Congrats! You're thinking about starting a private practice...maybe. You're excited and terrified and really unsure about what to do next. This post will review setting up your practice and getting all your essentials in order before you really start building a caseload. 

How Do You Want To Make Money/Find Referrals?

Do you want to get on insurance panels? Work for a group agency? Have a sliding scale? See clients only for cash-pay rates? 

There are no right-or-wrong answers; many therapists combine different approaches, and they often change their approach as their practice evolves. Moreover, each method has its pros and cons. 

Cash pay may earn you the most amount of income and freedom, but you’re solely responsible for marketing and all ongoing expenses. Insurance panels, for instance, offer a steady stream of referrals. But, you may need to complete lots of paperwork, and the reimbursement rates might be low.

Group agencies often provide marketing and referrals, but your take-home pay will be lower than it would be if you did it on your own. Sliding scales are great, as long as you know your limits and how you intend to implement the scale. 

That said, it’s a good idea to start thinking about how you intend to practice. You’ll need to start gathering this information ahead of time.

Can You Take Agency Clients With You?

Usually, but let’s review a few things. 

Did you sign a non-compete clause? If so, this clause states that you can’t solicit clients of the current practice. HOWEVER, such clauses rarely are enforceable, and they don’t hold much weight in court. After all, clients have every right to terminate therapy at a specific location and move on elsewhere. 

In other words, clients have a right to follow you. Some therapists simply say they’re leaving the practice on (this date). If the client asks where they’re going, they may provide the appropriate contact information. If you are unsure how to proceed, it’s worth contacting your licensing board to discuss the legal and ethical requirements. You can also consult with an attorney. 

I know some therapists who use this workaround when leaving an agency. They tell the client they are leaving on (specific date). Then, the client asks where they’re going. The therapist says they cannot divulge that information, but the client can look on Psychology Today/Google/the therapist’s website to obtain it. 

Keep in mind that you should not reach out to old clients after leaving a practice. It’s their responsibility to contact you.

Have You Picked Anyone’s Brain Lately?

I recommend that you find three people who work in private practice in your local area. Ideally, they should be therapists who specialize in the populations that most appeal to you.

Market saturation is a myth. If you stand out at what you do, clients will come to you. Similarly, therapists have full schedules, take vacations, and need referrals all the time- they need to know who you are and what you do.  

Email these three therapists and ask if they’d be willing to have their brains picked. Offer to buy them lunch or compensate them with their hourly rate- this shows that you’re serious about your conversation. It also encourages them to potentially plan ahead!

Many people will gloss over this invaluable suggestion (it’s too scary!) but really consider it. Spending three hours chatting with local therapists about their practices and asking them the do’s and dont’s will help you streamline your work. It may offer way more insight than anything in this post will!

Should You Join Insurance Panels?

Insurance panels have numerous advantages. For one, they can provide a steady stream of referrals, so you don’t have to do aggressive marketing or networking. For two, you may have greater reach and accessibility to more clients. 

But insurance panels have their downsides. Insurance can require a lot of paperwork, lengthy application processes, and low reimbursement rates. 

Which Insurance Panels Should You Choose?

I can't tell you, and that's because it varies so dramatically in different regions. recommend contacting a few therapists in your area who accept insurance and asking them about their experiences. They will be able to give you the ins and outs of which ones they prefer working with (and which ones they don’t).

Keep in mind that therapists may be contractually obligated to withhold information about specific reimbursements. That said, they can still often provide general guidance.

You can also consider your targeted population and referral source. For example, if you want to work with teachers, consider what insurance companies the school districts in your area use for their employees. 

Also, it's important to note that some panels will be closed to new providers. This usually happens in areas with a lot of therapists. You may also need to be licensed for a certain number of years before being eligible. 

How Do Therapists Get into Insurance Panels?

Insurance can be a tricky thing, but once you’re paneled, you should have a good amount of referrals coming your way!  To get started, you’ll need the following:

• Your most current license information.
• Proof of malpractice insurance (more on that below).
• NPI number.
• Current CV/resume.
• Any proof of special credentialing or training.
• Current practice address.

You need to begin by completing your CAQH via their enrollment hub. Save all your application information.

After that, you will select your desired panels. It’s up to you how many you choose, but many people start with 3-5 companies. I know therapists who just Google “Anthem insurance + credentialing” to find the straightforward answer for what to do next. 

As mentioned, some companies will be full. However, you might be able to still get paneled if you are willing to expand your availability or have experience with specific populations. 

