The idea of figuring out and budgeting your salary as a private practice owner can be quite overwhelming. Hopefully the next three steps can help you walk through figuring out how much you can take home. This, of course, is not tax or accountant advice, but more like my experience as a practice owner. If you need one of those, you should totally find one of those people, they are super helpful.

Figure Out Your Tax Structure

One starting point is to figure out how the money you earn in your practice is taxed. Most people including myself operate as a single person LLC, which essentially passes the income and the taxes to the owner. The federal government often refers to this as a “pass through entity”. If that’s the case then you get to taxed on the left over money in your bank account. If you file your taxes differently, or have your practice structured otherwise, you might need to pay yourself a proper salary or be fee-for-service. The rest of the article assumes that you are a single person LLC, but many of the principles still apply if this is not the case.

Private Practice Owner Salary Equals Income Minus Expenses

For most private practice owners, they money you take home is the money left over at the end of the month. To figure out what that might be, you can simply subtract your monthly expenses from your income. The final number is the money that you should be able to take home.

Whatever that number is, you’ll need to set aside some for taxes. Ask your account or look up you tax structure here.

Budgeting for your Private Practice Salary

The number that you are paid in theory can be tough to actually take home sometimes. Navigating cash flow is difficult, and you certainly don’t want to overdraft on your account. Finding a budgeting tool that gives you confidence in paying yourself is huge. I write my thoughts on using YNAB, a zero based budget, that I use to run by business finances.