7 Things to Know Before You Start a New Speech Therapy Practice

Starting a speech therapy practice is exciting, but taxes can trip you up if you’re not prepared. Here are 7 things you need to know before you open your doors, so you can avoid costly mistakes and keep more of what you earn.

1. Your Business Structure Affects Your Taxes

Your choice of business entity impacts how you pay taxes and your personal liability. For most new speech therapy practices, a sole proprietorship or LLC is common, but an S-corp might be better once you start earning more.

• Sole Proprietorship: Easiest to set up, but you’re personally liable for business debts. You report income on Schedule C of your personal tax return.
• LLC (Single-Member): Similar to sole proprietorship for taxes, but offers liability protection. You’ll need to file a separate tax return if you choose to be taxed as a corporation.
• S-Corp: Can save on self-employment taxes if you pay yourself a reasonable salary and take the rest as distributions. Requires more paperwork and payroll setup.

Action step: Consult a CPA or tax attorney to choose the best structure for your situation. This decision is hard to reverse later.

2. You Must Pay Estimated Taxes Quarterly

As a business owner, no one withholds taxes from your income. You’re responsible for paying estimated taxes to the IRS and your state every quarter. If you don’t, you’ll face penalties.

• When: Payments are due April 15, June 15, September 15, and January 15.
• How much: Estimate your annual income, subtract deductions, and calculate your tax. Use Form 1040-ES for individuals or 1120-W for corporations.
• Penalty: The IRS charges interest on underpayments, which can add up.

Action step: Set aside 25% to 30% of your income in a separate savings account for taxes. Pay your first estimated payment in April, even if you just started.

3. You Can Deduct Startup Costs

You can deduct up to $5,000 in startup costs in your first year, but the deduction phases out if your costs exceed $50,000. The rest must be amortized over 180 months.

Startup costs include:

• Market research
• Advertising and marketing before opening
• Training for staff
• Legal and accounting fees
• Office supplies and equipment (if under $2,500 per item)

Action step: Keep receipts for every expense you incur before you open. Categorize them as startup costs, not regular business expenses, to maximize your deduction.

4. Home Office Deduction Is Available, but Be Careful

If you use a space in your home exclusively and regularly for your practice, you can deduct it. The IRS offers two methods:

• Simplified Method: Deduct $5 per square foot, up to 300 square feet, for a maximum of $1,500.
• Regular Method: Deduct a percentage of your home expenses (mortgage interest, utilities, insurance) based on the square footage of your office.

Caution: The space must be used only for business. If you see clients in your home office, it must meet zoning and licensing requirements.

Action step: Measure your office space and calculate both methods to see which gives you a bigger deduction. Keep a log of business use.

5. You Can Deduct Professional Expenses

Many expenses are tax-deductible for a speech therapy practice. Common ones include:

• Licensing and certification fees: ASHA dues, state licenses, and continuing education.
• Malpractice insurance: Premiums are fully deductible.
• Equipment and supplies: Therapy materials, tablets, software, and office furniture.
• Marketing: Website costs, business cards, and online ads.
• Professional development: Conferences, workshops, and subscriptions.

Action step: Open a separate business credit card and use it for all business purchases. This makes tracking deductions easier at tax time.

6. You Must Track Mileage and Vehicle Expenses

If you drive to see clients, visit schools, or run errands for your practice, you can deduct vehicle expenses. You have two options:

• Standard Mileage Rate: For 2026, the rate is $0.70 per mile (check IRS updates). This is simpler and often more beneficial.
• Actual Expenses: Deduct the actual cost of gas, maintenance, insurance, and depreciation, but only for the business percentage of use.

Action step: Download a mileage tracking app like MileIQ or Everlance. Log every business trip, including the date, purpose, and miles. This is a common audit area, so be precise.

7. You Need a Tax Professional, Not Just Software

While software like QuickBooks and TurboTax can help, a tax professional who understands healthcare practices is invaluable. They can:

• Help you choose the right entity and avoid costly mistakes.
• Identify deductions you might miss.
• Plan for tax changes that affect your practice.
• Represent you if the IRS audits you.

Cost: Expect to pay $300 to $800 for a CPA to prepare your business tax return, depending on complexity. This is a deductible business expense.

Action step: Interview at least three CPAs or enrolled agents. Ask about their experience with speech therapy practices or similar service businesses.

FAQ

When do I need to start paying estimated taxes?

You should start paying estimated taxes in the first year you have net income. If you expect to owe more than $1,000 in taxes, you’re required to make quarterly payments. Even if you’re not sure, it’s safer to pay.

Can I deduct my health insurance premiums?

Yes, if you’re self-employed and not eligible for an employer plan, you can deduct health insurance premiums for yourself, your spouse, and dependents. This deduction is taken on your personal return, not the business.

What if I make a mistake on my taxes?

If you realize you made a mistake, file an amended return using Form 1040-X. You have three years to amend. It’s better to correct errors than to risk an audit.

Should I hire a bookkeeper or do it myself?

If you’re comfortable with accounting software and have time, you can do it yourself. But if you’re busy with clients, a part-time bookkeeper costs $200 to $500 per month and can save you money in the long run by keeping records accurate.

Related guides

• 7 Mistakes New Speech Therapy Practices Make in Their First Year
• 7 Questions to Ask Before Buying a New Speech Therapy Practice
• Best New Speech Therapy Practice Tools Compared in 2026

The bottom line

Starting a speech therapy practice is a rewarding venture, but taxes can be a minefield. By understanding your entity choice, paying quarterly taxes, and tracking deductions, you’ll avoid surprises. The most important step is to set up a system for tracking income and expenses from day one, and to consult a tax professional who can guide you. Take action this week: open a separate bank account, set up a bookkeeping system, and schedule a meeting with a CPA. Your future self will thank you.