Therapists need to be relatively proactive when it comes to getting into panels. It’s not uncommon to follow up several times and spend anywhere from 10-15 hours applying to each panel. I recommend keeping a working spreadsheet or document to track your application date and any follow-up attempts. 

PS: If you don’t want to handle all the paperwork yourself, it might be worth hiring an insurance credentialing company. They take care of most of the process, but it’s obviously a paid service!

Should You Join A Group Practice? 

Some people join a group practice to get experience working in private practice without making all the financial sacrifices themselves. I think it’s a great option to learn the ins and outs of the work. 

Of course, there are several considerations to think about ahead of time, such as:

• The fee split
• How you’re classified (W2 vs. 1099)
• Healthcare and other benefits
• The work environment and opportunities for growth 
• Marketing efforts (do you need to find your own clients?)

Remember, it’s easy to focus on the, say, 60 or 70% you’re getting (rather than the complete 100%). But it’s also easy to forget that your owner is responsible for so many costs that you don’t need to consider, like your office rent, furniture, training, insurance, payroll, etc.

Finally, it's impossible to EVER get that 100% of a session fee. The owner of a group practice absorbs many costs that you would be liable for if you run your own practice.

If You’re Going Solo, Have You Decided Your Fees?

Start Googling. Get at least 15-20+ therapists in the local area for a going rate. If you’re in a more rural area, you should still know what other therapists charge. 

I recommend starting a bit higher than you think. It’s easier to discount than raise rates once they are too low.

Remember, your fee likely needs to account for your:

• Time and expertise 
• Practice expenses
• Health insurance
• Retirement savings
• Sick days/PTO (you do plan to take some time off occasionally, right?)
• TAXES! 

Or, consider the following calculation. How much do you want to make per year, and how many hours per week do you want to work? Using simple math, let’s say you want to earn $100,000 annually, and you would like to work 25 hours a week. 

Factoring in two weeks off, this means you need to be charging at least $80/session. But, of course, you may not be able to fill up those 25 slots right away. Furthermore, those 25 hours DON’T account for cancellations, billing, marketing, commuting, consulting, etc. So, starting with $100 may allow you a bit more room for buffering! 

Are You Offering a Sliding Scale?

If so, how many slots can you reasonably offer, and how will you determine those rates?

Will you use the honor system or require a potential client to share proof of income? Will you offer a fixed decreased rate or have clients pay what they can afford? Do you want to have pro-bono slots? 

It’s important to consider your financial well-being when offering sliding scales. If you’re barely getting by, you may grow to resent your work and your sliding scale clients. So, again, go back to the original question: how much do you want to make per year, and how many hours per week do you want to work? This will help you determine a reasonable fee + any room for sliding scales or pro bono slots.

One last note: I don’t believe in guilting therapists into offering sliding scales. It has to make sense for you, your career, and your overall life. Yes, we can and should promote ongoing accessibility in mental health, but you can give back in so many ways, including:

• Donating a percentage of your income to charity.
• Volunteering or giving back your time to mental health organizations.
• Offering to mentor a new therapist.
• Speaking for community events.

How Do You Choose Your Practice Name? 

To start your practice, you will need a name. Invariably, you will find that almost every name you like is taken. This is where creativity coupled with patience begins. It may take time to find the right name. 

When choosing a practice name, I recommend:

• Googling A BUNCH of different therapy practices to start getting inspired.
• Jotting down words or phrases you like on a notepad or on your phone.
• Browsing name combinations on a domain site to see what’s available.

Think about what words or phrases will most closely align with your ideal client. Then, in the same vein, what might turn them off?

Even though I have done it myself, I don’t typically recommend using your own name as your practice name. It can be limiting, especially if you start taking on new therapists. It can also be confusing if you have other roles or jobs outside of therapy.

You may also want to reconsider tying a location to your practice name. If you opt to provide online therapy (or even think about moving in the future), this could be a barrier.

Finally, don’t forget to run your name ideas by a few trusted colleagues. They will hopefully give you honest feedback!

Do You Need an EIN?

An EIN is an employer identification number. In some cases (such as when you work as a sole proprietor), an EIN is optional. That said, it’s free and easy to get one.

You’ll also typically need one if you:

• Hire other employees.
• Open certain retirement accounts.
• Become an LLC or S-Corp
• Need to send billing or other information (and don’t want your social security number on there!).
• Want to apply for business accounts 

Here’s the link to apply through the IRS. It takes just a few minutes!

