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Are you Ready to Start your own Mental Health Therapy Practice?

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Are you Ready to Start your own Mental Health Therapy Practice?

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# Are you Ready to Start your own Mental Health Therapy Practice?

Image 5: MS Broudy, PhDMS Broudy, PhD

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10.29.2026

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_Authored by MS Broudy, PhD, in collaboration with__TheraPlatform__._

### The lure of owning a private therapy practice is undeniable: You control the clientele. You make the final decisions. You work when you want.

While your entrepreneurial drive and clinical expertise may be strong, running a business means taking on a new set of responsibilities and developing news skills. Knowing where to start can be difficult. We’ll explore the essentials of starting a private mental health practice: goals, finances, legal and business considerations, and the client experience.

#### What is your vision for your practice?

Before acting, consider developing a framework for what you want to accomplish. Essentially, what do you want your private practice to look like?Ask yourself the following questions as you think about your practice:

#### Who do you want to serve?

Do you want to provide therapy for anyone who steps in the door, or will you specialize in certain mental health conditions or populations?

For example, clinicians may want to focus on conditions or populations aligned with their training like depression, anxiety, obsessive-compulsive disorder or trauma-related concerns.

Specialization influences referrals, clinical training needs, and how a practice markets its services. Having a niche may also help a therapist stand out if they want to get credentialed with insurance companies.

Another consideration is that therapists have an ethical obligation to see people within your scope of practice.

#### How will you get paid?

When it comes to generating revenue for your mental health therapy practice, clinicians have a few options.

With private-pay clients, you can set the fee, and you will likely make more money per session.
However, you are limiting the socioeconomic status of your clientele.

If you want to serve middle-class and underprivileged clients, you will likely need to accept insurance, and the administrative overhead that comes with it.

#### What services will you offer?

Do you want to provide individual, group, couples, or family therapy? What about psychological testing? Will someone in your practice prescribe medication?

Adding a prescribing professional, or providing psychological evaluations, will add costs and complications. Understanding the services you offer will help determine your revenue.

#### Where will you provide care?

Do you want to perform telehealth, in-person therapy, or both? In-person practices require office space and have overhead costs. Telehealth demands technological knowledge, as well as a private, professional-looking area free of distraction.

#### How many clients does your mental health therapy practice need to be profitable?

An important aspect of costs includes calculating how many clients you need to see to support your financial needs.

One accurate way to estimate the number of clients you need to see each week is to work backward from your income goals (minus expenses) while accounting for cancellations, time off, and non-billable work.

For example, a therapist who needs $8,000 per month to cover business expenses and desired compensation, and collects an average of $125 per completed session, would need approximately 64 completed sessions per month. This calculation should also account for cancellations, unpaid time, taxes, and other financial obligations.

#### How much will you work?

When calculating time spent at work, practitioners may consider the number of clients scheduled each week for clinical care, as well as the time needed for documentation and administrative duties.

A 2025 Psychotherapy Action Network survey of 667 mental health professionals found that 49% identified working with insurance companies as a major challenge, while 45% cited the time required for notes and documentation.

These findings highlight the importance of accounting for administrative work when planning your schedule and maintaining a healthy work-life balance.

Clinicians need to find a balance between work responsibilities and personal happiness. A burnt-out therapist is no help to anyone.

#### What are the costs associated with launching a private mental health therapy practice?

Once you’ve settled on your vision and the type of clientele you want to serve, it’s time to understand the costs of launching a mental health therapy practice. Most therapists don’t want to think about this part of the equation, but it is a critical part of starting a private practice. Taking into account the following factors, will you make enough money to support your income goals?

#### What are the Startup costs and ongoing expenses?

Some costs will be the same whether you practice in-person or virtually. These include staff salaries, technology costs (e.g., EHRs, payment processing), business licenses, and other materials.

Some expenses will be determined by whether you have an in-person vs. teletherapy practice. Paying for office space, furniture, and monthly utilities can add up quickly. Starting an entirely virtual practice comes with its own set of considerations.

#### What are your Staffing costs?

Are you opening a solo practice or do you have other therapists working for you? The more clinicians in the practice, the higher the costs. However, also to note that those therapists will owe you a percentage of their income.

Other considerations for hiring therapists include how those practitioners will be classified. Many private practices treat practitioners as individual contractors rather than employees.

While hiring independent contractors relieves owners of employee-related benefits, such as vacation time and health plans, contractors legally have greater independence in how they perform their work, and exercising too much control over execution can open owners up to a misclassification risk.

