Starting a Private Practice: Complete Checklist

Starting a therapy private practice is one of the most rewarding career moves you can make. You finally get to practice on your own terms, choose your clients, set your schedule, and build something that reflects your clinical philosophy. But here is the truth nobody tells you in graduate school: becoming an excellent clinician does not prepare you to run a business. This complete checklist covers every essential step from legal setup to your first paying clients, with realistic timelines and practical insights gathered from watching hundreds of therapists launch successful practices.

If you have ever felt overwhelmed by the sheer number of decisions involved in going solo, you are not alone. Most new practice owners spend weeks researching things that do not matter while accidentally ignoring things that do. They get lost in logo design while neglecting liability insurance. They perfect their website copy while forgetting to set up a business bank account. This guide fixes that by putting everything in order of priority, with honest timelines and the context you need to make smart decisions fast.

6-8

Weeks to Launch

12-18

Months to Full Caseload

$2-5K

Typical Startup Costs

83%

Report Higher Satisfaction

Phase 1: Foundation and Business Structure (Weeks 1-2)

Before you pick office colors or design a logo, you need to make foundational decisions that affect every other choice. These are not glamorous, but they are essential. Rushing through this phase creates headaches that compound over months and years. The good news is that most of these decisions are straightforward once you understand your options.

Choosing Your Business Structure

Your business structure determines your liability protection, tax treatment, and administrative requirements. This single decision affects how you file taxes, whether your personal assets are protected from business lawsuits, and how much paperwork you manage annually. Here is how the options compare for therapy practices:

Simpler Options

Sole Proprietorship The simplest setup with no formal registration required in most states. You report business income on your personal taxes using Schedule C. The significant downside is zero liability protection between your business and personal assets. If something goes wrong professionally, your personal savings, home equity, and other assets could be at risk.

Single-Member LLC Requires more paperwork to establish, but provides crucial liability protection that separates your business and personal assets. Still taxed as a sole proprietorship unless you elect otherwise. This is the sweet spot for most new practices because it balances protection with simplicity.

More Complex Options

Professional LLC (PLLC) Required in some states for licensed professionals including therapists, counselors, and psychologists. Functions similarly to a standard LLC but includes state-specific requirements for healthcare providers. Check your state licensing board to determine if this is mandatory for your profession.

S-Corporation Can provide meaningful tax advantages once your income exceeds roughly $80,000-100,000 annually. Requires running payroll for yourself, filing additional tax forms, and managing more administrative complexity. Usually not worthwhile for practices in their first year or two.

Invest in Professional Guidance Early

Spend $200-400 for an hour with an accountant who works specifically with healthcare providers. This single conversation will save you thousands in potential mistakes and help you understand your specific state requirements. Many therapists choose the wrong structure because they followed generic online advice that did not account for professional licensing rules or healthcare-specific regulations.

Phase 1 Checklist

Choose your business structure Consult with an accountant first, then register with your state if required. Most states allow online registration that completes within 1-2 weeks.
Get your EIN (Employer Identification Number) Free from IRS.gov. Takes about 5 minutes online. You will need this for banking, insurance panels, and vendor accounts. Do not pay a service to get one for you.
Open a dedicated business bank account Never mix personal and business finances. This is essential for clean tax records and maintaining the liability protection your LLC provides.
Make your insurance panel decision Private pay only, insurance panels, or hybrid approach? This affects your rates, client demographics, and administrative workload significantly. Research reimbursement rates in your area.
Set aside 3-6 months of living expenses Building a caseload takes time. Financial stress makes it harder to make good clinical and business decisions. Save more rather than less.

Phase 2: Legal and Compliance Requirements (Weeks 2-3)

Compliance is not optional, and mistakes here can end your practice before it starts. Some therapists treat legal requirements as an afterthought, but enforcement agencies do not care that you were focused on clinical excellence. The good news is that most requirements are straightforward once you know what they are, and you can handle most of them in a concentrated week of effort.

Professional Liability Insurance

You need malpractice insurance before seeing your first private client. No exceptions. Most policies cost between $100-400 per year for new practitioners with limited caseloads. Common providers include HPSO, CPH and Associates, and the American Professional Agency. Your professional association may offer group rates that save money. Get coverage before you book that first consultation call.

HIPAA Compliance Essentials

You are personally responsible for HIPAA compliance, not your EHR vendor. Many new practice owners assume their software handles everything, but that is not how the law works. You need to understand the Privacy Rule, Security Rule, and Breach Notification Rule at least at a basic level. At minimum, you need a Notice of Privacy Practices for clients, a documented security plan for how you protect health information, and business associate agreements with any vendor who handles protected health information on your behalf.

