Starting a private practice in Illinois is one of the most exciting (and terrifying) decisions you'll ever make. The paperwork feels endless. The regulations feel confusing. And nobody in grad school taught you how to actually run a business. But here's the truth: you can absolutely do this. This complete checklist breaks down everything you need to start your Illinois private practice, step by step.
Let's get you from "thinking about it" to "officially open for business."
Verify Your Illinois Clinical License
Before anything else, you need an active clinical license from the Illinois Department of Financial and Professional Regulation (IDFPR). This is non-negotiable. No license, no practice.
Illinois recognizes several types of independently-licensed mental health professionals:
Illinois Mental Health License Types
- LCPC (Licensed Clinical Professional Counselor) Requires a master's degree in counseling, 3,000 hours of supervised experience (2 years minimum), and passing the NCE or NCMHCE.
- LCSW (Licensed Clinical Social Worker) Requires an MSW from a CSWE-accredited program, 3,000 hours of supervised clinical experience, and passing the ASWB Clinical exam.
- LMFT (Licensed Marriage and Family Therapist) Requires a master's degree in marriage and family therapy, 200 hours of face-to-face supervision, 1,000 clinical hours, and passing the MFT National Exam.
- Licensed Clinical Psychologist Requires a doctoral degree in psychology, supervised internship, and passing the EPPP.
Already licensed? Verify your license is active at the IDFPR License Lookup.
Choose Your Business Structure
You're not just a therapist anymore. You're starting a business. In Illinois, you have several options for structuring your practice.
Sole Proprietorship
The simplest option. You and your business are legally the same entity. No separate business formation required.
Pros: Easy to set up, minimal paperwork, lower startup costs
Cons: No personal liability protection. If someone sues your practice, your personal assets are at risk.
Limited Liability Company (LLC)
This is what most private practice therapists choose. An LLC creates a legal separation between you and your business. Your personal assets are protected if something goes wrong with the practice.
Pros: Liability protection, flexible tax options, professional credibility
Cons: More paperwork, annual fees, requires separate business banking
Forming an LLC in Illinois
- 1Choose a unique business name (check availability at the Illinois Secretary of State website)
- 2File Articles of Organization with the Illinois Secretary of State ($150 online, $175 by mail)
- 3Designate a registered agent (can be yourself at your business address)
- 4Create an Operating Agreement (not legally required but highly recommended)
- 5File your Annual Report each year ($75) to keep your LLC in good standing
My Recommendation
Form an LLC. The liability protection is worth the extra paperwork and fees. You can always change your tax election later as your practice grows.
Get Your Federal EIN
An Employer Identification Number (EIN) is like a Social Security number for your business. You'll need it to open a business bank account, file taxes, and work with insurance companies.
Good news: Getting an EIN is free and takes about 5 minutes.
Get Your EIN
- 1Go to IRS.gov EIN Application
- 2Complete the online application (available Monday-Friday, 7am-10pm ET)
- 3Receive your EIN immediately upon completion
- 4Download and save your confirmation letter
Apply for Your NPI Number
A National Provider Identifier (NPI) is a unique 10-digit number that identifies you as a healthcare provider. You need one if you plan to bill insurance or accept Medicare/Medicaid.
Even if you're starting as private-pay only, I recommend getting your NPI now. It's free, and you'll need it if you ever decide to accept insurance.
Apply at the NPPES website. The application takes about 15-20 minutes.
Secure Professional Liability Insurance
Professional liability insurance (malpractice insurance) protects you if a client alleges negligence or other professional misconduct. This is essential. Do not see clients without it.
Most therapists pay between $200-500 per year for liability insurance.
Popular Insurance Providers for Illinois Therapists
- HPSO (Healthcare Providers Service Organization): Popular choice with competitive rates
- CPH & Associates: Offers coverage for telehealth and specialized modalities
- American Professional Agency: Well-established with good customer service
- NASW Assurance Services: Option for social workers through NASW membership
Set Up HIPAA Compliance
HIPAA (Health Insurance Portability and Accountability Act) requires you to protect client health information. As a private practice, you're a "covered entity" and must comply with HIPAA regulations.
HIPAA Compliance Checklist
- Written Policies and Procedures Document how you protect PHI, handle breaches, and train staff.
- Notice of Privacy Practices (NPP) Explains to clients how you use and protect their health information. Clients must sign acknowledgment.
- Business Associate Agreements (BAAs) Contracts with any vendor who accesses client data: EHR systems, billing companies, cloud storage.
- Secure Technology Encrypted email, HIPAA-compliant video platform, secure EHR, encrypted devices.
Open a Business Bank Account
Keep your business and personal finances separate. This is essential for LLC protection, tax compliance, and your own sanity at tax time.
You'll need your EIN and LLC documentation to open a business account.
Secure Your Practice Location
Office Options for Illinois Therapists
- Traditional office lease: Most expensive but gives you full control. Expect $15-35 per square foot annually in most Illinois markets (higher in Chicago).
- Office sharing/sublease: Share space with another therapist. Often the most cost-effective option when starting out.
- Executive suites: Furnished offices with shared reception, often flexible lease terms.
- Telehealth only: No office needed. Just ensure you have a private, professional space for video sessions.
Choose Your Practice Management System
You need software to run your practice efficiently. At minimum, you'll need tools for scheduling, client intake, clinical documentation, billing, and secure messaging.
An all-in-one practice management system combines these functions. Look for a system that's HIPAA-compliant and includes a BAA.
Set Your Fees
In Illinois, private-pay therapy rates typically range from $120-200 per session outside Chicago, and $150-250+ in the Chicago metro area. Specialized services often command higher rates.
Build Your Initial Marketing Presence
- Psychology Today profile: This is where many people search for therapists. Worth the $30/month.
- Google Business Profile: Free and helps you appear in local searches.
- Simple website: Even a one-page site establishes credibility.
- Professional photo: Invest in a good headshot.
Your Complete Illinois Private Practice Checklist
Illinois Private Practice Startup Checklist
You Can Do This
Starting a private practice in Illinois takes work. There's no way around the paperwork, the decisions, and the moments of "am I really doing this?" But thousands of therapists have walked this path before you. And you're more prepared than you think.
Take it one step at a time. You don't have to do everything at once. Start with your license and business structure. Then move through the list methodically. Before you know it, you'll be seeing clients in your own practice.
Now go make it happen.
Ready to Build Your Practice the Smart Way?
TheraFocus gives you the practice management tools, HIPAA compliance, and intelligent automation you need to run a successful private practice.