Start a Private Practice
Are you dying to start a private practice in counseling but you have no idea where to start? I got you covered with a comprehensive list of everything you need to start a private practice.
And yes, I break down each item in this list step-by-step. This is a lengthy beast of a page, but boy I would have given an arm and a leg to have a page like this when I was first starting out. Do everything on this list and you WILL be all set up for private practice and ready for your first clients!
Start a Private Practice In Counseling
If you find it helpful to have a checklist to print out and check off items as you complete them, I made a handy dandy printable checklist just for ya’ll. I know it might be easier to keep track of a piece of paper rather than always needing to pull up this page each time you want to remind yourself what’s next on your list. Here’s the link (when you click on it, the PDF will automatically download):
This is a really meaty page because I want it to have everything you need on your checklist when starting a private practice in counseling. Here’s a handy table of contents in case you get a bit lost:
1. Is Private Practice Right for you?
Okay, let’s face the truth: you probably want to jump ahead to the next step so you can dive straight into private practice. But DON’T SKIP THIS STEP! Private practice is not for everyone. Better to find out if counseling private practice is a good fit for you before dropping hundreds or thousands of dollars into it.
Start with my article and video about whether private practice is right for you to make sure you’re ready before carrying on to the next step:
2. Create a Private Practice Business Plan
A key element in starting a private practice is understanding that private practice is in every way a business. And every business needs a business plan in order to be set up for success.
Not sure where to start? Check out my article and video about creating a business plan in private practice:
If you need a little help with setting your budget, check out my videos on the startup costs of private practice:
3. Build Your Website
Yep, we’re definitely in the 21st century now. If you want to have any credibility as a business, you need to have your own website. Fortunately, there are so many options out there that there’s bound to be something that’s a perfect fit for you.
Don’t know where to start with your website? I have a comprehensive article and video breaking down all the popular website builders to help you know where to start:
4. Find Your Niche
It’s important to get to this step pretty early on. Your niche influences your website content, factors to look for in an office, and your marketing strategy.
Want to know what a niche is, why it matters, and how to develop your niche? I go deep into the trenches of all you need to know about finding your niche in this article and video:
5. Choose a Business Entity
I know you’re thinking: uh, what the heck is a business entity? I got ya covered! Realistically, most therapists will either be a Sole Proprietor or an LLC, but there are other options available to you.
No idea what I’m talking about? I break down what you need to know about business entities in this video:
6. Buy Liability Insurance
Time to dig a little deeper into those pockets! Yep, liability insurance is a big-ticket item but it’s an absolute MUST-have going into our field. Fortunately, there are often discounts for early-career therapists.
You likely need to purchase liability insurance before signing a lease, as many landlords require proof of insurance before accepting a new tenant. But insurance is quick to sign up for and you can print out proof of insurance right away once you sign up. Of course, you do have to pay the annual fee all up front! (aka: cha-CHING!)
7. Find a Therapy Office
This is the step of starting a private practice when things start to feel real. To me, the office was the symbol of legitimacy when I felt like: I guess I’m really doing this!
If you’ve been following my content for awhile, you know I always suggest starting out part-time in private practice rather than diving into full-time private practice head first. The initial investment is much more manageable and you’re far less likely to run into cash flow problems if you don’t end up turning a profit right away.
Finding a therapy office is at least as stressful as finding a place to live. Let me help you take the mystery out of it! Check out my article and video all about finding a psychotherapy office space:
If you are starting private practice full-time, you can also begin searching for furniture while you complete the remaining steps. Want a little help designing your office? I have a video for that! Check out my video Private Practice Office Design on a Budget
8. Get a City Business License
Every city has it’s own rules and requirements around city business licenses. You can do a Google search of “City business license [your city name]” and you should be able to find your city government’s webpage and requirements.
9. Set up a Business Bank Account
I know most therapists don’t do this, but there are so many wonderful advantages to setting up a separate bank account! Here’s an overview of some of my favorites:
- Easily keep track of your cash flow (Expenses and Revenue)
- Stay on top of what expenses you can deduct from taxes
- Have an awesome paper trail for the IRS in case you ever get audited
- Reap the benefits of certain business accounts (e.g., cash back for money spent in certain categories, qualify for business loans, etc.)
