This article is by far my most popular private practice toolkit and has been read by over 20,000 clinicians. (See 5-star reviews at the end of this article.)
In this article, I teach you, step-by-step, how to get your private practice up and running in 6 – 8 weeks for as little as $244.84 per month. A cost breakdown is provided at the end of this article.
There are 12 steps that a licensed psychologist, LCSW, MFT, or LPC must take in order to start a private practice. This toolkit will cover:
- Malpractice and Business Insurance
- New Client Paperwork
- Record Keeping and Note Taking
- Office Space: Leasing, Subletting, or Renting Hourly
- Business Licensing
- Pros and Cons of Specialist vs. Generalist
- Websites and Online Advertising (including how to take a headshot and write a Psychology Today ad)
- Out-of-Network Insurance Information
- Reduced Pricing as a Marketing Strategy
- How to Accept Credit Cards
- Business Cards and Brochures
- Ideas for Connecting with your Community
Now let’s get started and let me show you how easy it is to get your private practice up and running in 6 – 8 weeks.
1. Malpractice and Business Insurance
The first step you will need to take is to obtain a malpractice insurance policy. It takes approximately 30 days for your malpractice policy to be approved by insurance. A 1 million / 3 million malpractice policy is mandatory for private practice. Malpractice insurance for part-time, 20 hours per week, can range from $200.00 – $750.00 per year depending on the number of years you’ve been licensed. Discounts can be provided for attending APA-approved continuing education courses, ethics courses approved by the insurer, and carrying an additional policy such as business insurance.
Business insurance is also required if you plan to lease or sublet an office. It costs approximately $250.00 per year. Business insurance can be easily added to any malpractice policy. The best place to look for malpractice and business insurance is through the APA Trust.
2. New Client Packet, Consent Forms, Release of Information Form
In order to accept clients at your office, you will need to have a new client packet that includes consent forms and a release of information form. It certainly helps to ask another clinician in private practice for a copy of his or her new client paperwork. You can also search online for examples and consult with a malpractice attorney. Many malpractice insurance policies provide free consultations with an attorney who can help you with new client paperwork.
Below I have outlined the most important information you will need to cover in your new client packet:
- What to expect from the therapeutic relationship
- The limits of confidentiality
- Information on your professional background
- How much services cost, and how money matters are handled
As you develop your consent forms, you will need to have two forms that describe in detail the:
- The Agreement for Treatment
- Authorization for Psychological Treatment
The release of information form should specify the following information:
- Treatment information to be released
- Where to release information
- Why information is being released
- How long the release will be in effect
- A statement about the client’s right to revoke the authorization
Again, just like the new client paperwork and consent forms, you can find the release of information forms online, obtain a copy from another clinician, or consult with a malpractice attorney.
NOTE: To make it simple and easy for your business, I recommend using a private practice management software called SimplePractice so that you can email the packet to new clients and have them review and electronically sign it to confirm their first appointments. When clients electronically sign the consent forms, I ask them if they have any questions about the new client packet. I then go over the limits of confidentiality a second time with them. If you would like to conduct remote sessions with your clients SimplePractice also offers a HIPPA Compliant Video Service.
3. Record Keeping and Note Taking
Many clinicians will ask me the most efficient way to keep records at their office. I generally suggest that they take notes on their computer during the session and then password-protect and encrypt client information. Password protection and encryption are very easy on Mac or PC. Just search online for the instructions for your operating system. If you do not want to take notes on your computer, then use a notepad to take notes, and keep your notepad in a locked filing cabinet. In most states, you are required to keep records for 7 years.
The standard way to take notes is to follow the SOAP note format. Below I’ve outlined the documentation procedures for a SOAPE note:
- S: The subjective section includes a very brief statement of the client (quoted) as to the purpose of the visit. If this is the first appointment take a history of the presenting problem.
- O: The objective section includes information that the clinician observes from the client’s current presentation such as appearance, mood, affect, concentration/focus, etc. You can find detailed information for this section online.
