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Calculating payroll for group practices

Calculating payroll for group practices

Managing payroll varies from practice to practice. For example, some teams pay clinicians an hourly rate, others a percentage, and others based on the number of appointments they conduct in a given time period.

To calculate payroll for multiple clinicians in a group practice, you can use the Income allocation report, which includes the current payments and past pay periods for your practice. For details about this report, see Navigating the Income allocation report.

If your practice pays clinicians by total session, we recommend using the Attendance report to help calculate payroll. If you pay clinicians based on service code, we recommend using the Appointment status report. For more information on these reports, see Understanding your clients and appointments reports.

In this guide, we’ll cover:

Note: In April of 2024, we began a phased rollout to customers with an update to the Income allocation report. Once you get the updated report in your account, you’ll be able to toggle between the old and new versions of the report until the new version becomes permanent on May 23, 2024. toggle.simplepractice.incomeallocation.png If you don’t see this in your account yet, but would like to use it immediately, please submit a help request.


Income allocation report overview

Group practices have three tabs in the Income allocation report: Current payments, Insurance payer allocation, and Past pay periods.

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The Past pay periods tab shows a collection of financial snapshots to help you manage your payroll. For additional information on the Past pay periods tab, see Using the Past pay periods tab for group practices.

You can export data from the Income allocation report. For more information on exporting, see Exporting the Income allocation report.

Note: Client payments entered into SimplePractice need to be applied to an invoice within a client’s file, and insurance payments need to be allocated to a date of service. If an appointment hasn’t been invoiced, the payment can’t be allocated and will remain as an unallocated payment. Unallocated payments won’t be included in the Total allocated to clinicians or Total allocated amounts. To learn more about how payments are allocated to invoices, see Unallocated payments.

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Note: Amounts in the Income allocation report may not match amounts in the Income report. This is because the Income report tracks payments whether or not it’s been allocated to an invoice, while the Income allocation report tracks income that’s been allocated to an invoice or date of service. For more information on how unallocated payments appear in the Income allocation report, see Viewing unallocated payments.


Closing pay periods for calculating payroll

Reviewing past pay periods and checking for adjustments is a necessary process in any payroll workflow. If you’re part of a group practice, you can close pay periods depending on how often you run payroll. Most Account Owners choose to pay their team members either every two weeks or once a month.

Closing pay periods creates a record of all allocated payments during that time period. Any changes to income allocated during that time period will be noted as adjustments in the following pay period. After a pay period has been closed, it will appear in the Past pay periods tab.

Note: For information on using the Past pay periods tab, see Closing pay periods for group practices and Using the Past pay periods tab for group practices.

This section provides information on closing pay periods manually and and setting up pay periods to close automatically:

Tip: The Income allocation report tracks gross income and doesn’t include Online Payments processing fees.

When choosing when to close pay periods, keep in mind that AutoPay runs between 12 AM and 2 AM in your local timezone. Payments that were processed on the last day of the pay period will be included in the next pay period.


Closing pay periods manually

To manually calculate the correct pay for team members for a set amount of time:

  • Navigate to Settings > Team > Payroll
  • Select Manually in the dropdown (this is the default selection)

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  • Click Save changes

Note: This is only accessible to the Account Owner, Clinicians with entire practice access, practice billers, and practice managers who have been granted additional financial reporting permissions.

Then, navigate to the Income allocation report. To do this:

  • Click Analytics in the left navigation menu
  • Select the Reports tab
  • Click Income allocation
  • From the Current payments tab, select the date range of your pay period
    • Each date can only be associated with one pay period

Note: It's not possible to close a pay period that includes the current date. The latest date you can include in a pay period would be the day before it’s manually closed.

  • Click Close pay period at the end of each pay period

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Important: To include the history of all invoices and claims paid during a specific date range, it’s recommended to close your pay periods regularly when calculating manually. If you delete a closed pay period, this will result in the deletion of pay periods after that date.

When deleting a closed pay period, you’ll receive a modal confirming this action:

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Closing pay periods automatically

You can also schedule pay periods to close automatically. This can help make calculating payroll easier if you’re part of a group practice.

To do this:

  • Navigate to Settings > Team > Payroll
  • Select one of the automatic options from the dropdown menu

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  • Choose the day of the week or month you’d like to the pay period to close automatically
  • Click Save changes

The schedule options include:

Weekly

Weekly pay periods automatically close every week on the night the Account Owner selects.

