“How much does it cost to start a private practice?”
This is one of the first questions I hear from therapists that are considering diving into this wonderful world of self employment. And, for good reason.
Most likely you aren’t starting your practice as a hobby. You are starting it to make a living. So, you don’t want to dive into something you can’t afford to do.
The reality is that starting a private practice IS NOT expensive at all. Unless you make it that way. The nature of being a therapist in private practice is that you can operate with very low overhead.
Many therapists make it more complicated on themselves by paying for things they want rather than just the needs.
Examples of wants:
- A subscription to a private practice management system like Theranotes or Simple Practice (use this link to get 1 month free & 50$ off the next month).
- A large office with a window & private waiting room.
- Amazing business cards.
- An awesome website with SEO.
- Professional headshots.
- Ads on every therapist directory and social media.
- Beautiful brand new furniture.
- Someone to help with billing or answering the phones.
- A complicated phone system.
I totally get desiring those things. In fact, I have most of them now. But I did not have them when I first started my practice ( besides a free subscription to Psychology Today).
- I kept paper notes & used a paper calendar for scheduling. I typed our receipts & invoices.
- I had the SMALLEST office ever with a shared waiting area.
- My business cards were mediocre and free from Vistaprint.
- My friend helped me make a simple website.
- My other friend took some “professional looking enough” photos of me in our living room.
- I got a free ad on Psychology Today for 6 months.
- My furniture was from my apartment and my mom’s basement. I eventually got a couch from the “As is” section of Ikea.
- I answered my own phones.
- I used my cell phone.
- My paperwork was from The Paper Office.
So what does it actually cost to start a private practice? It can be expensive, if you make it that way. And, if you can do that, go for it! But most therapists can’t start out that way. Yet, they compare themselves to therapists that have been in the private practice game longer and begin to believe they need things that they actually just want.
I know I push mindset A LOT but this is ALL about mindset. You have to get to a place where you believe that your skill and service is what drives people to want to work with you. Not your office filled with Pottery Barn furniture or a perfect looking website.
With that being said, there are some necessary costs to starting a practice.
Here are the NEEDS:
The cost of office space varies. You can choose to rent space from another therapist under a “pay as you go” system. This is usually the cheapest and lowest risk option for starting out. You pay the therapist a small fee to use office space whenever you schedule a client.
Another option is subletting space. This means that you pay for a certain day or number of hours each week. You will owe this amount to the clinician monthly. This is usually much cheaper than renting your own space and is a great option when you only have one or two days worth of clients.
A third option is to rent your own office in a shared suite. Many businesses have offices for rent with shared waiting. This gives you the freedom to your own office (you get to decorate it and have scheduling flexibility.). You won’t need to furnish a waiting area which is a major bonus.
A fourth option is to rent your own office space (waiting room and all). This provides you with flexibility to use the space whenever you want, privacy, and room to grow (and eventually, sublet). The downside is that you will have a contract for a certain number of months, so there is a higher financial risk and a longer commitment.
If you have the funds to go all in, then try out the leased office space. If not, you can always rent a few hours here and there from another therapist and grow from there.
Don’t feel pressured to “have it all” at once. You will get there!
You need furniture in a waiting area. If you rent from an office building that provides that for you then this cost will be reduced.
In your office, you will need a chair for you and space for AT LEAST 2 other people to sit. If possible, 3. You can get a couch or 2 chairs. You can always have an ottoman that serves as a third spot for extra clients.
You will want an end table for yourself (to put your notebook & coffee on) and an end table or coffee table for them (for tissues, the clock, and their coffees).
You will need a lamp or two. Overhead lighting is yuck, so even if this seems like a want I am calling it a need.
Lastly, you will need a filing cabinet. My best hack was getting a filing cabinet that looks like an end table. It was a great way to save money and also looked nicer than a metal cabinet. You can find them on Wayfair :-).
After I moved out of the “use furniture from the basement” phase, I opened a Wayfair Business account and bought furniture from there. This was BEFORE Homegoods, guys. I am so sad when I walk into Homegoods and see what I could have had!
You can also use Amazon to find really cute & affordable furniture. I have been pleasantly surprised with their options!
Grand Total? It’s whatever you make it! You could get these things from family and friends or buy them used from thrift stores. You could also get them brand new!
You will need to get a business license and file yourself as an LLC or Sole Proprietorship. There are filing fees associated with this. I suggest doing this through a lawyer. The cheap way is to try using something like Legal Zoom, but in my opinion it doesn’t work out well. You will end up missing things or setting up structures that are not advantageous to you.
A meeting with a lawyer or accountant to discuss these things will run you anywhere from $0.00 (as a consultation) to $450.00. Money well spent, in my opinion.
You will need paperwork for your clients to complete when they come to see you. The book “The Paper Office” is a great resource for this. You can purchase the book and download their templates. This is the cheap route. You can also discuss this with an attorney.
Grand total on this one? Anywhere from $75.00 (for The Paper Office) to $450.00+ , depending on what you ask an attorney to do.
What did I do? I just used paperwork from The Paper Office until I felt comfortable shelling out more money.
- White Noise Machine
- Legal Pads
- Filing Folders
Building a website
You can build a website for FREE. I don’t suggest it in the long term, the paid ones are better than the free sites. However, if you are in a pinch, my motto is “JUST DO IT!”. Make a free website through WordPress and when you are ready to fork out the dough you can create a paid website.
WordPress websites can run anywhere from $45.00 – $450.00 a year. You pay for them early (to keep the rights to your name, the premium site designs, etc)
Wix websites are fairly cheaper. And there is also Square Space, as well as a variety of other services.
Another option is using a service like Brighter Vision, which will help you to create a website for your therapy practice for a yearly fee.
Other than rent, your website will probably be your biggest start up cost and it is worth it!
A way to collect payments
If you will be taking credit card, please note that there are processing fees. You will not be paying these fees up front but they are a part of the “cost” as you will be paying an amount of money each month towards the amount of money you processed through credit cards.
Most processing companies provide you with the processing equipment for free (go payment, Stripe, Square, etc).
Want to hear me blab on about this stuff? Here is a video of me talking about private practice costs and my own experience.
Article by Elizabeth Earnshaw, LMFT
Elizabeth is a therapist, AAMFT Approved Supervisor, and business owner in Philadelphia, PA. She started her practice with a $1,000 loan and has grown into into a six figure business with several employees. Elizabeth believes in uncomplicating the effort of starting the business & will support you building a business that works for you!
For more information on Elizabeth click here.
For testimonials click here.
To contact email Elizabeth@moderntherapypractice.com