- A: The assessment section includes diagnosis. It also provides a quick summary of the client’s main symptoms, as well as the client’s progress since the last visit and overall progress toward the client’s goal from the clinician’s perspective.
- P: The plan section addresses how the clinician will treat the client’s concerns as well as the goals for therapy.
- E. The education section provides advice to clients regarding mental health treatment.
I also recommend that you keep a suicide risk assessment handy. Excellent risk assessments can be found online.
4. Office Space: Leasing, Subletting, or Renting Hourly.
If you want to reduce costs and take minimal risks, I recommend searching on Psychology Today for clinicians in your area and calling each one to see if they would sublet their office to you. You could offer to sublet one day per week or ask if you can use the office for a few hours per week and pay hourly. For my friends who are clinicians, I have provided an hourly rate and only charged $5.00 per hour. For example, they pay me $5.00 per hour for each client they see. If they only see 1 client, it is $5.00. If they do not see any clients that week it is zero!
It definitely helps to have friends who are clinicians and are willing to help you. But if you do not have that option, you can still ask a potential sublet if you can pay hourly. When I thought about starting a second office, I met a clinician who said he would accept hourly and only charge me $10.00 per hour but he wanted me to commit to paying a minimum of $50.00 per month. The cost of a sublet in most metropolitan areas is between $100.00 – $300.00 per month for 1 full day per week.
Since I was extremely committed to private practice, I decided to rent my own office. I was lucky enough to find a wonderful office in a great location for only $600.00 per month. At the time, I did not have any friends who were clinicians in my area to share the cost or help me out. I purchased office furniture and decorated it myself. My landlord was generous enough to accept a month-to-month lease with 30 days’ notice. Make sure to request a month-to-month lease, if you decide to sublet or lease an office!
If you decide to lease your own office, start advertising for subletters immediately on Craigslist. You might decide you do not want to work on Friday and Saturday. There are many clinicians who might be interested in those days. You can also offer an hourly rate of $10.00 per hour with a minimum of $50.00 per month allowing subletters to use your office in the early morning, afternoon, or evenings when you are not there.
5. Business License
Whether you decide to lease, sublet, or find an hourly option, you will need a business license in the city where you work. You can put the license under your name or you can file a fictitious business name. A city business license is very inexpensive. You are charged by how much money you make. If you make 0 – $15,000 per year, you pay approximately $20.00 per year. If you make over $100,000 dollars, it is about $150.00 per year depending on your city.
If you decide to create a fictitious business name like I did for my business, (Tri-Valley Psychotherapy) you will need to file a fictitious business name application with the county you live in. It costs about $40.00 to file a fictitious business name and another $20.00 to have it published in the local newspaper, which is a requirement of the filing process.
6. Specialist vs. Generalist
Deciding if you are a specialist or generalist is very important because it’s the foundation of your marketing strategy. I suggest asking yourself the following questions:
- What are my specialties?
- Besides mental health specialties, is there a specific therapeutic model that I’ve specialized in such as CBT, DBT, RET, EMDR, or psychoanalytic therapy?
- Will I have a niche and offer one specific service such as substance abuse counseling?
- Will I be a generalist offering a broad range of services for issues like depression, anxiety, PTSD, bipolar disorder, OCD, anger management, or sleep disorders?
- Who am I qualified to provide services to? Can I provide services to children, pre-teens, adolescents, and adults?
- Will I offer individual, couples, and family counseling?
Since I had over 10 years of clinical experience before starting my private practice working in hospitals, corporate settings, prisons, and the U.S. military, I felt confident presenting myself as a generalist with 20 different specialties. However, I knew I could not provide services to children under the age of 12, because I had no experience with this population. As a result, I offered services to adolescents and adults. I also had experience providing individual therapy, couples counseling, and family therapy so felt comfortable offering these services.