Do You Need an NPI?

An NPI is a 10-digit identifier that stays with you throughout your career. If you are a covered entity under HIPAA (and bill insurance), you need an NPI. You will use it for submitting claims and ensuring insurance eligibility. 

Here’s the link to apply for your NPI. It is free and easy. Keep in mind, if you’ve already worked in healthcare or an agency job, you may have an NPI and not realize it. Double-check! 

Do You Need A Business Checking Account?

Again, you want to keep your business and personal expenses separate. This account should NOT have any transactions outside of your private practice.  

Make sure you understand any bank fees or minimum requirements for the account. You can usually avoid fees by having a certain balance or completing a specific number of transactions in a month. I’ve used Chase for most of my business account needs. I rarely need to use an in-person branch- however, if that's important to you, make sure you find a bank that's within a reasonable distance.

Do You Need A Business Credit Card?

Yes. 

I’m not an accountant, but you need to keep your business and personal expenses separate! Don’t procrastinate on this- start it on the right foot from the beginning.

Most credit card companies allow you to apply as a sole proprietor (i.e., you can just use your name and EIN!). For the record, I primarily use Chase for business credit cards. As a bonus, they often offer amazing sign-up bonuses (free money or travel!). 

Are You Tracking Your Financial Transactions?

I like knowing where every cent of my life goes. It helps shape business goals and track profits. If you have many different sources of income (and expenses) in your household, this information becomes even more critical. 

As a business owner, you need a birds-eye view of all your transactions. The popular tools include:

• Mint
• You Need A Budget
• Personal Capital (my preferred choice-this referral link gets you $20 just for linking an account)
• Your own spreadsheets!

You should also be tracking your own books, even if you work with an accountant. I use Quickbooks.

Do You Have Your Liability Insurance?

Insurance can feel like a necessary evil, but it’s still super important. Your professional liability insurance can protect you if a client wants to sue or pursue other legal action against you. In addition, it can offer legal support, preventative steps to avoid lawsuits, and payment reimbursement. 

Like with any insurance, there isn’t a “perfect” answer for determining factors like your liability limits. Instead, it’s a good idea to consider:

• Are you working with high-risk clients?
• Have you ever been sued in the past?
• Are you willing to pay a higher deductible to lower your monthly or annual costs?

Here are some common liability insurance options: 

• CPH & Associates (what I use)
• HPSO
• Insureon

You may be able to get a discount through certain professional organizations. For example, I get a discount for being a member of CAMFT.  

Have You Secured Your Domain?

Once you find the name you like (and you know it’s available), get that domain!

I use Namecheap. You can typically secure a domain for less than $10/year. Make sure that you get that SSL certificate. It essentially authenticates and legitimizes your website. 

How Will You Provide Your Therapy? 

We’re now in the nuts-and-bolts of building a psychotherapy practice! Congrats. 

Now, you have a few different options for your practice, including:

• Traditional, face-to-face therapy
• Telehealth
• A hybrid approach 

Since the COVID-19 pandemic, more and more therapists have embraced virtual therapy (I certainly have!). Telehealth offers convenience, accessibility, and lower overhead than renting a traditional office. That said, I also love in-person work. Many therapists opt for a mix-and-match approach, and that’s reasonable, too!

Can You Sublease a Furnished Therapy Office?

It’s usually cheaper (and far more effective) to sublease another therapist’s space when you first start. You may be able to secure your payment by renting per hour or day. 

Here’s a straightforward script that you can use over the phone, email, or social media groups. “Hi, I’m opening my therapy practice in a few weeks. I am in the process of building up my caseload and wanted to know if anyone is subleasing their office!”

Here’s what’s going to happen. Someone will say yes! Or, people will say no, and then offer referrals for someone who can. As you build your practice, you might consider other options. 

Try your absolute best to pay 30% or LESS for your office. For example, if you charge $100 for your therapy session, this means $30 per hour per rent. Remember, private practice can eat up a ton of fees. Therefore, you want to minimize costs as much as possible when you first begin.

Have You Answered These Critical Questions Before Committing To An Office?

• What is the longest I’m willing to commute in one direction?
• Will my ideal client find it easy to reach my office? 
• Will I feel safe entering and leaving the office?
• What kinds of professionals will I be sharing my walls with?
• Does this office feel “like a real therapist's office?” 

