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EHRs and QuickBooks

Updated: May 13, 2023




How do your EHR system and QuickBooks Online work together? Most practices will use an Electronic Health Record (EHR) software to bill insurance, write notes and much more. Whether you use Simple Practice, Therapy Notes, or another EHR, it can be challenging to keep track of your finances since an EHR is not an accounting software. We’ve got a simple guide to tracking your income. Let’s get to it! QuickBooks Online (QBO) is the #1 small business financial software. It makes sense that it would be popular among therapy practices. QBO is NOT HIPAA compliant so we do not recommend using this for billing–and protected health information should never be in QBO. Actually, most financial softwares out there are not HIPAA compliant.


Billing should always be done within your EHR, and should not be duplicated into your accounting software. HIPAA compliance is also the main reason your EHR won’t integrate directly into your accounting software. As a reminder, the EHR system will hold all your accounts receivable and billing data details–while QBO will reflect a summarized version of your income.


If my EHR can’t integrate with my accounting software, how do I track my income? You’ll want to make sure your cash basis income is reflected in your accounting software. Under cash basis accounting, income is recognized when it is received, not when it is earned. For example, if you see a client in January but receive the session payment from their insurance in February, the income is recognized in February.

You’ll record deposits in your accounting software when they are received in your bank account. Reconciling your payments to your deposits

On a regular basis, you’ll want to audit that the payments listed in your electronic remittance advice (ERA) were actually received. This can also be done by your biller if they have access to your bank statements. It typically will not be done by your accountant.


If you don’t want to go through line by line, you can also compare your EHR's income report against the income recorded in your Profit & Loss. It’s completely normal for the numbers to not be exactly the same due to deposit timing, but they shouldn’t be wildly different. We typically expect to see 1-3% variance, so if the variance you observe is more, it’s time to go line by line to look for errors or missing payments.


What to do in QuickBooks Online:

In QBO, you’ll want to first set up your Products & Services to track income in a way that makes sense for your practice:

  • Service Type - Service Income (mapped to an Income Account)

  • (Optional) Service Type – Co-Pay Income (mapped to an Income Account)

When a deposit is received, simply enter the Insurance vendor as the Client name, and record the deposit to Service Income.


Credit Card Processing fees

Depending on your EHR, your credit card fees may be paid separately (TherapyNotes) or withheld from each payment you receive (SimplePractice). If credit card fees are withheld from each transaction, you’ll need to add an adjustment to your accounting software at the end of each month or at the end of the year. Small practices may choose to adjust each deposit, but that quickly gets unruly.


Once each month, run the Revenue report in SimplePractice and calculate the total credit card fees. Then you (or your bookkeeper or accountant) will add a Journal Entry in your accounting software. It will look like this:


Debit: Credit Card Fees


Credit: Service Income


Let’s look at an example: You process a $20 co-pay in SimplePractice. You receive a deposit of $19.71. The journal entry will look like this:


Debit: Credit Card Fees $0.29


Credit: Service Income $0.29


This will increase the Credit Card Fees expense by $0.29 and Increase Income by $0.29. The net income or profit won’t change at all.


Doing this will ensure the 1099s you receive at the end of the year will match the revenue reported in your accounting software.


What if I want to use an outside payment processing system to save on credit card fees?

In short, don’t. You might save a few pennies for each transaction, but you (or your team) will spend a whole lot of time recording the payments in your EHR. It’s also incredibly easy to make a mistake, which can snowball into your Accounts Receivable report being incorrect and useless. Save yourself the headache, and process co-pays directly in your EHR.


Need more assistance?


We’ve outlined some of the basics here, but there is so much more to tracking your income. If you are needing assistance with other situations–wanting to sell products, additional services like coaching or track sales tax–whatever it is, we can help customize your setup. Schedule a free consultation with one of our team members here!



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This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney or advisor regarding your particular facts and circumstances. GreenOak Accounting is an accounting firm that specializes in working with counselors and therapists in private practice. We provide monthly accounting & bookkeeping services, 1-time services and online courses. For more information on our specialized services for therapists please visit https://www.greenoakaccounting.com/our-specialized-services-for-therap

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