Legally Required

1. Active, unrestricted license in your state

2. Professional liability (malpractice) insurance

3. Business registration (requirements vary by state)

4. HIPAA Notice of Privacy Practices

5. Informed consent documentation

6. Good Faith Estimate (No Surprises Act)

Strongly Recommended

1. General business liability insurance

2. Cyber liability coverage for data breaches

3. Written cancellation and payment policies

4. Social media and telehealth-specific policies

5. Documented emergency and crisis procedures

6. Professional will or practice succession plan

Never Skip the Paperwork

Informed consent and HIPAA documentation protect both you and your clients. Get templates from your professional association or use a practice management platform that includes them. Never copy another therapist's paperwork without understanding every clause and ensuring it applies to your specific situation, state, and professional license type. What works for an LCSW in California might not work for an LPC in Texas.

Phase 3: Practice Infrastructure (Weeks 3-5)

With your legal foundation in place, you can build the systems that make your practice run smoothly day to day. These decisions affect your daily workflow more than almost anything else, so take time to evaluate options rather than grabbing the first thing you find. A poor EHR choice will frustrate you multiple times daily for years.

Electronic Health Record and Practice Management

Your EHR will be the central hub of your practice. You will use it daily for scheduling, clinical documentation, billing and invoicing, and secure client communication. Popular options include TheraFocus, SimplePractice, TherapyNotes, and Jane. All of them work reasonably well. The key is picking one that fits your specific workflow and committing to learning it thoroughly rather than constantly switching systems.

Communication Systems

Separate your personal and professional communications from day one. This is not optional. A dedicated business phone line keeps boundaries clear, looks more professional, and means you can actually disconnect when you need to. Google Voice is free and works well for new practices with limited budgets. More robust options include dedicated VOIP services designed specifically for healthcare providers with features like call recording and transcription.

Infrastructure Checklist

Choose and set up your EHR system Most platforms offer 30-day free trials. Test the actual features you will use daily, especially note-taking and scheduling, before committing to annual billing.
Set up dedicated business phone Configure voicemail with a professional greeting and clear after-hours instructions. Include emergency resources in your away message.
Create professional email address Use your practice name domain if possible. Set up automatic replies for when you are unavailable and organize folders for client communications.
Secure your practice location Office sublease, coworking therapy space, or telehealth-only model. Consider sound privacy, waiting area setup, accessibility requirements, and lease terms carefully.
Set up HIPAA-compliant video platform Even if you plan to see clients primarily in person, have a reliable telehealth option ready for inclement weather, illness, and client preferences.
Configure payment processing Most EHR systems include integrated payment processing. Understand the fee structure and how long deposits take to reach your bank account.

Setting Your Session Rates

Research what therapists with similar credentials, experience levels, and specialties charge in your geographic area. Psychology Today profiles often display rate ranges, and you can also call practices as a prospective client to inquire. Your rates should reflect your training, experience, and the value you provide to clients. Many new therapists undercharge significantly because they feel they need to "earn" higher rates. This is a mistake that becomes difficult to correct later. If you feel uncomfortable charging what the market bears, work through those feelings with a consultant or peer, but do not build your entire business model on undervalued rates.

Phase 4: Getting Your First Clients (Weeks 5-8 and Ongoing)

Marketing feels uncomfortable for many therapists. You trained to help people, not to sell services. But here is the reality: people who desperately need your help cannot find you if you remain invisible. They will end up with a less qualified therapist or no therapist at all. Marketing is not self-promotion. It is ensuring that the people you can help actually discover you exist. Focus your initial efforts on high-impact activities that produce results relatively quickly:

Client Acquisition Priority Order

Psychology Today Profile Still the primary way most people find therapists. Invest serious time in writing a compelling profile that speaks directly to your ideal client. Get professional photos taken.

Google Business Profile Completely free and essential for local search visibility. Helps potential clients find you when searching for therapists in your area. Add photos, services, and keep hours updated.

Simple Professional Website Does not need to be elaborate or expensive. Clear information about who you help, your approach, and how to contact you. A single page works fine initially.

Personal and Professional Network Tell everyone you know that you are accepting new clients. Word of mouth often produces your first clients and becomes your best ongoing referral source.

Referral Relationships Connect with primary care physicians, psychiatrists, other therapists with full caseloads, and community organizations. These relationships build slowly but pay dividends for years.

