Starting a Private Practice in Counseling
| Staff Writers
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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.
- Starting a private practice in therapy means you can set your schedule, take time off when you need it, and concentrate on a client population that interests you most.
- Building a successful business while helping people comes with multiple benefits and satisfaction that you may not experience working for someone else.
- You can join a group that offers connections and assistance with private practice growth. Alisha Sweyd, whose practice focuses on first responders and their families, recommends Next Level Practice. She also advises finding your own therapist.
Additional Expertise Required:
- You’re a therapist, not a lawyer, accountant, or marketing professional. In order to start your own practice, you need to understand (or hire people who understand) the legal aspects of opening a business, finances and taxation, and how to get clients to come in the door.
Overhead and Other Costs:
- You need office space, malpractice insurance, start-up funds to set up and market your practice, and to, potentially, hire other professionals to assist with these tasks. These costs, and potentially inconsistent income sources, pose challenges for new business owners.
Stress and Burnout:
- Not only do you perform your duties as a therapist, you also run a business. Each of these functions can be overwhelming, and, combined, they take considerable time and effort until you get on your feet and can hire employees to help.
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:
- Executive summary: Include your mission statement, the scope of your services, and financial information.
- Practice description: Identify your client base, your counseling approach, and your office location.
- Organization details: Describe your business’ legal structure, partners, and staff members.
- Marketing strategy: Detail how you will build your clientele.
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
Determine a Business Location
- With legal considerations covered, you can decide the location and format of your services. As Dowtin points out, in addition to its impact on your own commute, “Location is important because you would need to consider if the clients that you want to serve can actually get to you.” In order to support your clients, determine the location’s proximity to public transportation and other healthcare providers.
Early in 2020, when the pandemic took hold, many therapists made the transition to telemental health. According to Dowtin, “Some clinicians have had well-functioning online practices for years before the global pandemic.”
The choice to provide telemental health services can impact your access to your clients.
“You will need to decide if you want to also have a brick and mortar location along with being able to provide telemental health counseling,” says Dowtin. “In some states, you will need to obtain telemental health certification if you are planning to use an online platform to see some of your clients.”
Build Your Website
- Your website is one of the best marketing tools for starting a private practice in therapy, showcasing your services and providing contact info, forms, resources, and payment options. You can hire someone to build it or set it up yourself.
Dowtin provides advice on choosing a DIY platform: “Do a little research before selecting which web designer you will use (e.g., Wix, WordPress, Squarespace, etc.). They each have their own pros and cons and prices vary.”
Counselors should also consider HIPAA and HI-TECH compliance when setting up websites, email, booking, and payment methods.
“For example,” Dowtin offers, “popular payment apps, such as Venmo, CashApp, and PayPal do not currently follow HIPAA security, and should not be used to accept payments from clients covered under PHI protection.”
Prepare Client Forms and Documents
- Dowtin advises assembling client documents in advance. “It is good to have all of your policies, form letters, intake processes, progress note templates, etc., designed and ready before you see your first client,” she says.
Examples of forms you will need include:
-Consent for services or service contract outlining your guidelines
-Notice of privacy practices required for HIPAA-covered entities
-Authorization to release information to other practitioners if the need arises
-Authorization for client credit cards kept on file
-Social media policy concerning clients as friends and followers
You can find templates for these and other forms and documents online, altering them to suit your specific needs.
Tips for Starting a Private Practice in Counseling
Sublease your first space for a day or two per week
- “Many new clinicians are able to sublease office space if they are willing and able to start out their practice part time,” suggests Dowtin.
Advantages to this strategy include the ability to try out your location without a large financial commitment.
“Faith-based clinicians may also be able to reach out to their local churches for low to no-cost temporary therapy spaces,” Dowtin adds.
Join a private practice growth group
- Sweyd credits the group she belongs to for the current success of her practice, pointing out that group members hold you accountable for the goals you set for yourself.
“Not only do they teach you everything about running a business,” Sweyd explains of growth groups, but they also connect you with “people who help you become more creative in growing your practice.”
Explore resources for minority mental health services and providers
- The American Foundation for Suicide Prevention provides a comprehensive list of resources for minority mental health services and providers.
Paying for referral services isn’t always feasible, so Dowtin suggests several options for therapists looking for referrals. “There are a couple of really great free services like Therapy Den for full-fee clients, and Open Path Collective for clients with low income and no access to insurance,” she says.
- Opening your own business invariably involves stress.
“Running a business can be stressful. Living life can be stressful. Being a parent in a pandemic can be stressful,” offers Sweyd. “Get a therapist to be your therapist while you go through this major life transition.”
Conley also suggests finding “a mentor to help and guide you if possible.”
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 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.
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.
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