Starting a Private Practice in Counseling

Starting a private practice in counseling takes courage and resolve, eliciting both excitement and apprehension. Our guide can help you come up with a plan to open your own practice, beginning with the pros and cons (or challenges) you might encounter.

Examining the pros and cons should help you determine if you're ready for private practice counseling and whether or not it's a suitable path for you.

Pros:

Cons:

Who Can Start a Private Practice in Counseling?

Any licensed professional counselor can open their own practice. Obtaining a license requires a master's degree, supervised clinical experience, and a passing score on a qualifying examination.

According to LaTrice L. Dowtin, owner of PlayfulLeigh Psyched, "For the most part, there are no additional licenses required to start a private practice."

Though you won't need additional counseling qualifications, you need a business license for your practice pursuant to your local regulations.

"You will have to decide on your business structure, whether you will do sole proprietorship, LLC, or S-Corp," advises Sweyd. Some structures require filing papers with your state.

Before setting up your own practice, consider working in a group practice or medical office. Doing so provides an inside look at the day-to-day procedures of running a practice and helps you build a network of contacts.

Creating a Business Plan

Your business plan functions as the roadmap to starting your private practice. A business plan, advises Dowtin, "will help you hone your practice's mission and vision statement and help you identify your ideal client."

When starting your practice, Sweyd offers, "The first step is to really get specific and know your why. Why do you want to be a therapist? Why do you want to be in private practice?"

You'll need to identify the practical components of your business. Some of the elements of a solid business plan, according to the U.S. Small Business Administration, include:

Find Your Niche

Identifying your target or ideal client to determine your niche, which differs from your specialty, is an important aspect of your business plan.

As Dowtin explains, "Your specialty could be trauma and early childhood mental health. Your niche might be working with adoptive parents who have a young child with a trauma history."

Focusing on your niche may sound limiting and detrimental to building a client base, but it actually helps streamline your efforts and simplify networking sources.

"The greatest challenge for me was understanding how a niche helped me get more people through my door," says Sweyd.

"I was under the impression that if I focused my marketing to a specific group of clients, then I would end up not having a full practice," Sweyd elaborates. "But I found that when I focused on general populations, I was actually overwhelmed with the marketing as well as the work in my practice."

Legal Considerations for Private Practice in Counseling

Choose a Business Structure

One of the first steps to starting a private practice is determining your legal structure. Options include sole proprietorship, limited liability company (LLC), corporation, or partnership.

Courtney Conley, owner of Expanding Horizons Counseling and Wellness, says, "If at all possible, you want to consult a tax accountant or business consultant to be sure you set your practice up the right way and know what type of business taxes need to be filed."

Different structures offer different benefits, not only concerning taxation, but also in terms of protecting yourself from liability.

"If you are doing a sole proprietorship, you do put your personal life and assets at risk should you be sued for malpractice," advises Sweyd. "LLCs and S-Corps are safer, but take more time and energy to build up front."

Planning for Taxes and Accounting

New practice owners need to guard against making tax mistakes like mixing business and personal expenses, choosing the wrong legal structure, and deducting expenses incorrectly. To avoid these and other common situations, Sweyd suggests "finding an accountant that understands therapists."

Talking with an accountant at the outset increases your likelihood of making the right choices. For example, your business structure determines how you file your business taxes. "Consult a professional to decide what type of business entity to establish," emphasizes Conley.

An accountant may seem like an expense you cannot afford, but bypassing professional advice heightens the risks of costly problems later.

Though time consuming, carefully organizing your business expenses from the beginning will make later decisions easier. "If you are not diligent about tracking your expenses and putting away money for tax payments, you will have significant difficulty at the arrival of tax season," warns Dowtin.

Securing Malpractice Insurance

Clients file lawsuits against therapists for many reasons, including failure to report child abuse, failure to warn that a client may commit violent acts, and failure to intervene when a client makes a credible suicide threat.

Malpractice insurance provides legal help with lawsuits brought by clients, including defense against frivolous lawsuits, and protects your business -- and, in some cases, personal -- assets. Even if you establish your practice as an LLC, you still need professional liability insurance.

The amount you pay depends on your practice's location and your specialty area. It may seem like another expense you can't initially afford, but its importance cannot be overstated.

Starting Your Private Practice in Counseling

Tips for Starting a Private Practice in Counseling

Meet Our Contributors

LaTrice L. Dowtin

Dr. Dowtin, owner and director of PlayfulLeigh Psyched, is a Black cisgender woman who believes in the ongoing pursuit of cultural humility. She is a licensed clinical professional counselor who specializes in perinatal, trauma, and infant mental health for culturally, racially, and linguistically marginalized families. She uses both English and American Sign Language, and is currently co-director and professor at Gallaudet University in the Infants, Toddlers, and Families graduate program. Dr. Dowtin is also co-chair of the Training & Education Committee with the National Network of NICU Psychologists under the National Perinatal Association. Given her background, Dr. Dowtin is passionate about serving historically marginalized populations, disrupting the generational transmission of trauma, and facilitating healthy social-emotional development from conception through adulthood.

Alisha Sweyd

Alisha Sweyd helps first responders and their families find fulfillment, joy, and meaning in their life of service. She especially enjoys working with first responder couples to overcome the unpredictable lifestyle and discover the passion and love in their marriage again. Alisha's credentials include licensed marriage and family therapist, certified first responder counselor, certified clinical trauma professional, and certified SYMBIS facilitator. When she is not working with clients, Alisha enjoys quality time with her family, walking her dogs, and reading books not based on real life, while watching the waves along the Monterey coast.

Courtney Conley

Dr. Courtney Conley is an assistant professor, therapist, and author who specializes in working with adolescents. Her mission is to equip adolescents with the tools needed to successfully navigate their teenage years. She has drawn from her own teenage experience and her eight years as a school counselor to develop an approach that reaches adolescents. She currently resides in a suburb of Washington D.C., where she continues to serve adolescents and their families in her private practice, Expanding Horizons Counseling and Wellness. Connect with Dr. Conley on Twitter: @ConleyEmpowerment.