Although it has worked for me to market myself as a generalist, many private practice experts suggest clinicians develop a niche. As an expert myself, I am against clinicians limiting themselves to one specialty, especially when they are just starting out. Generating enough referrals to stay in business is very difficult. However, if clinicians have a reliable referral source from a hospital, medical practice, or clinic then focusing on one specialty might make sense.
On the other hand, if you do not have a reliable referral source, I recommend selecting at least 5 – 10 specialties that you feel confident offering. Some of these can be as simple as stress management. However, most of us have worked with clients who’ve struggled with a variety of mental health issues such as anxiety, depression, anger management, and trauma so it should be easy to offer services in multiple areas.
To feel confident with your private practice, you will need to decide which services you can legally and ethically offer. For example, if you have very little experience working with clients with substance abuse problems, it is illegal and unethical for you to provide services to these clients unless you take continuing education courses and consult with a licensed clinician who has this specialty. As a result, I strongly suggest that clinicians carefully select their specialties and service offerings.
7. Website and Online Advertising
Now that you have decided on a name for your business as well as your specialties, you are ready to create a webpage. One simple way to develop a webpage and to advertise online is to create a Psychology Today ad, which costs $29.99 per month. Believe it or not, most of my referrals still come from Psychology Today. So, not only are you creating a webpage, but you are also creating an online referral base.
If clinicians do not want to spend money on a website, I suggest they get a free blog on wordpress.com or blogspot.com where they can write simple, self-help articles. After clinicians post at least 3 short articles on their blogs, I ask them to link their blogs to their Psychology Today page. I also encourage clinicians to take advantage of LinkedIn by building a network and posting articles. LinkedIn, a free blog, and your Psychology Today page are simple, inexpensive ways to create a web presence without a website. However, if you would like to create a website, you can use services like wix.com, wordpress.com, and godaddy.com, which provide affordable options ranging from $96.00 – $156.00 per year.
Even with a blog and Psychology Today page, it is critical that you add your business to Google Maps. It takes approximately 30 days for Google to verify your business and even longer for it to show up in search engines. However, once you are verified, you can create a webpage about your business on Google Maps, post photos of yourself and your business as well as provide business information.
Free Head Shots. Let me take a moment to talk about headshots. Your headshot is very important because people seeing you online make quick decisions about you based on how you look. For years, I have taken my own headshots by recording myself on video with my phone. I then upload the video to my computer and take a screenshot. Since I am really bad about doing my own hair, I usually pay $50.00 to have a professional hair salon do my hair for my headshots. Most men do not have to worry about their hair like women, but they need to look as professional as possible. It is important to wear a suit, be clean-cut, and try to look your best. You do not want to look fake. However, you want to look like a more polished version of yourself. I avoid taking pictures of myself in nature wearing informal clothing. Instead, I prefer sitting at my desk with my bookshelf in the background or with a plain white or black background. Remember clients will be more likely to select you and to pay your full fee when you present yourself as a professional rather than a person who spends time outdoors.
How to Write a Psychology Today Ad. Over the years, many of my clients have told me that the reason they selected me instead of someone else was that my Psychology Today ad was different from other clinicians. Most clinicians will write standard ads that start out with something like, “Are you struggling with depression or anxiety?” “Do you need help but are not sure where to turn?” “I am a warm, caring, and supportive therapist that provides a safe, non-judgmental environment.” Now, I am not saying that phrases like these are bad but they are cliche and when clients read them over and over in advertisements they can seem inauthentic.
Even if you start out your ad in this standard way and then write more original content, only the first, 2 or 3 sentences from your ad show up when clients see a list of therapists in their area. As a result, I suggest you take time to think about what you are offering and state your specialties up front in order to differentiate yourself from other therapists. You might also discuss your education, training, and experiences.
Below are three basic questions to answer when writing your Psychology Today ad:
- How am I going to help my clients?
- What experiences make me stand out as a clinician?
- What is a special fact about me that my clients would admire?