- Make it easier to protect your personal assets in a lawsuit
- Have your office address listed on checks instead of your home address
If this step seems overwhelming, it’s not too complicated! To learn more, check out my video all about the benefits of opening a business checking account and how to do it:
10. Get Great Headshots
YES! I still can’t believe how many therapists listed on Psychology Today have a grainy photo that clearly was from a party with their loved one cropped out of the photo.
Ya’ll. We are professionals. We can do better than that! Even if you don’t want to fork out any money and you don’t have a fancy camera, put in the time to get ready and have someone take a photo of you in nice lighting using a smartphone. So often clients tell me they picked me because I “looked like a nice person” in my photo. Though I like to believe all the effort I put into my website content is what’s paying off, I can’t deny my headshots are a key factor in my marketing strategy.
By the way, if you’re that person with the grainy cropped photo as your professional picture: I’m sorry for my blunt words. But I believe in you! And I believe your business will thrive all the more if you update that picture!
11. Email and Phone Setup
Though you might be tempted to use your personal phone number and email to start, let me steer you away from that option. There is just too much of a mess waiting to happen with HIPAA if you go that route.
There are several phone options available to use, ranging from free to pricey. Same with email, but I can’t rave enough about Google for Business. You can have a HIPAA-compliant email account for just five bucks a month. (I’ll share more on this subject in the future!)
12. Set Your Rate
I feel like this is one of those topics that therapists rarely talk about but that everyone thinks about a lot: how much do you charge in private practice?
Setting your rate shouldn’t have to be a guessing game. You can figure out how to set your rate so that you charge competitively for your area and credentials. I have an entire blog post dedicated to setting your hourly rate in private practice:
Just be sure not to undercharge! Now is also a good time to decide if you will offer a sliding scale.
13. Decide if You’ll Offer Teletherapy Services
This is such a hot topic right now! I admit I have so much to learn in this arena, as teletherapy is not an emphasis of mine.
14. Informed Consent and Beyond
Before you meet with your first client, you need your key forms ready to go before anyone agrees to meet with you for therapy. It’s time to get your informed consent up and running.
My website is still a work in progress. I hope to have more information on forms in the future. For the time being, Dr. Maelisa Hall’s article with Practice of the Practice covers this topic in detail: Starting Your Paperwork Off Right in Private Practice.
15. Charting: Paper or Electronic?
You have a decision to make about whether you prefer to do paper charting or if you’d like to go with an electronic practice management system. Of course, you can also start with paper and then migrate over later if you choose.
I can’t vouch for any EHRs myself. I had a bad experience several years ago with a free EHR system and I never looked back…
16. Insurance or Cash Pay?
This is a big question! Of course, you can always start out accepting only cash pay and add on insurance panels later. Keep in mind that once you’re on an insurance panel, it’s not so simple to back out of it. You usually need to phase out slowly unless you don’t mind dropping care for several of your clients at once.
Not sure how to decide? I have a video covering the pros and cons of accepting insurance vs cash pay in counseling private practice:
This is also a great time to decide if you would like to be available as an out-of-network provider. Just a year or two ago, this used to be as simple as providing a superbill for clients to submit to their insurance for reimbursement. But lately insurance panels are asking me to provide additional paperwork to prove my credentials and to confirm that I provided the services my client claims I provided.
It’s a little bit of extra work up front, but it’s a great way to allow clients to apply insurance benefits towards therapy if you’re not in-network on any insurance panels.
Stay tuned in the future to learn all about superbills – the detailed receipt insurance requires from your clients in order to apply for out-of-network benefits.
There are other third party payers for counseling, including victims of crime compensation (links to the CA website) and workers’ compensation, to name a couple of examples. Feel free to explore your options before deciding who to accept payment from.
17. Expense Tracking
Running a private practice in counseling costs a lot of money! It’s important to have a way to keep track of both your expenses and your revenue. This will make paying taxes less of a pain in the you-know-where. It also will help you greatly if you ever get audited by the IRS.
For me, logging my expenses and revenue at the end of every month is an important ritual in seeing what strategies are worth continuing to pay for and where I might like to change my focus in the future.
After I tally my expenses and revenue for the month, I subtract percentages for my retirement plan and taxes. The leftover is the paycheck I cut myself for the month. Easy peasy!
This process doesn’t have to be fancy. I’m sure there’s software you can pay for to do this, but I just have a spreadsheet in my Google drive that I use to keep track of my finances. It works!
18. Accepted forms of Payment
Alright. This section is for all ya’ll out there who are afraid of accepting credit cards.
Credit cards aren’t scary!