These questions force you to reflect on your priorities and the overall direction of your practice. For example, I start getting grumpy if I drive more than 30 minutes to work. But, at the same time, I don’t want to provide therapy in the same city where I live. I also know that most of my clients will arrive by car- therefore, it’s not as important to be on a direct public transportation route. Finally, I don’t want to share my walls with, say, a music studio. 

Have You Picked Your Therapy EMR?

You need a system for paperwork, intake documentation, and treatment plans. Unless you plan on using paper and locked filing cabinets, you can record everything in an electronic medical record. 

I use Simple Practice for my practice right now. They provide all intake forms, which cuts down on paperwork and administrative tasks. Overall, the platform is intuitive and straightforward. I have tried a few other platforms, and I like theirs best. 

I currently subscribe to the plan that includes telehealth. If you end up signing up with my referral link, you will receive a $100 credit towards your next subscription renewal (which may be several months free). I do NOT use their credit card payment system because I prefer another method (see more on that below).

Have You Decided On Your Payment System? 

I love IvyPay and have used them for years. They are HIPPA-compliant and designed for therapists. A client simply adds their card on file (following a text prompt), and then you charge after the session. In my experience, the pay comes within 1-3 business days.  

All credit card processing systems take some fees, but IvyPay only charges 2.75% per charge. Plus, they are the only program I know that offers a referral program. You can use my referral link with the code nica458 to get $1000 in free charges. 

Do You Need Professional Headshots?

Whether you like it or not, clients want to see your face. They want to know who they will be potentially working with. 

You are a professional business owner. You need the headshots, and I believe they are worth the investment. If you do have a headshot, make sure it’s RECENT (within the last five years) and that you haven’t made drastic changes to your appearance since. Clients notice these things.  

If money is exceptionally tight, have a friend take them. Make sure the lighting is good and wear professional clothes. If you’re unsure which ones look best, ask a few friends/trusted loved ones to give you their honest opinion. 

Whatever you do, please don’t use a selfie as your main headshot. 

Have You Hired An Accountant or Bookkeeper?

Welcome to the exciting world of taxes! As a small business owner, you are now responsible for tracking your expenses, deductions, and all the other nitty-gritty details of your financial landscape. 

For a very long time, I outsourced absolutely NOTHING in my business...except for an accountant. This is because taxes can be complicated, and mistakes can be costly. Now, I also have a bookkeeper to manage my financial transactions, but that’s because my business has grown and become more complicated!

I recommend asking other therapists who they use for their accounting services. You want someone who understands the industry. If you have other income streams, they should have a robust knowledge of that kind of entrepreneurial spirit. 

As mentioned, along with having a professional, I strongly recommend having a birds-eye look at your own books. I have used Quickbooks for several years (here’s a referral link for getting 55% off your first 3 months!). If you want to do your own taxes, Quickbooks makes it super easy.

Should You Hire a Virtual Assistant? 

Believe it or not, I only recently started working with a VA, and it’s one of those things where I wish I had started sooner. A good VA can excel in doing the things you hate doing or doing the things you don’t have time to do.

Marketing services

• Social media content creation
• SEO/Blogging
• Press releases
• Outreach with other mental health professionals 

Clinical services

• Data entry
• Managing billing issues
• Collecting and verifying insurance information
• Collecting unpaid invoices 

That said, assembling a team can become costly, and I’m always of the belief that you need to be mindful of such expenses when you first start. But if you’re already having lots of work (and you feel overwhelmed or scattered), it may be time to start outsourcing. 

Are You Able to Save for Retirement?

As a small business owner, you have different tax-advantaged retirement options available to you. These accounts allow you to save for your future while also lowering your tax burden each year- that’s a good thing! Even just stashing away a few dollars each week can make a significant difference in a few years. 

The main retirement account options for self-employed individuals are:

• Roth or traditional IRA
• SEP IRA
• Simple IRA
• Solo 401(k)

You can open an account at most brokerage firms (I use Schwab: here’s a link for a bonus reward of $100-$1000 depending on your deposit).

Keep in mind that each retirement account has different considerations and limits, and it’s a good idea to talk with an accountant to determine the best option for you. 

Do You Have a Professional Will?

Shocking news: you will die.

Now that this news is out of the way, it’s essential to think about how your practice will need to be handled if you die unexpectedly. And death isn’t the only concern- at any moment, we’re all susceptible to severe life-threatening disabilities or emergencies. So we need to have contingency plans to manage these situations. 

Your professional will should have an executor who agrees to manage your legal issues and notify clients of the news. 

Here is a thorough guide on the topic! I recommend giving it a read and getting started as soon as possible.