Remember that the Psychology Today ad has only three sections and severely limits the number of words you can write, which is why I suggest choosing your words carefully.
8. Out-of-Network Insurance Provider
Because it is increasingly difficult to get on insurance panels, many clinicians have decided to go out-of-network with insurance. If you are a licensed clinician, all PPO insurance plans with out-of-network benefits will consider you an out-of-network provider.
As an out-of-network provider, clients pay you at the time of service and you provide them with an invoice to submit to insurance for reimbursement. Your invoice must include ICD 10 diagnostic codes and procedure codes, which can be found online. Many of my clients end up paying $20.00 – $80.00 for psychotherapy services with me after getting reimbursed by insurance. However, most insurance plans with out-of-network benefits pay 60% of a customary rate for psychotherapy services. As a result, it is important to find out what most insurance plans consider a “customary” rate for a 50-minute psychotherapy session and price your services accordingly.
As an out-of-network provider, it is important to develop a strategy for sharing this information with your clients. In the Psychology Today ad, you can specify that you are out-of-network with insurance. When you’re on the phone with a potential client, you must share all information and expectations up-front before scheduling an appointment. Over the phone or via email, clients should be informed that they are responsible for paying their full fee at the time of service and that you will provide them with an invoice to submit to insurance for reimbursement. If clients seem confused about the process, ask them to call their insurance company to discuss out-of-network benefits and reimbursement rates before scheduling an appointment with you. Sometimes clients will ask you to fill out a claim form for their out-of-network benefits. This form is very easy to complete.
9. Reduced Pricing as a Marketing Strategy
When clinicians are just starting out, I recommend that they offer a reduced fee to generate referrals, especially if they are private pay or out-of-network providers. When clients search for clinicians on Psychology Today, sometimes they will refine the search based on “cost of service.” If you put a range from $50.00 – $200.00 per session, you will pop up in the search and might even be #2 or #3 on the list. If you have a nice profile, clients will most likely reach out to you.
If a client reaches out to you regarding your reduced fee, you should present yourself as a clinician who offers a sliding scale. You might then ask the client what he or she can afford. Some might tell you $50.00 (the low end of what you stated) and other clients might meet you in the middle at $125.00. Regardless the two of you might settle on $85.00, which is great if you just opened your office and are excited about getting new clients. As you build a reputation in the community and a client base, you can continue to offer a sliding scale to those in need but also maintain a higher, more appropriate rate for your services. Depending on your educational level and experience, you can charge between $125.00 – $285.00 for a 50 min session.
10. Credit Cards, Checks, and Cash
When clinicians first start their private practice, I recommend initially taking checks and cash rather than paying a 2.75% service charge on credit card transitions. However, this might not be reasonable if you decide to market yourself as private pay or out-of-network. When clinicians are out-of-network providers, it helps their clients to accept credit cards. It takes approximately 2-weeks from the time an invoice is submitted to insurance for clients to receive payment. Credit card payments are generally due within 30 days, which means clients are able to pay their credit card after receiving the check from their insurance company.
If you want to take credit cards it is super easy with the system called Square. Luckily this system just came out when I started my private practice in 2011. To receive a free Square device, simply register online with Square. Once you receive the device, download the Square app, plug the device into your tablet or phone, connect your business account, and start accepting credit card payments! Another nice way to accept credit card payments is through Paypal’s online business services. Register your business on Paypal and send invoices to clients via email to pay online.
11. Business Cards and Brochures
When you are first starting out in private practice, it is exciting to get business cards and to hand them out at social events, meet-ups, or to clients. But honestly, the last time I handed out a business card was in 2012. In the modern digital age, I do not think business cards serve a purpose and if people really want to contact me, I will type their email into my phone and send them a message. However, it is incredibly exciting when you first start your private practice to print 150 business cards for approximately $15.00. I love Vista Print which provides you with free templates and has the option of having appointment dates and times on the back of your cards.
I also made brochures for my private practice. I used the free templates available in Microsoft Word and wrote the content for the brochure based on my Psychology Today ad. You can also print about 50 brochures through Vista Print for approx. $30.00. Brochures are nice to have in your waiting room, to give to colleagues, or to hand out to local medical offices.
12. Connecting with your Community
Now that you have set up your private practice, you can have lots of fun attending local meet-ups, and Chamber of Commerce meetings, having lunch with colleagues or visiting local medical offices to discuss your private practice. When I started my private practice, I asked the public library if I could do a series of six, 1-hour health and wellness seminars over a 1-year period. They agreed and I absolutely loved meeting people in the community and providing innovative health and wellness seminars to the public. Even though I did not generate any direct referrals from my seminars, I was able to advertise them on my website.
Because of the popularity of my health and wellness seminars at the library, the local TV station interviewed me. In 5 years, I was interviewed 14 times on local TV!
Starting a private practice is exciting and fun. I hope this step-by-step guide gives you the courage to make your dreams of private practice become a reality. The world needs you and your future clients need you. There are hundreds of clients waiting for you!
Private Practice Start-Up Costs
Approx. Average Monthly Costs
- $42.00 per month: Malpractice Insurance
- $20.00 per month: Business Insurance
- $150.00 per month: Office Sublease Option
- $1.60 per month: Business License Fee
- $29.99 per month: Psychology Today Ad
- $1.25 per month: Business cards
TOTAL per month: $244.84
About the Author
Dr. Christine E. Dickson has been in private practice since 2011. She holds a Dual PhD in clinical and industrial-organizational psychology. Even though she is licensed to practice as a clinical psychologist her unique educational background gave her an advantage in business. Christine completed graduate coursework in business and marketing as part of her Dual PhD in industrial-organizational psychology. She also taught undergraduate business classes. Christine’s knowledge of business allowed her to develop an effective business plan for her private practice and within the first month of starting her practice she generated her previous full-time monthly salary working only part-time. Christine is passionate about teaching clinicians how to start their private practice because most clinicians have never taken a business class and do not know how to design an effective plan. To purchase her full private practice toolkit and/or receive business coaching, please visit her website.
Rave Reviews for 12 Steps to Starting a Private Practice Article
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“I am just beginning to look into building a private practice. I have looked everywhere for information on how to get started, as it all seems very overwhelming. Your materials provided me with so much information without the sense of feeling overwhelmed.” – Sarah L., Counselor
“I am looking to start my own private practice and your materials were very helpful. The information was straightforward and easy to understand. Thank you for sharing your knowledge!” –Bianca L, LCSW
“For someone who is just starting the process, this article is amazingly helpful! Thank you very much!!” – Julie A., Social Work Consultant
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“Thank you so much for sharing this information. This article could not have come at a better time as I am in the beginning stages of opening my business.” –Kerina K. , MS, QMHP
“Thank you very much….I know what to do now and I am confident that my new private practice I am planning to open, its going to be a success.” – Fahmida A.-S., Social Worker
“Thanks! This was very helpful and gave me insight for my future career goals.” – Megan M., Counselor
“This is extremely helpful. Thank you for sharing all this info!“ –Brittney R. C., LCSW
“Thank you!! This was very informative. I am looking to start my private practice and it’s somewhat intimidating. I would love to speak with you to pick your brain a little!” -Rihana C., LCSW
“Very informative and motivating, thanks.” –Hagit B., LP
“Thank you, Christine! Just what I needed. Very inspiring and hopeful.” – Emma B., Mental Health Therapist
“Thank you so much! This is an incredible resource, and I am so grateful!“, Robin G, Psychotherapist
“Very informative, thank you!” Chris P., Psychologist
“This was sooo helpful, many thanks!!!” -Ashley P., Psychotherapist
“Outstandingly comprehensive. Well done Dr. Dickson.” –Jerry H., USMC
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“Dr. Christine. Great advice! Thank you!!!!” – Regina B., -LMFT