I used to work in a group practice of 15 therapists where only a small handful of us accepted credit cards. The excuse I heard from therapists who only accepted cash or check was that they didn’t want to pay the fee that companies charge for running someone’s card.
Here’s the thing: it’s only about once a quarter that someone will pay me in a form of payment other than swiping plastic. In other words, EVERYONE pays with card.
Also, back when I was an intern in private practice, I only accepted cash or check payments. People forgot to bring payment so often that I spent a few hours every month chasing down outstanding balances.
My suggestion: when you set your rate, assume everyone will pay with card and tag on an extra $5 to what you would charge if everyone paid cash. You will earn more in the end as it’s incredibly inconvenient to not accept card and you’ll end up never receiving payment for many sessions. Because who lugs around their checkbook or giant wads of cash anymore?
There. That was my two cents.
Lastly on this topic: Now is a great time to consider accepting HSA payments. A significant amount of my clients pay for counseling using Health Savings Accounts (it charges just like a credit card!). I’m able to do this using my Square reader. You do have to do a bit of setup on the back end to make it work. Want to learn how? I cover it in my article and video all about how to accept Health Savings Account payments in private practice:
19. NPI and EIN
National Provider Identifier (NPI)
What’s an NPI? NPI stands for your National Provider Identifier (if you’re in the United States). Every health care provider has an NPI number, which means you already have one if you’ve offered therapy services anywhere.
Why does your NPI number matter? It’s a way of keeping track of each health care provider in the nation. It’s almost like a social security number, but it’s publicly accessible. Most often I need my NPI number when interacting with insurance companies. It’s also a key piece of information to include in a superbill.
Employer Identification Number (EIN)
If you operate as a sole proprietor, by default your social security number acts as your business identification number. You use this number primarily to identify your business for tax purposes.
However, using your social security number quickly presents an issue. When interfacing with insurance, they need to know your identification both through your NPI number and your EIN. If you don’t have an EIN, then you need to use your social security number for clients to apply insurance benefits towards counseling.
If you offer your clients a superbill for out-of-network billing, you need to put that number on the form. NEVER put your social security number on any paperwork you give out to clients! Instead, get an EIN. It’s fast, easy, and free. So why not?
Want to apply for an EIN? Here are the EIN application instructions on the IRS website. The whole process took me all of 20 minutes.
20. Screening Process
Before you’re officially open for business, you need to know what your initial screening protocol will be like. What will the funnel look like between receiving an inquiry from a potential client and scheduling an appointment with them?
Most potential clients initially contact me via email. My typical process is to schedule a free phone consultation to answer questions they may have and to ensure we’re a good fit to work together. I also encourage them to explore other therapists in the area to find the right fit before scheduling an appointment.
Want to learn more about how to do the initial phone screen? Check out my video where I walk you through developing a strategy that works best for you:
21. Confirmation Sequence
Once you schedule that initial call, it’s helpful to have a standardized confirmation sequence. For me, I ask permission to confirm our appointment via email. Within the email, I include information about where the office is located, fees, accepted forms of payment, and initial forms to complete.
If our appointment is scheduled more than a week in advance, I like to send a reminder email a day prior to minimize no-shows (no-shows are more common for the first appointment than future appointments).
22. Online Directories
Online directories get mixed reviews depending on who you talk to. My recommendation is to see how many directories offer a free trial and try to get a free listing with all of them. Once the trial is up, you can cancel any that aren’t paying off. Here are some of the more popular directories:
- Psychology Today
- Therapy Den
- Directory for Therapists
- Therapy Tribe
- Therapist Locator
- Network Therapy
There are also many directories that cater to specific specialties, such as EMDR, LGBTQ+, and Faith-based directories.
Also be sure to get listed with Google my Business. It’s completely free and it gives a HUGE boost to your practice. It helps with your website SEO (makes your page more likely to appear closer to the top of a Google search), and also pops up on Google maps.
You might also consider adding yourself to Yelp, Facebook, Instagram, and other directories to give your practice more credibility and make it easier for people to find. You can get a full list of such directories in Backlinkfy’s article, Top 50 Free USA Business Directories To List Your Local Business. I found a rainy afternoon and made free listings all over the internet!
23. Marketing & Beyond!
You’re now all set to begin marketing your practice so that you can start seeing clients! I’ll be building up my resources around marketing, so be sure to keep an eye on your emails for more marketing goodies. Here is an article and a couple of videos to get you started: