in bigger firms, bigger businesses.

What I was able to see as I took myself out of that world was that a lot of the way that my brain works and the things that make me good at what I do don't necessarily parallel with what's expected a lot of times at the big firms or the big places. And so, that was eye-opening. And it's also allowed me to tailor the way I do my work and the clients that I work with to better serve the way I work and the way they work.

PATRICK CASALE: That's a great point and perspective. And I imagine that so many people, myself included, who are listening had similar experiences, if they worked in a corporate structure, community mental health, in medical setting, or practice, or group practice, where maybe the workplace culture was not neurodivergent affirming, where they had to be there nine to five, regardless, of when they got their work done. Or how their sleep was impacted. Or how their sensory systems were impacted throughout the day. And then, you had to sit in certain meetings that, like, felt like meetings about meetings.

And then, you were like, "I just want to get the fuck out of here. Like, what is happening? This doesn't feel like me."

And so many of us leave those places to start our own thing. Whatever the thing is, and there's just so much fear, so much self-doubt, so much insecurity that comes with being an entrepreneur. It's like a roller coaster. Like, there are days where you're like, "Best decision I've ever made, wouldn't trade it for the world." And there are days behind the scenes where you're like, you're playing every single role, right?

So, for those who are listening, taxes are a piece of this. When you're an entrepreneur, taxes are one of those things that come up in conversation where people are pretty afraid of them. And that goes with like, quarterly taxes. How do I save enough? I feel like I'm constantly owing the IRS or I'm feeling like I'm not making enough money to really make this worth my while. Do you see a lot of that from your side of the desk, so to speak?

DANIEL ROWE: And the thing that I really, really try to do is make taxes and the topic of it something that's approachable, that doesn't feel just insurmountable and intimidating. And because I feel like that's what I realized are the things that I struggle with, or the things that I don't face directly, or that I don't have a good handle on, or a feel out of control on. But the things that really cause me a lot of stress just in the background of my brain.

And so, my approach is always to try to explain, try to help people actually be empowered and feel like they're in control of their tax situation, business situation, without trying to make them tax experts, just enough information where they feel confident that, "Okay, this is not so intimidating. I actually understand what I need to do. Now, it's set up. Now, let's almost autopilot the way it works."

And then, we check in throughout the year just to make sure everything is still where we had planned for it to be, or if things have changed, then we adjust the plans. But it is really about empowerment and making people feel like they can do this.

PATRICK CASALE: Yeah, I think that's a huge piece. And that kind of, like, coincides with starting a business, right? Like, when you look at these checklists that people provide of like, this is how you start your PLLC and start your business.

And it feels so daunting when you don't know what any of that verbiage means when you don't know what any of that terminology means or the processes. It almost allows you to like say, "I'll do this some other time. I'm going to put this on the back burner and like…" Or, "I'll save this for later. But it feels too intimidating right now."

I think when we don't know what we don't know things feel a lot scarier than they actually are. So, by providing just a little bit of knowledge about taxes, it really does bring that, like, fear and intimidation factor down just a little bit. And if you have the right professional in your corner, and you trust them, that also allows for this to be a lot easier because you kind of know this person's got my back, they're going to support me, they're going to kind of advise me on the right decisions that I should be making, which is something I want to talk about.

I have a pretty big Facebook group of mental health practitioners in private practice. A lot of people are always looking for accountants. I feel like it's one of the top five most commonly asked questions. And the things you hear are similar to things that we hear in the therapy world. I called 12 accountants and nobody called me back. I get charged every time I pick up the phone just to ask them a question. I don't really understand why they keep asking me to move to an S-Corp from a PLC. You're kind of smiling because I'm sure you get that question all the time.

So, any of those things feel like directions you want to move into right now?

DANIEL ROWE: All three of those just resonate with me a lot. The first one, going to the you don't get a call back. And I feel probably two reasons for that, that come to mind. One is just the volume of work that CPAs have right now. And it's just, I'm sure, other industries feel the same thing. But I can speak to the to the CPA world. And there's just not enough people able to do the work that is in demand. And so, maybe that is part of the reason for lack of a callback.

The other one I think is, one thing I realized, again, having my own practice and stepping back from working with so many other people, I was able to reflect and realize that a lot of the people I work with, I believe, are also neurodivergent. And spend a lot of time masking, trying to go with the flow. And I think some things like calling people back is difficult.

I struggle with that sometimes, too. I go through periods where I just want to check out and I don't really want to communicate with the outside world for a minute, and then, get that burst of energy, and then, start going through the checklist, calling people back, getting everything done. And so, I think those two reasons contribute to it.

And the other, you mentioned, just why to convert from one type of company to the other, and that type of thing does feel intimidating. What I would say is that when you're looking for a CPA or you're looking for a tax attorney, look for someone that their focus is on giving you peace of mind and letting you then run your business. Meaning they're going to give you the information you need enough to get you going. But you don't need to spend your time studying the rules, studying the law. That's what they're going to do. But they're going to give you enough information so that you feel like you're making the decisions yourself, but you're making them from an educated place.

And so, I do a lot of diagramming, drawing, whiteboarding, just trying to show people how things move from one type of business to their personal taxes, and just being able to compare things for them digitally.

So, I think the face-to-face is also something I hear a lot of times people are lacking with their accountants or their attorneys, is that so much is just over the phone, or email, written communication. And so, the other thing I would look for is someone that is either in your local area or that is very comfortable with getting on Zoom or getting on Teams and doing the calls with you face to face because I do think that for some people that is very, very helpful.

And in the part about getting billed for little questions here and there, that is a concern. And I think both sides of the equation struggle with that. So, the professional doesn't want people not to call them, and wait until they've already done something, and now we're trying to fix it. But the practitioner doesn't want to call and get charged for the time spent.

So, most of my engagements and the way I arrange things are on fixed fees, where it's almost certain things are always a menu pricing where you know exactly what it's going to be. I account for the fact that I'm going to be doing check-ins, phone calls, put questions here and there type of things out, that's all built in so that when you have a fixed price, and we also break it down for some if they prefer to do it monthly. So, I say, you know, this is the total cost, but we're just going to do it over 12 months, and periodic, so you have the same payment every month instead of getting hit with a big bill at tax time. Or you know, when all the work's being done.

So, yeah, that's part of the way we deal with those [INDISCERNIBLE 00:11:04].

PATRICK CASALE: So, those are three great answers. I want to unpack each one, and I want to track them. And just trying to keep track of what you were saying.

First, the phone call peace. Great points, right? Like, one, maybe it's a private practitioner, like yourself, who maybe it's behind the scenes, just you doing everything, which is so typical for a lot of mental health therapists. So, like, I always try to see both sides. Like, if you hear mental health therapists aren't calling people back, there could be so many reasons for that. It could be that they're handling all the admin tasks, maybe they are neurodivergent and their executive functioning is just really struggling. And it's hard to, like, do things sequentially? Or do things in order? Or do things, like, that require that extra amount of energy that you don't have. So, that's first and foremost, I'm so glad you mentioned that.

Also, I feel like a lot of people call tax professionals during tax time, when they're like freaking out that, "Hey, I didn't prepare the way I probably should have. And it's April 14th. And nobody's calling me back."

And it's like, "Well, we're kind of at like crunch time for folks that are doing these things." So, that's also something I want everyone to think about. Like, get proactively prepared. Find that person sooner than later, not on the last week of the final deadline and month.

One of my best friends is an accountant. And I've been in his office during the week of, like, April 15th and it's just chaos. So, I'm like, yeah, I get it.

The other thing is having someone who is willing to, like, communicate with you in a way that works for you, I think is super important. So, like you said, instead of just emails and phone calls, if that's not how you retain, and absorb, and understand information, and you really need someone who's willing to get on Zoom, or Teams, or meet face to face, I think those are important questions to ask when you're hiring a CPA or a tax professional. Like, how do you like to communicate? What's the best way? Are you willing to accommodate the things that I need?

And I think that we should be interviewing, to some degree, not like extensively. Our CPAs are tax professionals, our support team, like our boardroom of our businesses. We should not just pick because someone was like, "Oh, I've worked with this person, just give them a call." That helps. But I think you should still ask a couple of questions that are important for you to know.

Similarly, to when someone calls a therapist, and that person wants to ask 10 or 15 minutes worth of questions about like, what kind of therapy? Do you take my insurance? What are your rates? Like, where are you located? Those things are important to have conversations about.

I also think there has to be some semblance of rapport when you're working with someone who's so involved in your financials because it's a major source of stress in our lives. So, I like these answers. And I think it just goes to show what it means when we have someone who wants to show up for the professionals who are doing this type of work and gets their day-to-day because there's just an enormous amount of stress, financially, that goes into business ownership.

And I think, for whatever reason, mental health professionals and money, it's just a big area of struggle and concern. So, there's almost this mentality of like, "This person wants to move me from my PLLC to an S-Corp. I think they're just trying to, like, get over me or charge me extra money this year." And it's like, you hear that a lot. And sometimes that's probably true, right?

But for the most part, you have to trust the person that you hired, who's doing the work for you, and doing the things that you don't know how to do.

DANIEL ROWE: It's very vulnerable. I think sharing that type of information with someone, your finances, your personal thing because you really have to get into that person's life. Know about if they just got married, if they got divorced, if they're having kids, they bought a house.

And so, one other thing I would look for when you're sort of interviewing professionals is a CPA or a tax attorney that is willing to be sort of a hub for you, meaning they can connect and work with other advisors for you so that they're not necessarily doing everything themselves, but they bring in the right professionals and coordinate things.

So, maybe they connect you with the right life insurance person, or for your retirement plan, they know people that can get you set up with that. And they're willing to coordinate all those different pieces for you so that you're not going out on your own seeking and having to kind of from scratch to put all those pieces together because they're also integrated. And the CPA really has access to so much information that it's so much more helpful if they're sharing that with others. And putting all those pieces together for you.

PATRICK CASALE: Yeah, I agree 100%. It's a hell of a lot more helpful to ask your CPA do you have recommendations of people you work with, or work closely with, or recommend opposed to just Google searching, like, life insurance near me or retirement planning near me because you just never know what you're going to connect with. And you know, it's nice to have that team kind of synced up so that you can kind of all look at things together from that perspective.

One thing that comes up a lot is bookkeeping. Your thoughts on should that be something your CPA is handling? Should that be something you're outsourcing? Should you be doing that yourself? There's so many thoughts on this. And, like, people really struggle with the concept of like, "I just have a Google spreadsheet. Well, like, I'm just tracking my expenses on there." I hear that a lot, which is fine when you're starting out to some extent. But like, as you grow, bookkeeping is very important.

DANIEL ROWE: I agree. And I don't like to give this type of answer. But I will say that it sort of depends on your situation, and how complicated, or what you have going on. I will say, I think I can make a blanket statement on it that I would not just use a Google spreadsheet to keep track of everything and use some type of bookkeeping system.

And well, I would say the reason why it depends on your situation is because there are… I have a lot of clients that do most of it themselves. Because right now, the two main products for bookkeeping are QuickBooks Online and Xero, X-E-R-O. And they're so intuitive, they're integrated into your bank account, your credit card, that you essentially are going through just categorizing expenses, the AI learns what's what, and then starts to prompt you to just basically press OK and classify it.

So, I would say you need some help getting it set up initially, building your chart of accounts, determining what accounts you're going to have, how it's going to be set up. We haven't talked about it yet, but what type of business you're going to be. So, you need a lot of help upfront, putting it all together. But then, a lot of it can be run on a regular basis without some professional oversight.

However, I would recommend that you still do have, ideally, a CPA that works with a bookkeeper that looks at your financials on if not monthly than a quarterly basis and goes over them with you.

