How to Start a Private Practice [The Sustainable & Pleasurable Way]
Takeaway: Starting a private practice can be exciting and nerve-wracking at the same time. If you’re anything like I was at the start of my private practice journey, you’re thrilled at the idea of feeling more independent but also daunted by everything that goes into running a business. I’m here to walk you through how to open a private practice that’s aligned with your needs and values–mentally, emotionally, and financially–all while experiencing pleasure during the building process.
In this post, you'll learn all the things no one talked about in graduate school. I'll cover the legal, professional, and logistical requirements for starting a private practice, typical costs you'll encounter, and a few ways to make the process easier and more pleasurable.
P.S. Prefer to listen to my tips instead of reading? Check out episode 43 of my podcast where I share my step-by-step guide on starting a private practice in 2024.
Building your practice should be enjoyable. Here’s how to prioritize pleasure in the process.
Running a private practice is full of challenges but that doesn't mean it should be joyless. Despite what you learned in grad school, you are allowed to make money as a mental health professional and have fun doing it!
As a small business owner, you have the unique opportunity to create a fantastic working environment for your employee (you!). Start your private practice off on the right foot by crafting one that caters to your needs and interests. This isn't selfish. Prioritizing your own mental health is the best way to guarantee that your clients receive the best possible care.
Here are some tips for private practitioners that ensure you'll have a thriving practice you love!
Prioritize work life balance.
One thing you'll quickly learn about being your own boss is that there is literally no end to the work you could do on your business. This means it's up to you to establish boundaries around how much time you spend working on your business. Decide what tasks you'll focus on before you start working and stick to your plan. This will save you tons of time in the long run and make your work more pleasurable.
Make decisions you'll still love next year.
When I was starting my private practice in San Francisco, it was very popular to have an office space downtown. You would even hear people say things like, "No one wants to meet with a therapist who's not downtown."
But I HATED downtown and wanted to have an office much closer to my neighborhood. And you know what? It all worked out. I found a beautiful office within minutes of my house and I am so glad I didn't give into a decision based on fear. My clients didn't mind coming there either.
Celebrate EVERYTHING.
Let me guess: you want a full caseload? More clients? These are fantastic goals (this blog is going to help you reach them), AND so many things happen before and between hitting these goals.
If you only ever count new clients as a win, you'll find being a private practice owner isn't so much fun. Do yourself a favor and celebrate every *little* step along the way. A solid mindset practice is a must for every counseling practice owner. These are often journaling and reflection practices and may also include somatic exploration and artistic expression.
If you want to develop or dig deeper into a mindset practice, join my free online community, Healing Money, and take advantage of my Daily Mindset course.
Get expert support early and often.
Nothing in your formal training prepared you for the business side of running a private therapy practice. But luckily for you, there is a wealth of support for private practices that can fill the gap.
You didn't teach yourself how to become a therapist in a vacuum. You shouldn't build your business in a vacuum either. Despite devoting years and thousands of dollars to building clinical skills, most therapists think they have to wing it when it comes to starting a new practice. Maybe you think you need to get a few more clients before you hire a business coach, make more money, or prove that you can do it on your own.
The truth is, having support from the very beginning will help you avoid countless pitfalls and develop business acumen much faster. Plus it will be more of a pleasurable experience knowing you have someone in your corner who is there to guide and support you through every step of launching your private therapy practice.
We're about to get into the logistical, nitty-gritty aspects of building a private practice, but in my opinion, what we've just covered makes the biggest difference. I always say that running a business is a path of deep spiritual development. It will activate and challenge you. This can be hard, but it's also an opportunity for deep healing.
So as you move through your counseling practice journey, know that you're not crazy if you feel like you're being challenged in ways you've never expected or if seemingly simple things feel hard. That's totally normal and there's help for that. Join my free community, Healing Money, listen to the podcast, get personalized support through one-on-one coaching, or enroll in my Liberated Business course.
My step-by-step guide for how to open a private practice
If you've been dying to leave that crappy agency, say goodbye to the group practice where you're not appreciated, or you're just ready to have more control and freedom over your work, this guide will take you through the steps you need to start private practice quickly and easily. I'll take you through the legal, professional, and logistical considerations the reader needs to open your own practice.
Legal requirements for starting a private practice
To start a counseling practice, you will need to complete a few legal items. These tasks are straightforward and most (if not all) can be completed online within one day and at a low cost. You'll find the SBA website to be incredibly helpful as well as your local Office of Small Business and any professional organization you belong to.
Choose a business structure.
