Step by Step Guide to Setting Up Your Therapy Practice
Are you thinking about starting a private practice? Maybe you are looking to just try it out with a client or two on the side. Or perhaps you are looking to leave your full time job and go completely on your own. In any case, awesome! I know it can feel overwhelming and you likely don’t know where to begin. I’ve been there! I started my practice many years ago by first taking a part time job in a school three days a week and building my private practice on the other two days. After about a year and a half, I had built up enough of a caseload that I felt comfortable enough to leave the school the following year.
I had to figure out how to navigate things like setting up an LLC, taking payments, setting up business banking, paying taxes, keeping client records in a HIPAA compliant manner, marketing…it was a lot to tackle on my own. They don’t teach you these things in grad school! Nevertheless, after doing the research and the hard work on my own I figured it out. Now I can share my knowledge and experience with you to make the process a little easier.
There are many paths you can take on the road to building your private practice. You will need to carve out the path that best suits your life and personal situation. Before you start though, you will want to figure out your why – why do you want to start a practice? Are you looking for more time freedom, independence, better financial compensation? Are you excited at the thought of being able to develop a niche and offer specialized services to better serve the community? Are you tired of being told how you need to deliver your therapy services and being constrained by lots of red tape? Sort out all the reasons why private practice is appealing to you and then you can decide how to move forward. I suggest finding a support system right from the start; friends, family, other therapists, or a group on social media.
I have outlined the crucial steps here so that you have a starting place and a process for setting up your private practice. If you follow my step by step guide, you can get started quickly and efficiently so you can finally focus on doing what you love to do – serving your clients.
Initial Considerations
Before you begin the process of actually setting things up, here are some considerations:
You should develop a business plan.
What do you want your life and practice to look like 3 years from now? Are you still solo or with a group? Are you a practicing therapist or just managing? Are you in person or virtual? Will you travel to homes or centers? Will you be cash based only or will you take insurance? If you just want to test the waters with private practice with a client or two, that’s fine as well. Then you don’t need to necessarily nail down all the details yet. But you can start thinking and mulling over some ideas. You can change your mind with any of this, but start to brainstorm and come up with initial thoughts.
Determine your budget.
If you’re going to need office space, this will likely be the biggest part of your monthly budget. Start researching office space early so you know what you will need to spend. Would you consider sharing space? Subleasing space? Renting from one of those office suites that rents by the day specifically to therapists such as “Therapy Space?” Maybe reach out to local healthcare providers and let them know you’re looking to sublet a room if they have an extra one.
Decide how you will deliver services and who your clients will be.
Are you offering teletherapy? What are your state’s teletherapy requirements? What platform will you use that’s HIPAA compliant? If you use Google Workspace for EHR you can use Google Meet included with the plan.
Are you properly licensed for private practice? Will you practice across state lines virtually and what are the licensing requirements for doing so?
Have you decided on your niche? Or will you be a generalist? Identify your ideal client.
And now…
Steps for Setting Up Your Private Practice
Naming your practice
Considerations – will you stay solo and want to use your own name or do you prefer to name your practice something else that describes your niche, or something catchy? With a solo practice you can choose a name based on your personal preference. But as a group practice you might not want to be limited to just using your name as the practice name.
Research the practice name – this involves going to your state department government website and doing a business name search to see if the name is available. You don’t want to buy a domain name only to find out someone is using that name already.
Then research the domain name and see if that’s available. I use NameCheap to find and purchase domain names. You can often reserve the business name on the state website for some time before purchasing if you aren’t quite ready to commit. For domain names I recommend the .com as this is the name most used and familiar to the general public.
Business Entity Formation
Decide on your business entity type and apply for your LLC or PLLC depending on your state, or S Corp. You can do the research and decide what works best for your individual circumstances, but the consensus is that you should protect yourself legally in your practice by forming a corporation so you’re not personally liable if a lawsuit should arise. You can do this on your own or use a company online such as Legal Zoom. There is an option to go through the setup process with them for free, you just need to complete some of the steps in the process on your own.
*Disclaimer – don’t take legal advice from a therapist! Consult with an attorney for any questions you have in the process of your private practice setup if you have questions or concerns and want to cover your bases.
Applying for EIN
Next you apply for your EIN (Employee Identification Number) on the IRS website. It’s not hard to do by yourself. You don’t want to put your social security number on billing documents if you don’t have to once you start seeing clients. This will be your identification number for tax purposes.