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Biweekly

Biweekly pay periods close automatically every two weeks on the night the Account Owner selects.

  • Once selected, pay periods will begin closing every two weeks from that date

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Semi-monthly

Semi-monthly pay periods close automatically on the two days of the month the Account Owner selects.

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Monthly

Monthly pay periods automatically close on one day of the month the Account Owner selects.

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Note: If the Account Owner selects the 29th, 30th, or last day of the month for semi-monthly and monthly pay periods, this message will appear: Pay periods will be closed on the [ 31 ] day of the month or on the last day for months with fewer days.

When the pay period auto-closes, it can appear differently depending on certain conditions:

  • If no pay periods have been closed before, the pay period will include the last 30 days since it's the default view of the Income allocation report
  • If pay periods have been created in the past, the start date will automatically adjust
    • This means the pay period's end date is the day it automatically closes, and its beginning date is the day after the last pay period was closed
  • If automation is set up, the Past pay periods tab will show the date that the next pay period is set to close

Implementing best practices for managing payroll

If you plan to pay your team members based on when the practice receives payment, we have included some best practice tips below.

Note: If the needs of your team are complex and require a full-featured payroll system, we recommend that you use another billing platform.

In this section, we’ll cover:


Invoicing and client payments

Your ability to identify and allocate payments starts with invoicing. 

Payments will be unallocated and excluded from the clinician's total in the Income allocation report if an invoice’s total fee is too large and there aren’t enough payments to cover the invoice. Instead, we recommend creating individual invoices for each appointment, rather than one invoice that contains many appointments.

For example, an invoice is created for two appointments totaling $300. A payment is added for $150 for one of the appointments. The $150 won’t appear on the report because it hasn’t been allocated to an invoice yet. The $150 is therefore considered unallocated.

Note: For more information on how unallocated payments appear in the Income allocation report, see Viewing unallocated payments.

A client’s full payment for an invoice must be recorded in their account for the invoice to be marked as Paid. We also recommend invoicing and collecting full payment at the time of service. If a payment is added to a client’s file, but that payment isn’t allocated to an invoice, it won’t be included in the Total allocated to clinicians or Total allocated amounts.

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Note: For more information about invoicing, see Creating invoices.


Unallocated client payments and credits

Unlike adjustments, the amounts on the Unallocated client payments and credits report don’t need to be factored into your clinician’s totals. This report tracks the income that was received or removed outside of the pay period.

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The best way to avoid having clients on this list is to create invoices daily and collect payments at the time of service. You can track the status of an invoice in the Appointment status report.


Accounting for adjustments

At the end of each pay period, you can view your records to compare changes between pay periods. Adjustments happen when you use any payroll system, and comparing your current pay period to past ones can help you stay on top of the changes.

If any billing information changes after the pay period is closed, that change will be reflected as an adjustment on the current pay period once it’s locked. They can either be positive or negative amounts.

The amount in the Adjustments column of a past pay period will be included in the Total pay amount.

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A positive adjustment is added to, and a negative adjustment is subtracted from the clinician’s total.

A positive adjustment means income from services rendered have increased for the amount that has already been tracked for a clinician in a previous pay period. A positive adjustment occurs when:

  • An invoice is reassigned to a clinician
  • A client payment is added and backdated 
  • A manual insurance payment is added and backdated

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Note: For information on insurance adjustments, see Managing insurance adjustments.

A negative adjustment means income for services rendered have been reduced for what has already been tracked to a clinician in a past pay period. A negative adjustment occurs when:

  • A refund is issued for an invoice outside of the current pay period
  • A client payment is deleted, edited to be a lesser amount, or the date is changed
  • An insurance payment is deleted, edited to be a lesser amount, or the date is changed
  • An invoice is deleted or assigned to another clinician

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For more information on the Past pay periods tab, see Using the Past pay periods tab for group practices.

To help avoid adjustments:

  • Create a fee adjustment invoice for a change in client responsibility instead of deleting invoices when possible
  • Refrain from backdating insurance payments outside of the current pay period
  • Add client payments to invoices within the same pay period
    • While the Income allocation report will still track payments added to invoices from a different pay period, the payment will only appear as part of the clinician’s income during the pay period when the invoice is marked as Paid

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