Cost: Varies
Most therapists will choose to start a sole proprietorship as it's the most simple business entity. However, there may be certain tax advantages to choosing a different business structure. For instance, high-earning counseling practices might consider incorporating and filing taxes as an S-Corp. Check with your state licensing board or professional organization to see what types of business structures are available to you and check with a tax accountant to find out if you'd benefit from choosing one over another. My favorite accounting firm for solo practice owners is WellnessFi and for group practice, I love Private Practice CPA.
Get an Employee Identification Number.
Cost: Free
And EIN takes the place of your SSN on your tax documents and superbills. If you have a sole proprietorship, it's not totally necessary but many therapists prefer to use an EIN for privacy and security. You should never pay for an EIN as it's completely free and the process to get one takes just minutes through this government website.
Obtain a business license and choose a trade name.
Cost: Varies
Depending on the business structure you choose you may need to register your business with both your state and local government, both of which can be done online. You may be able to get support through your local Office of Small Business.
Choose a name for your private practice ensuring that it complies with your licensing board requirements. If you want to use a trade name, e.g. Calm Therapy vs Rogers Child Therapy, you'll need to file an FBN (fictitious business name) aka DBA (doing business as). Again, this process can be done online.
Get liability and malpractice insurance.
Cost: Varies
Private therapy practice owners must maintain malpractice and liability insurance. If you belong to any professional associations, check to see if they partner with an insurance company that offers a discount.
Create your documentation.
Cost: Free or included in EHR subscription
If you choose to get a subscription to a practice management system or EHR (electronic health record) service, you may have access to ready-made templates for documents like Informed Consent and Release of Information. If not, you will need to make or purchase your own. Your local professional organization may offer templates you can customize for your private therapy practice.
Ensure your practice is HIPPA compliant.
Cost: This may be an additional cost if your software is not already HIPPA compliant.
Make a list of all the technologies and software you will use in your practice and check to see that they are HIPPA compliant. Even if you aren't a HIPPA-covered entity, it's best practice to comply with this standard. When you use a telehealth, EHR, or payment platform made for private practitioners, those companies should ensure HIPPA compliance.
If you use a software or platform not explicitly made for therapists or mental health professionals, you may need to sign a BAA (business associate agreement) to ensure HIPPA compliance. Here's information on how to sign a BAA with Google.
A big fear therapists have about private practice is that they're going to get one thing wrong and the powers that be are gonna come after them and take away their ability to practice. It does not work this way. Believe me, I have grilled my accountant and CAMFT lawyers. Even if you do make a mistake, you can fix it. You would have to be incredibly negligent again and again for something truly terrible to happen. Go forth with courage!
Professional requirements for starting a private practice
To start a private practice you'll need to meet professional requirements that will take more time and thoughtfulness than many of the items on your legal requirements list. I'll walk you through the decisions you need to make and what to focus on.
Create a business plan.
Cost: Free
While not a requirement, taking the time to craft a solid business plan can help you move through the early days of setting up and growing your business. A business plan often includes market research, analysis of how many clients you need, business expenses, financial projections, and a marketing plan for attracting prospective clients.
Find a supervisor if you're pre-licensed.
Cost: Varies
In many states pre-licensed therapists are able to start their own businesses. But if you're still acquiring hours toward licensure, you'll need to have a clinical supervisor. Always check with your state licensing board for supervision requirements.
Do a search for therapists in your area. Some will state on their websites that they provide clinical supervision. If you find a supervisor you're excited to work with but don't see supervision listed on their website, feel free to contact them and inquire.
Get a National Provider Identifier.
Cost: Free
Your NPI is a unique identifier that you'll use if you accept insurance or provide clients with receipts to submit to insurance for reimbursement. It is completely free and you can obtain one through this website. You'll need your social security number and licensing information.
Find office space for your practice.
Cost: Varies
While it is still possible to have a fully remote therapy practice, especially if that's something you desire, many therapists have chosen to return to the office and there is a segment of therapy clients who will prefer to meet in person. Make sure to choose an office location that is not only convenient for your clients but is located in an area that you will love going to day after day.
Next, you'll need to choose office furniture that's comfortable physically and visually. And don't neglect your waiting room! This doesn't mean you have to spend tons of money. You can purchase furniture and decor second-hand or buy it new at a low cost. If you do choose a fully remote practice, pay extra attention to creating a confidential space.
Choose a practice management system.
Cost: $10-170/month
This is where you'll keep you'll maintain all your client documentation like progress notes and treatment plans. Most EHRs include online scheduling, automatic appointment reminders, an integrated telehealth platform, payment processing, and insurance claims submissions. New platforms are always being created, so do a quick search for the pricing and features of various platforms to see what suits you best.
Once you've completed these professional requirements, you're one step closer to welcoming new clients into your private therapy practice.
Logistical requirements for starting a private practice
The items in this category are by far the most creative. This is where you get to fully customize your practice which is both a blessing and a major responsibility. The decisions you make regarding the logistics of your private practice determine how sustainable and pleasurable your practice will be.