Business Banking Account
Once you have your EIN you can apply for a business checking account. Some people opt not to do this, but it is highly recommended to keep your personal and business finances separate. If you search you can find a small business checking solution at a local bank that is either free or very affordable on a monthly basis.
Obtaining NPI Number
You will need to apply for an NPI number. A National Provider Identifier (NPI) is a number that is used to identify health care providers in administrative and financial transactions. Every healthcare provider has one and you will need to include this on your superbills.
Practice Insurance
Make sure you have an appropriate level of professional liability insurance as a private practitioner. If you are renting space, you will probably need to add general liability insurance as well.
Licensing Requirements
Check with your local business office to see if you are required to obtain a city license to practice in your local area.
Accepting Payments
Decide on the forms of payment you accept. It is definitely a good idea to accept credit cards as everyone expects it these days. You can use a service like Square that is HIPAA compliant to accept credit cards including FSA and HSA as well as bank transfers. Square also offers a customer contact portal where you can store client information securely, do your appointment scheduling and send email and text reminders free of charge.
If you are going to take insurance, start the credentialing process early as it can take some time.
Bookkeeping and Accounting
Choose a bookkeeping system. How will you manage your books? Do you want to use an accounting software online or can you do it yourself using a spreadsheet with Google Sheets? Keeping track of your expenses and revenue on a monthly basis is an important part of maintaining your practice records so you’ll need to find a way to do this. With some research and practice, you can learn to manage your own books on a spreadsheet. It’s what I do, although I do hire an accountant who takes care of filing my taxes each year.
Determining Rates
It’s a good idea at this point to figure out what your rates will be. Do some research within your local area and in your niche to see what the going rate is and decide what you are comfortable charging. Don’t undersell your professional skills!
Selecting EHR and Practice Management Software
Decide on a HIPAA compliant system for maintaining your records. I highly recommend Google Workspace as an affordable EHR system. The benefits of paperless charting are many and what most practices use today. Once you have your domain you can set up an account for just $6 a month when paid annually for a single user and you will obtain your email address and access to the whole suite of tools from Google for managing your practice. You can read more about Google Workspace and HIPAA compliance on my previous blogpost here.
You can add on google voice for $10 a month if you want HIPAA compliant phone and messaging services as well. Keeping everything all under one “roof” helps streamline your practice and makes your workflow simple and manageable.
You will need to get your consent forms setup for onboarding new clients. If you use Google Workspace you can send these easily with Google Forms and have the information stored digitally in your Google Drive. Get counseling from an attorney if you are unsure about what forms you need to cover your legal bases. Check with your local governing jurisdiction to make sure you include all required components in your paperwork.
Having an onboarding process in place will help simplify the process of bringing on new clients. How will clients reach out to schedule an initial appointment? Will you take phone calls or email for this or set up a booking button for a free consult on your website? You might want to set up email templates with your intake forms and practice policy information ready to go. Or perhaps you will have a portal on your website where new clients will be directed to fill out forms.
Having a standardized onboarding sequence will make this process a breeze. Mine looks like this:
I have a booking button on my website where clients can schedule a call and see if we are a good fit to work together.
If so we schedule a first session.
I add their contact information to Square and they receive email and text confirmations for the appointment.
I send an email containing consent and history forms and office information including policies.
You can also decide how you will handle clients that you can’t accommodate – will you have a waitlist system in place or will you prefer to refer out?
Marketing Your Private Practice
Will you be setting up a website? You should! You can create a free site to start using Google Sites if you’re not ready to pay web hosting fees. But this may be an investment worth considering from the start as it can really elevate your practice right from the get go. You can use a platform like WordPress, Squarespace or Wix and if you are the DIY type can do some research to build a simple site yourself. Otherwise there are affordable options out there for web developers if you do your research. You’ll want to make sure your site is built with SEO in mind and a good web developer can help with that if you’re not able to tackle that yourself.
How else will you market – ads, networking, outreach, online directories, social media?
You might want to get some good headshots that you can include in your marketing. If you’re on a tight budget try to find college students studying photography – they would be thrilled to make some extra money and you can get some nice professional photos.
So there you have it; a step by step process for setting up your private practice. By following this guide, you’ll be well-prepared to launch and manage a successful practice. Remember, starting a private practice is a dynamic process, and being adaptable and open to learning will be crucial to your success. Don’t waste any more time; get started now!