Retention is also less predictable with contractors as they tend to work for multiple practices or maintain their own businesses.

#### What are the legal and compliance aspects of starting a private practice?

Several professional and business operations need to be enacted before you can start seeing clients.

Establishing a National Provide Identifier

First, you need your state professional license to practice. Once you have that, you can apply for a National Provider Identifier (NPI) and buy malpractice insurance.

Business Setup

Starting a private practice requires several steps. The table below outlines what’s required to get started from a legal stand point.

#### Business setup checklist for starting a private practice

#### Business setup step#### What therapists need to consider
##### Choose a business structure##### Decide whether to operate as a sole proprietorship or establish a limited liability company (LLC). Depending on state requirements, other professional business structures may apply.
##### Obtain an Employer Identification Number (EIN)##### Apply for an EIN through the IRS if required for your business structure, employees, or tax obligations. Some sole proprietors without employees may not need one.
##### Obtain business licenses and registrations##### Check state and local requirements for business registration, licenses, and permits. Requirements vary by location and business structure.
##### Open a business bank account##### Establish a dedicated account to separate business and personal finances and simplify bookkeeping.
##### Select accounting and payment tools##### Choose software to track income, manage expenses, process client payments, and support financial reporting.
##### Create a practice website##### Develop a website that explains your services, specialties, fees or insurance participation, contact information, and appointment scheduling options.

Note: Business formation, licensing, and tax requirements vary by state. Mental health professionals should consult qualified legal or accounting professionals when establishing their practice.

#### Clinical and administrative processes

Before you see your first client, it is a good idea to establish the framework for their care.

Create security and privacy procedures. For example, if you still have paper records, how will you store them to meet HIPAA compliance?
Create forms and templates for intake, treatment plans, release of information, and progress notes. You’ll be using these daily as part of your practice. Make sure you have a streamlined process in place that is easy for you and the client. Additionally, you will need to provide clients with the policies of the practice, including fee agreements and how you handle personal health information.
Establish emergency protocols. How will you and your staff handle emergencies? What will you do, for instance, if a client has a mental health crisis in-person? Therapists must also develop an emergency protocol tailored to telehealth. This plan should specify how to locate clients in crisis, identify local emergency contacts, and outline steps to follow if immediate intervention is needed.

#### The client experience

Good client outcomes are the foundation of a successful practice. Private practice owners need to consider the client experience from intake through discharge.

Some questions to consider:

How will someone find you? Are you listed on popular directories such as Psychology Today and GoodTherapy?
Do you have a phone number to call for appointments, or do you want scheduling to be done online?
Can initial paperwork be completed before the intake session?
If using telehealth, do clients videoconference through a patient portal or a secure link?
How does a client communicate with the therapist? Phone, client portal, email, or text?
How are clients presented with bills? Is it through a client portal via an EHR, email, or snail mail?
Do clients pay online or in person? Do you ask them to give a credit card for ongoing fees?
Will you follow up with clients after discharge?

Launching your own mental health therapy practice can be exciting. Developing goals and plans ahead of opening your business is a great way to set yourself up for success while ensuring your clinical skills will help your clients achieve great outcomes.

Interested in learning more about how to launch your own private practice? TheraPlatform offers a free guide to launching a private practice written by a mental health therapist in private practice.

References
Centers for Medicare & Medicaid Services. _National provider identifier standard_. https://www.cms.gov/regulations-and-guidance/administrative-simplification/nationalprovidentstand

Entrepreneurial Therapist. Should you form an LLC for your therapy practice? A complete guide. https://www.theentrepreneurialtherapist.com/blog/k9khupudjydz4dqnze44aj7xs8ufye

Marschal, A. (2024, December 5). VeryWell Mind. What your therapist’s scope of practice means for you. https://www.verywellmind.com/what-is-scope-of-practice-for-therapists-5323826

Psychotherapy Action Network. (2025). Study: Practice management companies. https://www.psian.org/practice-management-companies

_This blog is presented in collaboration with__TheraPlatform,__an EHR and practice management software platform for mental health professionals and private practices._

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MS Broudy, PhD

MS Broudy, PhD

MS Broudy, PhD, is a psychologist, and mental health writer with over 20 years of clinical experience. He contributes educational content to TheraPlatform, a mental health EHR and practice management software provider. He holds a PhD. in clinical psychology and …

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