The Complete New Aba Practice Startup Checklist

Starting an ABA (Applied Behavior Analysis) practice is exciting, but the tax side can feel overwhelming. This checklist walks you through the essential tax steps for a new ABA practice, from choosing an entity to filing your first quarterly return. Follow it in order, and you will avoid common penalties and set up a solid financial foundation.

1. Choose Your Business Entity

Your entity type determines how you pay taxes and your personal liability. For most new ABA practices, the options are:

• Sole Proprietorship (or Single-Member LLC): Easiest to set up, but you pay self-employment tax (15.3%) on all net income. No liability protection.
• Partnership (or Multi-Member LLC): Similar to sole prop, but with multiple owners. Each partner pays self-employment tax on their share.
• S Corporation: Offers liability protection and can save on self-employment tax, but requires payroll for owners and more paperwork.
• C Corporation: Rare for new practices; double taxation, but may be useful if you plan to raise investors.

Recommendation: Most ABA practices start as an LLC and elect S-corp status once net income exceeds $40,000 to $60,000 per year. The S-corp election allows you to pay yourself a reasonable salary and take the rest as distributions, which are not subject to self-employment tax. However, you must file Form 2553 with the IRS within 75 days of forming the LLC.

Action step: If you have not yet formed your entity, consult with a CPA or business attorney to choose the best structure. If you already have an LLC, ask about S-corp election.

2. Get an EIN and Open a Business Bank Account

An Employer Identification Number (EIN) is your business tax ID. You need it to open a bank account, hire employees, and file taxes. You can get one free from the IRS website in about 10 minutes.

• Apply online at IRS.gov/EIN.
• Open a separate business checking account. This is critical for clean bookkeeping and tax deductions.
• Use this account for all business income and expenses, never mix personal and business funds.

Action step: Apply for your EIN today. Then, open a business bank account with a bank that offers low fees (often $0 to $10 per month).

3. Set Up Your Bookkeeping System

Accurate books are the backbone of tax compliance. You need to track every dollar in and out. Options include:

• Accounting software: QuickBooks Online ($30-$80/month) or Xero ($30-$60/month). These automate tracking and generate reports.
• Spreadsheets: Free, but error-prone. Only use if you have a very simple practice and a CPA who can help.
• Hire a bookkeeper: $200-$500/month for a part-time virtual bookkeeper. This can save you hours and reduce errors.

Action step: Choose a system and set up a chart of accounts specific to ABA (e.g., supervision income, materials, rent, payroll). Enter all transactions weekly.

4. Understand Your Tax Obligations

As a new practice, you have several tax obligations. Here is a quick overview:

Tax Type	Who Pays	Frequency	Typical Rate/Range
Federal income tax	Business (based on entity)	Quarterly (estimated)	10%-37% of net income
Self-employment tax	Sole props, partners, LLC owners	Quarterly	15.3% of net income
Payroll taxes (FICA, FUTA)	Employers (if you have employees)	Semi-weekly or monthly	7.65% employer share + withholdings
State income tax	Business	Varies	0%-13% depending on state
Sales tax	If you sell products (e.g., therapy materials)	Monthly/quarterly	Varies by state

Action step: Review this table and identify which taxes apply to you. Most new ABA practices will need to pay quarterly estimated taxes.

5. Pay Quarterly Estimated Taxes

If you expect to owe more than $1,000 in federal taxes, you must pay estimated taxes quarterly. Deadlines are typically April 15, June 15, September 15, and January 15. Use Form 1040-ES (for individuals) or Form 1120-W (for corporations).

• Calculate your estimated tax using your expected income, deductions, and credits.
• Pay online via IRS Direct Pay or EFTPS (free).
• Underpayment penalty is around 0.5% per month on the unpaid amount, so it pays to estimate accurately.

Action step: If you have not paid Q1 estimated taxes yet, do it this week. Use your bookkeeping data to estimate net income for the year.

6. Track Deductions Specific to ABA Practices

Maximize your deductions by tracking all business expenses. Common deductions for ABA practices include:

• Clinical supplies: Data collection tools, therapy materials, reinforcers (toys, snacks), and assessment kits.
• Professional development: CEUs, conferences, and certifications (e.g., BACB renewal fees).
• Software and technology: Practice management software, scheduling apps, and telehealth platforms.
• Rent and utilities: If you have a clinic space, deduct rent, utilities, and internet.
• Insurance: Professional liability, general liability, and business owner’s policy.
• Marketing: Website, ads, and printed materials.
• Vehicle expenses: If you drive to client homes, track mileage at the IRS rate (65.5 cents per mile in 2026).

Action step: Create a folder (physical or digital) for receipts and log expenses weekly. Use a mileage app like MileIQ or Stride to track drives.

7. Handle Payroll Correctly

If you hire employees (e.g., RBTs, BCBAs, office staff), you must run payroll and pay payroll taxes. Mistakes here are costly.

• Register for an EIN and state tax ID.
• Choose a payroll service: Gusto ($39-$99/month), ADP, or Paychex. These handle tax filings automatically.
• Classify workers correctly: employees vs. independent contractors. Misclassification can lead to back taxes and penalties.
• Pay federal unemployment tax (FUTA) and state unemployment tax (SUTA).

Action step: If you plan to hire, set up payroll before your first hire. Talk to a CPA about worker classification rules for BCBAs and RBTs.

8. File Annual Returns and Stay Compliant

At year-end, you must file:

• Form 1120-S (S-corp) or Schedule C (sole prop) with your personal return.
• Form 940 for FUTA and Form 941 for quarterly payroll taxes.
• State returns as required.

Action step: Mark your calendar for these deadlines. Work with a CPA to prepare and file your returns, especially in your first year.

9. Common Tax Mistakes to Avoid

• Mixing personal and business expenses: This triggers audits and lost deductions.
• Forgetting to pay quarterly taxes: Penalties add up quickly.
• Not tracking mileage: You lose a significant deduction.
• Ignoring state tax requirements: Many states have separate registration and filing rules.
• Waiting until April to think about taxes: Proactive planning saves money.

FAQ

Q: Do I need to charge sales tax on ABA therapy services? A: In most states, medical and therapeutic services are exempt from sales tax. However, if you sell tangible goods like therapy kits or books, sales tax may apply. Check your state’s department of revenue.

Q: Can I deduct the cost of my BCBA certification? A: Yes, the cost of initial certification and renewal fees are deductible as professional development expenses. Also, exam prep courses and study materials are deductible.

Q: What if I miss a quarterly estimated tax payment? A: The IRS charges a penalty based on the amount owed and the time it is unpaid. File and pay as soon as possible to minimize the penalty. You can also adjust your withholding if you have a W-2 job.

Q: Should I hire a CPA or use DIY tax software? A: For a new practice, a CPA who understands healthcare practices is worth the cost (typically $300-$800 for business tax prep). They can help with entity choice, deductions, and compliance. DIY software is fine for very simple returns, but as you grow, a CPA saves you money.

Related guides

• The Annual New Aba Practice Review Checklist
• 7 Mistakes New Aba Practices Make in Their First Year
• 7 Questions to Ask Before Buying a New ABA Practice

The bottom line

Starting an ABA practice involves many moving parts, but taxes don’t have to be a nightmare. Follow this checklist: choose the right entity, get an EIN, set up bookkeeping, pay quarterly taxes, track deductions, and handle payroll correctly. By taking these steps now, you will avoid penalties, save money, and build a financially healthy practice. If you feel overwhelmed, invest in a good CPA and bookkeeper; it is money well spent. Start with step one today, and you will be on your way to a successful, compliant practice.