Starting a private therapy practice is one of the most exciting career moves you can make. But between the excitement and the vision of helping clients on your own terms, there is a practical question that keeps many therapists up at night: How much does it actually cost?
Here is the truth: you can start a successful private practice at almost any budget level. I have seen therapists launch with under $3,000 and others invest $30,000+ before seeing their first client. Both approaches can work. What matters is understanding where your money goes and making intentional choices that match your financial reality.
This guide breaks down every expense you will encounter, from one-time startup costs to recurring monthly bills. We will look at three budget scenarios with real numbers, show you where to save, and identify the areas where cutting corners could cost you more in the long run.
One-Time Startup Costs
These are the expenses you pay once when launching your practice. Some are legally required, others are practically essential, and a few are nice to have. Understanding the difference helps you prioritize your initial investment.
Legal and Business Formation
Before seeing your first client, you need to exist as a legal business entity. This protects your personal assets and establishes your professional credibility.
Legal Setup Costs
| Expense | Cost Range | Notes |
|---|---|---|
| LLC Formation | $50 - $500 | Varies by state. California is expensive, Wyoming is affordable. |
| PLLC Formation (if required) | $100 - $800 | Some states require Professional LLCs for licensed therapists. |
| Business License | $50 - $400 | City or county requirement. Check local regulations. |
| NPI Number | Free | Required for insurance billing. Apply at NPPES. |
| EIN (Tax ID) | Free | Get this from the IRS website in about 10 minutes. |
| Attorney Review (optional) | $300 - $1,500 | For reviewing contracts, lease agreements, or policies. |
The bare minimum here is around $100 to $200 in most states. You can file your own LLC online without a lawyer. But if your state requires a PLLC or you want legal review of your operating agreement, budget $500 to $1,000.
Technology and Software Setup
Technology is where many new practice owners either overspend or underspend. You need certain things from day one, while others can wait until your caseload grows.
Technology Startup Costs
| Item | Cost Range | Priority |
|---|---|---|
| Laptop or Computer | $0 - $1,500 | Use existing |
| External HD Webcam | $50 - $150 | Recommended |
| Headset or Microphone | $30 - $100 | Essential for telehealth |
| Ring Light | $25 - $75 | Nice to have |
| Simple Website | $0 - $500 | Recommended |
| Domain Name | $12 - $50/year | Essential |
| Professional Email | $0 - $72/year | Recommended |
If you already have a decent laptop, your technology startup costs can be under $200. If you need new equipment, budget $500 to $1,500.
Monthly Recurring Costs
These ongoing expenses form your monthly overhead. Keeping these low in the beginning gives you more runway to build your caseload without financial pressure.
Monthly Operating Expenses
| Expense | Lean Budget | Moderate Budget | Premium Budget |
|---|---|---|---|
| EHR/Practice Management | $30 - $50 | $75 - $150 | $150 - $300 |
| Telehealth Platform | $0 (included) | $0 - $50 | $50 - $100 |
| Business Phone | $15 - $30 | $30 - $50 | $50 - $100 |
| Office Space | $0 (telehealth) | $300 - $600 (sublet) | $800 - $2,000 |
| Malpractice Insurance | $30 - $50 | $40 - $75 | $75 - $150 |
| Directory Listing (Psychology Today) | $30 | $30 | $30 |
| Total Monthly | $105 - $160 | $475 - $955 | $1,155 - $2,680 |
The Hidden Cost Most Therapists Forget
The biggest hidden cost is time without income. Most practices take 6 to 12 months to become consistently profitable. Plan for this runway, not just startup expenses. If you are leaving a full-time job, have at least 6 months of living expenses saved before making the leap.
Three Budget Scenarios
Let us look at three realistic scenarios to help you understand what starting a practice actually looks like at different investment levels.
Lean Start: $2,500 - $4,000
For therapists with limited savings or those testing private practice while keeping another job.
- ✓ Telehealth-only model
- ✓ Basic EHR with integrated video
- ✓ Psychology Today listing only
- ✓ Simple one-page website
- ✓ Private-pay clients only
Monthly overhead: $105 - $160
Moderate Start: $8,000 - $15,000
The sweet spot for most therapists. Enough investment for a professional setup without overextending.
- ✓ Hybrid model with part-time office sublet
- ✓ Mid-tier EHR with billing features
- ✓ Professional website with SEO basics
- ✓ Multiple directory listings
- ✓ Some insurance panel credentialing
Monthly overhead: $475 - $955
Premium Start: $20,000 - $35,000
For therapists with significant savings or business loans who want to start with a fully professional setup.
- ✓ Dedicated private office space
- ✓ Professional furniture and decor
- ✓ Premium EHR with all features
- ✓ Custom branded website
- ✓ Marketing and SEO investment
- ✓ Full insurance panel credentialing
Monthly overhead: $1,155 - $2,680
Where to Save (And Where You Should Not)
Not all cost-cutting is created equal. Some savings are smart, while others can hurt your practice before it even gets started.