Common Mistakes to Avoid

Most new practice owners make predictable mistakes. Knowing what they are helps you avoid the same pitfalls. Pay attention to this section because avoiding these errors will save you significant time, money, and frustration:

Do This Instead

Get basic systems working before perfecting your website design

Set rates based on thorough market research and your actual value

Define your ideal client clearly and speak directly to their needs

Build a solid financial runway before officially launching

Use professional contracts and documentation from your very first client

Start marketing activities before you feel completely ready

Track your income and expenses from day one

Avoid These Mistakes

Spending weeks on website design before having operational systems ready

Setting rates too low because you feel you need to prove yourself first

Trying to appeal to everyone and ultimately connecting with no one

Launching without adequate savings for the slow building months

Skipping formal contracts because they feel awkward or too formal

Waiting until everything is absolutely perfect to start seeing clients

Mixing personal and business finances in the same accounts

Realistic Timeline and Expectations

Here is what an honest, realistic timeline looks like for most new practice owners. Your specific situation may vary based on your location, specialty, and how much time you can dedicate to setup, but this gives you a general framework:

Weeks 1-2: Business structure decisions, EIN acquisition, bank account setup, initial planning and research
Weeks 3-4: Professional liability insurance secured, compliance paperwork completed, EHR selection and configuration
Weeks 5-6: Practice location secured or telehealth setup complete, phone and email systems operational, directory profiles live
Weeks 7-8: First client inquiries arriving, initial consultations scheduled, beginning to see clients
Months 3-6: Steady trickle of new clients, refining intake processes, developing referral relationships
Months 6-12: Growing caseload, better understanding of your ideal client, smoother operations
Months 12-18: Approaching full caseload for most practitioners who have marketed consistently

Building a sustainable practice takes longer than most people expect. That is completely normal and does not mean you are doing something wrong. Plan your finances to support a gradual build rather than expecting immediate full capacity. The therapists who struggle most are those who underestimate the timeline and run out of financial runway before their practice matures.

Frequently Asked Questions

How much money do I need to start a private practice?

Most therapists can launch with $2,000-5,000 for essentials including liability insurance, EHR subscription, business registration fees, phone system, and initial marketing costs. Telehealth-only practices can often start for less since there are no office costs. If you need physical office space, add $3,000-6,000 for security deposits, first month rent, and basic furnishings.

Should I accept insurance or go private pay only?

There is no universally right answer to this question. Insurance panels provide steadier referrals and make therapy accessible to more clients, but come with lower reimbursement rates and significant administrative burden. Private pay offers higher income per session and more clinical flexibility but requires stronger marketing skills. Many therapists start with a hybrid model accepting one or two major insurers while also seeing private pay clients.

How long until I have a full caseload?

Most therapists reach a comfortably full caseload in 12-18 months. Some accomplish it faster with aggressive marketing, strong niche positioning, and excellent consultation skills. Others take longer, especially in saturated markets or with very specialized focuses. Plan financially for 18 months to be conservative and realistic.

Do I need a website to start my practice?

A website helps establish credibility but is not strictly essential in your first few weeks. A strong Psychology Today profile and properly configured Google Business listing can generate initial clients while you build your website. Do not let website perfectionism delay your launch. A simple, professional page is better than an elaborate site that takes months to complete.

What if I am still working another job?

Many therapists build their private practice while maintaining other employment. This approach provides financial stability during the building phase and reduces the pressure to fill your caseload immediately. Start with evening and weekend availability, build your caseload gradually over 6-12 months, and transition to full-time private practice when your income reliably supports it.

What is the biggest mistake new practice owners make?

Underestimating the timeline and running out of financial reserves before the practice becomes profitable. Building a sustainable caseload takes time, and financial stress leads to poor decisions. The second biggest mistake is undercharging, which is much harder to correct later than it seems at the time.

Key Takeaways

1. Start with legal and financial foundations before everything else. Consult an accountant before choosing your business structure to avoid costly mistakes.
2. Compliance is not optional and cannot be an afterthought. Get proper insurance, complete documentation, and establish HIPAA processes before seeing your first private client.
3. Your EHR and communication systems will shape your daily experience for years. Take time to choose well and learn your selected tools thoroughly.
4. Marketing starts before you feel ready. Psychology Today, Google Business Profile, and your personal network are high-impact, low-cost starting points.
5. Building a full caseload takes 12-18 months for most practitioners. Plan your finances accordingly and do not panic if growth feels slow initially.

Private practice is absolutely achievable. Thousands of therapists have navigated this path successfully, and you can too. It requires planning, patience, and a willingness to learn business skills that graduate school never taught you. The freedom, flexibility, and professional fulfillment waiting on the other side make every effort worthwhile.

Take it one phase at a time. Check off the foundational items first. Build your systems carefully. Get your compliance handled properly. And remember that every successful practice owner started exactly where you are right now, with a checklist, questions, and a vision for something better. You have everything you need to make it happen.