You set up your business structure for your nutrition private practice - now what?
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Bravo! So you finally decided how you want to structure your business (sole prop, LLC or corporation). You have dotted your ‘i’s and crossed your ‘t’s.
I wish I could tell you that you were off the hook. But then I would be lying. And The Reimbursement Dietitian ain’t no stinkin’ liar. Below are the next steps I would suggest taking after you have decided on your business structure.
Additional Steps to becoming a Private practice RD
Get an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number and is used to identify a business entity. Technically an EIN is only required if you plan on having employees. However, it is also essential in establishing a separate tax identity for your new business.
One of the key benefits of having an EIN is that you won’t be obligated to disclose your personal Social Security number to clients or payers such as insurance companies for payment. You instead will use your EIN.
Also by having an EIN you build credibility with clients since it’s clear you’ve taken steps to establish a separate identity for your business.
If you started off your business as an LLC (which I really, really hope you did!) then you already legally have an EIN tied to your LLC. So you can ignore this step.
But if you decided to start as a sole proprietor, you will want to apply for an EIN so you don’t need to slap your social security on every single claim 🙂
Additional EIN Resources:
For more information on exactly WHO needs an EIN read this quick article entitled, “Do I Need an EIN” by our good friends at the IRS.
You may apply for an EIN in various ways. You can even apply online here. This is a free service offered by the Internal Revenue Service and you can get your EIN immediately.
Obtain a License (if you NEED one!)
Do I need a license to practice nutrition? Well, it really depends on what state you live in. In CT we don’t need a license but that doesn’t mean you don’t.
The majority of states have enacted laws that regulate the practice of dietetics in order to protect the public. Yay!
State licensure and state certification are entirely separate and distinct from the RD and DTR credentials obtained from CDR or the “certification” provided by private “certifying bodies.” Currently, forty-seven states, Puerto Rico, and the District of Columbia currently have statutory provisions regulating the dietetics profession or associated titles such as dietitian and nutritionist.
While CT does not require licensure – I hold a CT License issued by the Department of Health. Many insurance companies require that you hold a license if you choose to be credentialed. I pay $110 annually for my CT license.
Apply for a Seller’s Permit (also only if you NEED one!)
Does your nutrition private practice need a seller’s permit? Once again, the answer depends. In Connecticut, our actual service is not subject to income tax. However, if you decide to sell supplements or any retail products chances are you will likely need a seller’s permit and you will pay sales tax (depending on your state) on the products you sell. And if you operate in more than one location, you’ll need multiple permits. Make sure you get this necessary permit before you start selling.
Resources for Seller’s Permits:
This is a great article by The Balance: Small Business on how to obtain a Seller’s Permit if you decide to sell retail goods. I love all the information this website has to offer for small businesses. They make the complicated stuff SO much easier to understand.
Open a Separate Bank Account
It’s a good idea to have a separate bank account for your business no matter how you formed your private practice. A separate account makes it possible to keep track of your personal and business funds individually. However, if you incorporated your business or formed an LLC, a separate account is a necessity.
I highly suggest having separate accounts for your personal and business account BUT with the same bank. This makes things so much easier if you need to jockey around money between your accounts. While as an LLC you cannot commingle your expenses – you can still transfer money legally among your accounts. Also having separate accounts with the same bank it makes it easy to see your true income. If you are both employed and self-employed your bank account will often show two very different stories.
For example – I have several accounts with Bank of America. Two worth noting are my personal checking and my business checking. My money earned from teaching goes into my personal account, while all of the money received from my nutrition private practice go into my business checking account.
This is super important (because of my teaching status as an employee) my take-home pay is pre-taxed. Therefore, the money in my personal checking is all mine. However, this is not the case with my business checking account.
My income from my practice isn’t taxed prior to it being deposited. I instead pay taxes on my practice’s earnings on a quarterly basis. Therefore, the money in my account is not always mine. This is because I still owe taxes on that money to the government.
So it can be deceiving when you view the money in your accounts. You may think you are big pimpin’. However, a good portion of the money in my business account disappears when I go to make my quarterly tax payments.
Your private practice income is always subject to state and federal income tax. Therefore, in addition to having a separate business account, I would suggest having a tax account. Each month I would suggest looking at your ‘total deposits’ and then transferring enough money to cover your estimated quarterly payments.
How much should you put aside each month for taxes? Well, it really depends on what tax bracket you fall into. That is totally dictated by how much you (and your spouse is you file jointly) make collectively. When I say collectively I mean your total income between any self-employee wages PLUS your private practice income.
Curious to see what percentage you might fall in. Here are the federal income tax brackets for 2022/2023
Get a Business Credit Card
Just like a separate bank account, using a business-specific credit card not only makes record-keeping easier, it can ensure that you maintain the “corporate veil” that protects your personal assets—one of the key benefits of having an LLC or incorporation. I know this sounds like a no-brainer but be sure you use your personal credit card for personal expenses and your business card for business expenses.
I am a travel junkie which means I love my points. In fact, Marc and I go on at least one ‘free’ trip each year just using our points.
Therefore, it is no surprise I have a handful of American Express cards. Between the sign-on bonuses, retail offers, and ease of earning and combining points Amex makes it easy to accrue a big old pile of points. Below is a picture of me chillin’ in my business class seat (thanks to points) on Emirates to Greece in October. All because I was a boss about how I expensed my purchases.
I have three Amex Cards: The Platinum Card & The EveryDay Card. In addition, I have the AMEX Blue Business Plus Card. I always keep my business and personal transactions separate. However, Amex allows me to combine my points. Boom shake the room. Let it rain points 🙂
The Reimbursement Dietitian Tip
If you love to travel (especially for free) and earn points don’t hesitate to use my affiliate link to check out all the cool stuff Amex has to offer. I am definitely hooked!
Get a Merchant Account
In today’s business world, so many transactions are conducted online. I would highly recommend making payments as convenient as possible for your clients by opening an account with a credit services company as a merchant.
This way, your clients both online and off can conveniently make payments via credit card. Not only will it be easier for them, it will be faster for you since you won’t have to wait for checks to be written, processed, and mailed.
In my practice in order for anyone to be able to make an appointment I require a credit card on file. It is also my rule that services such as metabolism testing require a deposit. By having the ability to accept payments online through my website I am able to streamline the whole payment process. I cannot tell you how much this simple process has increased the efficiency of my practice.
Currently, I use the merchant service Square. It is user-friendly and can be integrated into most online shopping cart platforms. The credit card scanner plugs directly into the headset plug on your iPhone, so you can collect payments at the time of the service.
There are numerous merchant account options available to small business owners like yourself. I would first check with your current bank and see if they offer merchant services. If you are a loyal customer they may give you a break on your rates. Then, shop around and see what other companies are offering for rates.
Here is a list of 7 different popular merchant accounts and their respective rates.
Generally, each time you swipe a client’s credit card there is an associated fee. For example with Square, it is 2.75 %. So say you run someone’s card for $100 – this means that only $97.25 will be deposited into your bank account after Square collects its fees. It, therefore, costs you $2.75 to use the service.
Holy Toledo! I think that enough for now 🙂
In closing, the steps outlined here are easy and relatively inexpensive and they can make a HUGE difference in the success of your nutrition private practice. So consider each one carefully and think about incorporating them into your business plan. It will show potential customers that you mean business.