Starting a private practice as a therapist can be incredibly rewarding, offering autonomy, freedom, flexibility, and the opportunity to tailor your work to your unique strengths. However, the process of getting started can seem daunting without the right guidance. To simplify it, here’s a guide to launching your own practice, from the legal setup to the essential private practice paperwork you’ll need.
Is it Worth Going into Private Practice?
Yes, starting a private practice can be highly beneficial and rewarding, both professionally and personally. It offers flexibility in scheduling, client selection, and treatment methods, which are often constrained when working for an organization. Financially, private practice has the potential to be lucrative once established, especially if you focus on identifying your ideal client, creating a high-converting website, consistent marketing strategies, and client retention. Additionally, many therapists find immense fulfillment in creating a personalized therapeutic environment.
However, there are challenges, including handling the administrative side of the business, building a client base, and managing the fluctuating nature of client intake. Yet, for those who are entrepreneurial and enjoy autonomy, private practice is a worthwhile path.
How Do You Legally Set Up a Private Therapy Practice?
Setting up a private therapy practice requires complying with several legal and regulatory requirements. It is always best to check what your state requirements are and a CPA when setting up your business. Here's a basic outline for private counseling practice requirements:
Business License: Depending on your state, you'll need to obtain a business license, you can consider this your private practice business license. Some locations require both city and county licenses. It’s essential to check your local regulations on whether a private practice therapist needs a business license and if you need it just for the city or county or both.
Entity Formation: Most therapists establish their practice as an LLC (Limited Liability Company) or a corporation to separate their personal and business liabilities. An LLC is usually the preferred structure because it’s easier to manage and offers protection. California private practice therapists have other requirements when setting up their entity. Check with your state to see what is required. It is also a good idea to check with your CPA regarding this. You will also want to discuss with your CPA the type of entity formation needed for your counseling private practice at each stage of growth. *** Before you incorporate, you want to check both online URLs and your state incorporation website to ensure the name you are choosing for your private practice is both eligible through the state and your website. You will want your business name and website to be the same. Many times businesses incorporate just to find out that the website URL is already taken.***
Tax Identification Number (TIN): Apply for an Employer Identification Number (EIN) through the IRS to handle taxes and open a business bank account. This is quite simple, but you need to be incorporated first to get your EIN. It is free.
Malpractice Insurance: Malpractice insurance is a must to legally protect yourself and your business. Research your options for professional liability insurance and get coverage before seeing clients. There are 3 main carriers for mental health counseling therapists.
State Licensing: Your professional license must be current and active. Be sure to stay compliant with all state requirements for continuing education and licensure renewals.
HIPAA Compliance: Ensure that your practice and records meet HIPAA regulations for privacy and confidentiality. Secure client data with encrypted software and ensure all forms are HIPAA compliant. If you are looking for free mental health private practice forms and need an attorney-approved HIPAA privacy notice for your private practice, we've got you covered.
What Are the Essential Steps for Opening a Private Practice?
Opening a private practice involves a series of important steps to ensure both legal compliance and business sustainability. As private practice therapists, we understand. Wouldn’t it be great to have a “Starting a Private Practice in Counseling Checklist” for free? Here's a streamlined list:
Set Up Your Business Structure
Business Plan: Create a simple plan that outlines your practice's mission, vision, goals, financial outlook, and services. This plan will be your roadmap to success.
Location: Will you have an online practice, a brick-and-mortar office, or a hybrid of both? If you have a hybrid or brick-and-mortar office, you need to find the right location for your business. Find an area where you want to serve that is easy for clients to access with plenty of parking.
Much of setting up your business structure was covered in the above paragraph.
2. Organize Your Finances
Banking: After you have filed your business name and got your EIN you can now open a business checking and savings account to keep your personal and business finances separate. Consider using a business credit card for expenses, definitely get one with points so you can benefit, and ask your banker which credit card might be best for you!
Business Taxes: Consult with your accountant on how much to set aside for taxes—usually between 20-28% of your earnings. If you are going from a W2 job into private practice this can be a large expense come tax time. It is best you plan for it and the reason you open up a business savings account. It is recommended every time you get paid you put money for taxes aside.
Fees: Research market rates for therapy in your area, consider your area(s) of expertise, and longevity in the profession and confidently set your fees. Determine how much you want to make each year, consider how many weeks of vacation and sick leave you will want to take, how many clients you want to see each week, and then work backward to determine your rate.
Credit Card Processor: Credit cards are the way most people pay. You will want to get something like SquareUp or Ivy Pay in order to take credit card payments.
Vacation: You want to create a business that works around your life. Don’t forget to plan for time off, sick time, and vacation! Depending on what type of clients you work with, you may experience some seasonality in your business. Be intentional with planning vacations when your caseload has seasonal dips.
3. Build Your Online Presence
Website: Invest in a high-quality, user-friendly website that clearly showcases your services and makes it easy for clients to contact you.
Blogging: Write blogs that reflect your personality and expertise to engage potential clients.
Social Media: Use platforms like Instagram, TikTok, or Facebook to connect with clients and show who you are as a therapist. It is important to know what platform(s) your ideal clients most use. Social media is great for brand awareness and reminding potential clients who you are and what you offer.
Vlogging: Consider starting a YouTube channel if you are open to creating videos. Videos with transcription are the best! When your ideal client can see, hear, and experience you they are more apt to reach out.
Ad Words: Once your private practice website is up and running, consider hiring an expert to help drive your ideal client to your ad and website to gain clients quicker.
SEO: You’ll want to hire SEO experts to help optimize your website so you begin ranking higher on the search engine when people are looking for therapists in your area.