Safe Places to Cut Costs
- ✓ Office space: Start telehealth-only or with hourly sublets
- ✓ Furniture: Buy secondhand or refinish existing pieces
- ✓ Website: Start simple with one-page or directory profile
- ✓ Business cards: You probably do not need them in 2025
- ✓ Branding: A clean, simple look works great initially
- ✓ Directory listings: Psychology Today alone is often enough at first
Never Skip These
- ✗ Malpractice insurance: Non-negotiable. Period.
- ✗ HIPAA-compliant EHR: Proper documentation protects you legally
- ✗ Separate business phone: Maintain boundaries from day one
- ✗ Business bank account: Never mix personal and business finances
- ✗ Written policies: Informed consent, cancellation policy, etc.
- ✗ LLC or PLLC: Protect your personal assets
Your Break-Even Analysis
Understanding when you will break even helps you set realistic expectations and plan your finances accordingly.
The Break-Even Formula
Monthly Overhead / Session Fee = Sessions Needed to Cover Costs
Lean Start: $150 / $150 per session = 1 session per month just for overhead
Moderate: $700 / $150 per session = 4.7 sessions per month
Premium: $1,800 / $150 per session = 12 sessions per month
Remember, this is just to cover overhead. To replace a $60,000 salary (after accounting for self-employment taxes, which add about 15%), you need roughly $75,000 in revenue. That is about 500 sessions per year at $150 each, or 10 to 12 sessions per week.
Most new practice owners reach this milestone within 12 to 18 months. The key is keeping overhead low while you build your caseload.
Your Startup Checklist
Legal Foundations
- Form LLC or PLLC
- Get EIN from IRS
- Apply for NPI number
- Get business license
- Purchase malpractice insurance
Operations Setup
- Open business bank account
- Set up HIPAA-compliant EHR
- Get business phone number
- Create informed consent forms
- Write practice policies
Getting Visible
- Create Psychology Today profile
- Set up Google Business Profile
- Build simple website
Frequently Asked Questions
How much money should I save before starting a private practice?
Plan for startup costs plus 6 months of personal living expenses. If you are doing a lean start at $3,000 and your monthly living expenses are $4,000, you should have about $27,000 saved before making the leap. This gives you runway to build your caseload without financial panic affecting your clinical work.
Can I start a therapy practice with no money?
Technically, the bare minimum is around $500 to $1,000 for LLC formation, malpractice insurance, and a basic EHR subscription. You can work from home doing telehealth only. However, starting with zero capital is risky. Having some financial cushion helps you make better decisions and survive the initial slow months.
Should I get a business loan to start my practice?
Only if you have a solid business plan and are confident in your ability to build a caseload. A therapy practice can be started very lean, so loans are rarely necessary. If you do borrow, keep it small, under $10,000, and have a clear plan for how you will pay it back during the first year.
How long does it take to fill a therapy practice caseload?
Most therapists can fill a part-time caseload of 10 to 15 clients within 3 to 6 months with consistent marketing effort. A full caseload of 20 to 25 clients typically takes 9 to 18 months. Location, specialty, insurance acceptance, and marketing consistency all affect these timelines significantly.
Is it worth paying for a practice management system?
Absolutely. A good EHR/practice management system typically costs $30 to $150 per month but saves you 5 to 10 hours per week on administrative tasks. It also protects you legally through proper documentation and HIPAA compliance. This is one area where spending a bit more is almost always worth it.
Key Takeaways
You can start a legitimate therapy practice for as little as $2,500 to $4,000 using a telehealth-only model with minimal overhead.
Never skip malpractice insurance, HIPAA-compliant software, or proper business formation, no matter how tight your budget.
Plan for 6 to 12 months of personal living expenses on top of startup costs, since most practices take time to become profitable.
Keep monthly overhead low in the beginning. You can always upgrade your office, systems, and marketing as your income grows.
To replace a $60,000 salary, plan for roughly 10 to 12 weekly sessions at $150 each, which most therapists achieve within 12 to 18 months.
Start with the essentials, get visible quickly, and refine your systems as you learn what works for your unique practice and clientele.
Taking the First Step
Starting a private practice is a significant decision, but it does not have to be overwhelming. Start with the essentials, keep your overhead low, and scale up as your caseload grows. Every successful practice owner started exactly where you are now.
Here is your action plan:
- Choose your budget tier. Be honest about your financial runway and risk tolerance.
- Handle the legal basics. LLC, EIN, NPI, and malpractice insurance come first.
- Set up your systems. EHR, phone, and bank account are your operational foundation.
- Get visible. Psychology Today profile and Google Business Profile are your starting point.
- Start seeing clients. Everything else can be figured out as you go.
You do not need everything perfect before you begin. You just need the essentials in place and the willingness to learn as you grow. The therapists who succeed are not the ones with the biggest budgets. They are the ones who start, stay consistent, and keep improving.
You have got this.
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The TheraFocus team is dedicated to empowering therapy practices with cutting-edge technology, expert guidance, and actionable insights on practice management, compliance, and clinical excellence.