In this section, I'll cover things like marketing strategies, what to look for in a business bank account, how many clients you should have in your counseling practice, and links to a ton of resources so you can delve deeper into topics of your choice.
Make decisions about the financial aspects of your private therapy practice.
Cost: Free
This includes things like setting your private pay fee, crafting your cancellation policy, deciding if you want to accept insurance or offer a sliding scale, and determining how many clients you'll see overall.
Every factor listed above works together to determine whether or not you make enough money to sustain your business, afford your life, and enjoy running a private therapy practice. While your feelings and preferences are important, your private pay fee and cancellation policy aren't the sort of thing you should "vibe out."
You might be tempted to base these decisions on what other therapists in your area are doing and though that's not the worst idea, it usually fails to take into account your unique needs, preferences, and goals.
One of the best things about being a private practice owner is that you have full freedom to make it a fantastic place for you to work. Don't miss that opportunity by deferring to others.
Kick good therapist conditioning to the curb and use my fee calculator and private practice design tool and read this blog for a step-by-step guide to setting your fee.
Open a business bank account.
Cost: Varies, but can be free
You're gonna need a place to put all that money! Make sure you have a separate bank account for your business income regardless of what business structure you choose. I love using the Profit First model for my business finances. If would like to take a Profit First approach to your business, look for a bank that will allow you to open multiple accounts, has no fees, and no minimum balance requirements. I use a local credit union for my business and it works great!
Determine your working hours.
Cost: Free
If you knew you could have the exact hours that make the most sense for you, what would they be? Don't be afraid to stick to your boundaries when clients request times outside of your office hours. Your longevity as a mental health professional depends on your commitment to your own well-being.
My approach to private practice is to have a small number of clients that are paying a higher fee. This won't be the right approach for every therapist but if you're in a place in a life where a small, streamlined caseload makes sense for you, trust yourself and choose hours that work for you. Check out this blog post on the caseload size and private practice schedules.
Identify your ideal clients and create compelling messaging.
Cost: Free
Yup, the dreaded niching conversation. I know this can be so annoying to hear but the reason why you can't escape it is because it just works. When I work with mental health professionals, this is an area where we spend a lot of time. The good news is that finding your therapy niche will actually make you happier and more fulfilled clinically.
Here's what works: get way more specific than you think you need to. You'll know you've found your best-fit client when it feels easy to talk to them. Plus, they're typically related to your journey. Listen to Episode 4 of The Bad Therapy Show, and use Building a StoryBrand to help you craft your messaging.
Create a marketing plan.
Cost: Varies
The business side of your practice is just as important as the clinical side and, yes, that means marketing should be a priority. A great marketing plan will be overwhelm-free and should reliably turn potential clients into new clients.
Start by picking simple practice marketing strategies and allow yourself to grow in this area over time. A low-tech strategy like networking will never go out of fashion. Identify other professionals and referral sources in your area and reach out to them consistently.
If you want a higher-tech strategy consider search engine optimization. My favorite SEO firm for therapists is TherapieSEO. (They're who did work on my website!) Whatever you do, make sure your marketing efforts are consistent if you want to attract and convert your ideal client.
You did it! You're now familiar with all the major steps of starting private practice. Bookmark this blog so you can come back to it again and again as you launch your private therapy practice and before you know it you'll have clients coming.
(P.S.) Want even more tips?
Check out these free podcast episodes!
Episode 5: Marketing Mindset Shifts You Need to Make to Fall in Love With Marketing
Episode 6: Mastering Your Marketing Strategy
Episode 39: Why Lowering Your Fees Isn’t Always the Answer
How much does starting a private practice in counseling cost?
Starting a private practice will cost you very little, but you'll likely make significant investments over the course of running your practice. While this is considered perfectly normal for other businesses, therapists often have the belief that they should invest as little money as possible.
This approach can hamper your growth and make things way harder than they need to be. I love how Rachel Rodgers approaches smart financial investments in her book We Should All Be Millionaires. That being said, you can keep the start-up costs very low and make larger investments in your private practice over time. I'll share average costs, my tips for saving money, and where I think you should splurge.
All costs below are annual unless otherwise specified.
Registering your business.
Cost: ~$200
Registering your business and filing a DBA can typically be done for less than $200. Costs associated with registering your business will be determined by the type of business entity you choose, your state, and whether or not you choose to use a trade name for your business.
For instance, LMFTs in California can only form sole proprietorships or professional corporations. LLCs are off-limits. In California, you have to register a sole proprietorship at a local level but not a state level, reducing your registration costs. If you choose to form a professional corporation, you'll need to pay additional fees to register with the California Secretary of State.