4. Create Marketing & Networking Strategies
Ideal Client: Identify your ideal client by clarifying what their biggest struggles are and what their goals are for counseling. This clear picture will help with creating a clear marketing strategy and position you as the expert. When starting a private practice not all therapists know who their ideal client is, and that’s ok. It will evolve over time.
Branding: Create a unique and authentic brand that resonates with your ideal clients, reflecting why you do what you do. Let your personality shine!
Directories: List your services on online therapy directories like Psychology Today, Good Therapy, Therapy for Black Girls, Therapy Den, etc to reach a wider audience.
Referral Relationships: Build strong relationships with other professionals who can refer clients to you and vice versa.
5. Set Up Client Management Tools
HIPAA Compliant Forms: Ensure you have legally and ethically compliant forms for client intake, consent, and privacy agreements.
HIPAA-Compliant Email: You want to ensure you have a HIPAA-compliant email platform.
Attorney-Approved Private Practice Paperwork: Assure you have attorney-approved private practice paperwork before you start seeing clients. You never know when your first client will be calling to schedule an appointment with you. Well, chat more about the paperwork forms you need below.
Scheduling: Establish clear business hours and manage your schedule efficiently to stay in alignment with your ideal schedule and avoid burnout. It is best to give clients only 2 or 3 options to schedule appointments. You don’t want to tell them you are available Monday - Thursday from 12 - 7.
Electronic Health Records (EHR): Choose whether to use paper files or an electronic health record system like TherapyNotes to manage client records.
6. Stay Compliant
Ethics & Laws: Familiarize yourself with ethical guidelines and legal regulations in your area. Keep your professional license up-to-date.
Track & Measure: Keep track of where your referrals come from with your marketing efforts and monitor your financial growth to assess what’s working and what isn’t. Follow your client conversion and retention numbers too. Invest more time and money in what is working.
7. Nurture Personal & Professional Growth
Coach & Support System: Consider hiring a private practice coach or joining a peer group for ongoing guidance. Collaborate with colleagues to keep your skillset sharp and avoid isolation.
Self-Care & Work-Life Balance: Prioritize self-care by scheduling personal time and ensuring you maintain a balance between work and life.
Listen to Podcasts: There are so many FREE podcasts available for mental health counselors looking to build a private practice. It is a great way to get free support along the private practice journey.
8. Celebrate Your Successes
Celebrate: Acknowledge and reward yourself for both big and small accomplishments. This will keep you motivated as your practice grows.
What Forms Do You Need to Start a Private Practice?
When starting a private practice, having the right forms in place is critical for both compliance and efficiency. Here are the essential forms you'll need to get started:
Informed Consent Form: A private practice intake form for counseling outlines your private practice counseling policies and procedures, the therapeutic process, fees, limits of confidentiality, risks and benefits of treatment, treatment expectations, and more. They ensure that clients understand and agree to the terms of their treatment.
HIPAA Privacy Notices: This form informs clients about how their protected health information (PHI) will be used and shared. It’s crucial for compliance with HIPAA regulations.
HIPAA Psychotherapy Authorization Form/Release of Information (ROI): If clients request you to share their information with other providers, this form gives you permission to do so. It is necessary to remain HIPAA compliant.
Sliding Scale Fee Agreement: For clients with financial constraints, this form details any fee adjustments you may offer.
Telehealth Consent Forms: If you provide virtual therapy, this form is essential to get client consent for online sessions, explaining any technology and confidentiality considerations.
Good Faith Estimate Forms: As required by the No Surprises Act, this form provides clients with a transparent estimate of treatment costs.
Biopsychosocial Forms: These are essential to gather client information, family history, goals, and so much more. Having specific biopsychosocial intake forms for your ideal clients is important.
Progress Notes: A therapist’s favorite paperwork, just kidding! Assure you have progress notes to document all sessions.
These forms are what you need to have on hand to see an initial client, consider them your private practice startup paperwork from The Private Practice Startup. There are many other forms you need for private practice. You will also need additional forms if you take insurance.
For therapists looking for all the forms they need for their private practice and to simplify the paperwork process, the Private Practice Paperwork Peak Package is an excellent resource. It includes attorney-approved forms that cover everything from intake paperwork to HIPAA compliance and Good Faith Estimates. By using these templates, you’ll save time and ensure your forms meet legal standards.
Ready to Simplify Your Private Practice Setup with Essential Forms and Paperwork?
Starting your own therapy practice can be both exciting and overwhelming. The good news is that with the right resources, you can simplify the process and focus on what you do best—helping your clients. The Private Practice Startup offers a comprehensive Private Practice Paperwork Peak Package, including everything from attorney-approved intake forms to HIPAA compliance documentation. Follow these three simple steps to get started:
Ask Any Questions – Contact us at Kate@ThePrivatePracticeStartup.com if you have any questions or need help with setting up your practice.
Grab Your Paperwork Package – Download the Private Practice Paperwork Peak Package, which includes all the essential forms you need to get started with confidence.
Start Using It Today – Customize your forms with your practice details and begin using them to ensure compliance and efficiency from day one.
Additional Services Offered at The Private Practice Startup
At The Private Practice Startup, we’re here to help your private practice flourish. Our offerings include custom private practice paperwork packages for mental health professionals, along with specialized supervision forms, HIPAA-compliant documents, and Good Faith Estimates tailored to your unique needs. Ready to grow your client base? Our Private Practice Marketing E-Course provides clear, step-by-step strategies to help you attract and retain clients with confidence. Plus, gain valuable insights by tuning into our Private Practice Startup Podcast, featuring advice from industry experts, successful therapists, and entrepreneurs. No matter where you’re practicing—Texas, New York, or anywhere in the U.S.—we’re committed to supporting your success.
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