Because there's so many opportunities that come up and they get missed when you don't know what your income is at a given point in time during the year and we're waiting to the end of the year to start figuring out estimated payments or retirement plan contributions. And so, to be doing that stuff periodically, but you need good data to do that.

So, I would say a lot of it can be done yourself, but there's should be some oversight by a professional that can check in, get things cleaned up, make sure, you know, everything's on track.

PATRICK CASALE: Yeah, I agree 100%. I know when I was a sole proprietor, not making a ton of money, when I first started out, my bookkeeping was pretty simple. Now that I own three businesses, and there's income coming in from all these sources it's like, "If I was going to try to do that without, like, support or oversight, or at least some accountability, or checking, it would be a disaster."

And when my accountant got my stuff at the end of the year, he'd be like, "Yeah, we need to fix so much of this." So, thinking about that, again, proactively, getting prepared, and really putting the systems in place to set you up for success financially.

We can kind of touch base on business structure. I know that's something that really confuses people, too. I think that, like, starting off, everyone always says, you know, and this is state-dependent, everyone who's listening, all of your states have different laws. So, I can't speak to all of those things. But I know there's the big debate of like, is it a sole proprietorship? Do I start as a PLLC? What is an LLC versus PLLC?

And I can answer all those questions pretty simply. When people start talking about, like, I'm going to hire LegalZoom to help me set up my PLLC, or this entity, or this entity, or this entity, what are your thoughts on that?

DANIEL ROWE: Okay, my [CROSSTALK 00:22:08]-

PATRICK CASALE: Let me use the [INDISCERNIBLE 00:22:09] like, this is like a sole owned, pretty straightforward cut and dried, black and white, I'm opening a private practice. It's not like I have 20 employees in different states.

DANIEL ROWE: So, I mean, the convenience about LegalZoom is that you can just do it online, you don't have to interact with a person. It's affordable, it's low cost. So, you can kind of just get it done and checked off your list.

The downside, and why I typically, there are times where I say, "I think you can use LegalZoom and get your stuff done." Why? Typically, it's because you're missing the understanding piece, you're missing the thought that goes into what you should be doing, what type of business you should be, what the implications are. And so, you're missing that educational component at the very time that you're forming your business, right? So, you really need someone that can guide you, that can explain everything that's going on.

It may be a case where they explain these things to you. Now you know what you want to be. When you go to LegalZoom to get the documents created, I mean, you will do that as well. But I think you need some explanation and some understanding of what you're getting into at the beginning that needs to come directly from a person.

PATRICK CASALE: Yeah, I agree with that. You know, for our neurodivergent folks who are listening, I think that's super important, the understanding component is really crucial because otherwise, I think, we have this propensity for like, I need to know the why. And if we don't know that when we're running our businesses, it almost feels like our businesses are running us and not the other way around. So, just ensuring that you have confidence and talking about this stuff. It doesn't mean you have to know all of the ins and outs, but you should at least know why you're deciding to be a sole proprietor, why you're creating a PLLC, why you're switching to an S-Corp. Like, these things are important to know. It's not the sexy part of business ownership by any means.

But I think we have to spend a little bit of time trying to have an understanding, or at least have, again, that, like, boardroom of people and support, whether it's an attorney, a CPA, a financial advisor, etc., who are advising us on what decisions we should be making and why we should be making them, super important.

DANIEL ROWE: And I mean, I learned a lot starting my practices in North Carolina. So, we moved from California, I was licensed in California, had to get licensed in a different state, and then, had to go through the process of what type of entity can I be? There's restrictions on what you can name your practice, depending on which board is approving it.

And so, just going through those steps was very educational for me because I had previously worked at other accounting firms, other law firms, didn't have to go through that process.

So, doing that I learned a lot. And that's actually what got me into really wanting to start to do this for other licensed professionals because it is intimidating, it's confusing, it was super confusing to me. I had to sort out a lot of stuff, talked to a lot of different people. I finally put it all together. And now with that information, I feel like I can share that with others in an easy-to-understand way and get them going.