Check with your state licensing board to find out what business entities are available and with your state and local government for registration costs.
Liability and malpractice insurance.
Cost: ~$300
You absolutely must have insurance as a practicing therapist but it probably won't cost you more than $300 per year especially if you regularly meet law and ethics and risk management CEUs or if you can apply discounts from membership in a professional organization.
Membership in a professional organization.
Cost: ~$95-$260
Membership in a professional organization is not at all required but they can be worth the money. Many come with perks like discounts on CEUs, EHRs, insurance, and access to staff lawyers. Organizations like the National Association of Social Workers and the California Association of Marriage and Family Therapists even offer discounted membership rates for pre-licensed therapists.
An email address with your custom domain.
Cost: ~$70
You're probably going to want an email address at your website domain. The route most therapists choose is creating a Google Workspace account which costs as little as $6 or even less with my Google Workspace discount code.
Building and hosting your website.
Cost: ~$200-$2,000 and up
Think of your website as, at minimum, a digital business card, and at best a powerful marketing and conversion tool. We are now in a world where having a website is a minimum requirement but I don't say this to scare you. You can start with something basic and inexpensive. And in fact, that's what I would suggest if you are at the very start of building your practice and/or still don't know how to define your niche.
If you'd like to build your own website and use a premade template, you can get started for as little as $200. If you'd like to get a unique template or have a professional build it for you, you'll likely pay several thousand dollars.
Therapist directories.
Cost: $0-$300
The jury is out on therapist directories. Some people have great success and others never see a single client come through. Placement on most directories will cost you around $300 per year. And remember being found in a directory is usually just one step of the process. A potential client will probably still visit your website and have a consultation call with you before deciding to start therapy, so make sure you're whole onboarding process has been given the care it deserves.
That being said, I am a big fan of Best Therapists. (Full disclosure, I'm their Clinical Advisor because I love them that much.) Best Therapists prioritized therapists' wellbeing and it was built by the SEO experts behind TherapieSEO. In a constantly changing digital landscape, it's important to know you're working with the best of the best.
EHR, telehealth, and payment processing platform.
Cost: ~$350-$1,000
Depending on the EHR you choose, secure video, payment processing, and informed consent documents may be included in the service. Or you can DIY it using a Google Workspace account after signing a BAA to ensure HIPPA compliance. Go here to use my discount on your first year of Google Workspace.
Renting an office space.
Cost: ~$500-$2,000 per month
If you plan to meet with clients in person, look for an office that makes you feel legit and is located in an area you'll enjoy spending a lot of time in. If you're renting by the day, you'll likely spend more per day, but less overall. If you choose to rent an office full-time, look for one that allows you to sublet it to other therapists. If you don't plan to use it every day, you may be able to rent it out to other therapists enough to cover most if not all of your costs.
Accounting services.
Cost: $0-$3,000
Look, if you can do your own accounting, I applaud you. This was not for me and I realized pretty quickly this was one thing I was very happy to pay someone else to do. You can 100% DIY it with a free Wave account or Quickbooks for $72 per year or hire an accounting firm like WellnessFi or Private Practice CPA for around $250 per month. In case it wasn't clear, this is an area I'd recommend you splurge.
Business coaching.
Cost: ~$2,000-$18,000
Business coaching can be a total game changer for therapists starting private practice. One of my private coaching clients achieved consistent 5-figure months in their first year in private practice after deciding to hire me. Members in Liberated Business have tripled their income.
While you don't have to get professional support in your business, I (obviously) think this is a place you should splurge if for no other reason than you deserve to have the best support. Working with a business coach could cost as little as a few hundred dollars if you're purchasing a masterclass or more than $1,000 per month if you're working with them one-on-one. Working closely with a therapist who has been right where you're at, has navigated the same challenges, and has the experience of helping so many therapists achieve private practice success can be a game-changer.
As you can see, there is a huge range in terms of how much you can spend when launching your private practice. On the low end, you can spend under $1,000 to get your business up and running and ready to welcome clients. Remember that making thoughtful investments in your business is always a good idea.
Get support building a thriving private practice that aligns with your values
You don't have to start a private therapy practice on your own. There's no award for the toughest, most stressed-out therapist. If you want to speed up your progress and enjoy more of the journey, the best way to do that is with a trusted business coach by your side. And I have something for you regardless of your budget, goals, and learning style. Take this quiz to find out what kind of support is best for you and go to the work with me section to learn more about my current offerings, including 1:1 coaching, my Liberated Business course, CEO days and retreats, and creating scalable offers for therapists.
This post is for informational purposes only and does not constitute legal, business, or tax advice. Consult your own attorney, business advisor, or tax advisor with respect to matters referenced in this post.