Because I think one of the things that holds people back from starting their own practice, I think you touched on this earlier, but it really is what am I getting into? What do I need to be aware of? How am I going to handle all these different things that I don't know about? Who can I even go to for help?

And I do think there's a lot of people that can help you but a CPA is one of the keys just because they are so involved in all the aspects of the business and can connect you to other people that can help with those other things like the insurance, the retirement plans, that kind of thing.

PATRICK CASALE: I agree 100%. And I think the CPA is like foundational. Because there are things, like, as you grow your business, you can start adding different components. Like, okay, I want to add a biller. Okay, I want to add a marketing team. Okay, I want to add this. But I think from the starting point, like there are things that you should really have in place. And a CPA is something that or someone I always say, should be a priority because it's very different. running your business, then doing your taxes on TurboTax. Like, it's just very different understanding deductions, maximizing them, protecting yourself, understanding, like, where your money is going, how much you should be saving.

You hear so many horror stories of people who were like, "I got to the end of the year, and I ended up owing like $30,000 more than I thought I was going to, and now I'm in this repayment plan with the IRS, and I can't catch up. So, I'm just going to go back to an agency job where I know what to expect every single paycheck."

And I just feel like that's not… It's so defeating when you hear stuff like that because that stuff is preventable, if we have the right education and tools in place.

Well, this was a great conversation, Daniel. And I appreciate you sharing this because I think this is one of those conversations that we could have, like, extensions of, and go down different pathways because we're just really scratching the surface. But I think that's important to have someone who you hire as your CPA, who can help you scratch the surface, who can help you better understand all of these components for your business.

So, glad to know you're out there, glad to know you're in North Carolina, two hours away from me. And it's also always nice to meet more neurodivergent business owners who are doing the thing and figuring out ways to best support their systems.

And for everyone listening, where can they find you? How can they connect with you? What's the best way for them to start working together?

DANIEL ROWE: There's two different ways depending on what they need. And if it is CPA and accounting support, they could go to drowetax.com. And it's D-R-O-W-E-tax.com. If it's legal advice, if it is business formation and estate planning, you can go to drowelawgroup.com and find me there. I'm also on LinkedIn, Facebook, all those things.

I can add one thing to what we just talked about a minute ago if that's all right?

PATRICK CASALE: Good.

DANIEL ROWE: Yeah. So, going back to kind of getting everything set up and setting up your accounting system, one question that people ask me when they're sort of interviewing me to work with them is, do you work with other businesses like mine? Or what type of businesses do you work with? What industries are you practicing in?

And for that, I think it is important that someone understands your business, and can help you with acquiring various tools that make it run better.

So, for example, when I'm thinking about setting up QuickBooks or Xero, there's a lot of apps that integrate with them. You can connect your billing to that, you can connect your payment systems to that, you can connect to all these different apps that you already have and they're integrated into the software. But having someone that understands what you're using, what other tools you're using besides accounting tools is really, really key to help kind of streamline things and make your business run a lot better.

So, I would ask the person, do they work with other professionals? What areas do they work in? Do they have experience working with therapists or mental health practitioners? And just get a sense of, do they have other clients like you? Because they learned a lot along the way if they do. [INDISCERNIBLE 00:29:21]-

PATRICK CASALE: I think that's a great piece of advice too. And people are pretty often asking that like, do you know any accountants who work with private practice therapists, you know, specifically? And I think it's important to have a good understanding of the day-to-day and the world that you're in. So, really, really important point.

I want to thank you for coming on and just sharing your advice. All of Daniels information will be in the show notes so that you can have easy access to all the links that he provided. And you can connect with him for either legal advice or tax planning purposes. Thanks again for making the time.

DANIEL ROWE: I appreciate you having me. Thank you.

PATRICK CASALE: To everyone listening to the All Things Private Practice podcast, new episodes are out every single Saturday on all major platforms and YouTube. Like, download, subscribe, and share. Doubt yourself, do it anyway. We'll see you next week.