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How to Start a Private Practice in Counseling

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Free Counseling Private Practice Business Plan Template

April 22, 2024

13 Min Read

How to Start a Private Practice in Counseling
Table of Contents
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If you ever wish to make a difference by providing counseling services, then starting a private practice could be your ideal path.

There are many people across the country struggling with mental health issues, relationship problems, major life changes, and more. Yet access to quality mental health services can be limited. You could fill that need by offering compassionate counseling support.

Starting a counseling private practice does require proper licensure, education, training, and experience, but you don’t need to break the bank. Just an appropriate office space, your counseling expertise, and a passion for making a difference in people’s lives.

So if you’re a licensed counselor looking to be your own boss, this guide is your map to private practice success. We’ll show you everything, from launching your business to making it thrive. You’ll learn the ins and outs of launching your business legally and ethically.

Let’s get started and first learn about the things you should know before starting a private practice.

Considerations before starting a private practice in Counseling

Before jumping straight into opening your private therapy practice, take time to reflect on the big picture of this career move. Here are some key considerations:

Proper Credentials

First and foremost, you need to ensure you meet all the certification and licensure requirements in your state to legally operate. This typically means having at least a master’s degree in counseling or clinical social work.

Clinical Experience

While licensure allows private practice, most therapists find it extremely valuable to first gain 3-5 years of experience working in agencies, hospitals, or group practices. The clinical hours and mentorship better prepare you.

Business Acumen

You may be an excellent counselor, but running a private practice means wearing many other hats too – marketing, billing, scheduling, accounting, HR if you have staff, etc. Brushing up on entrepreneurial skills is wise.

Financial Resilience

It can easily take 12-18 months to build up enough of a steady client base for your income to feel stable. Having a financial runway of savings or supplemental income during that ramp-up phase is crucial.

Work/Life Balance

Private therapy practice is incredibly demanding, especially when just starting out. Be honest about your ability to maintain self-care, relationships, and general life responsibilities with such a workload.

If you take the time to diligently prepare yourself in each of those areas, you’ll be setting your counseling private practice up for long-term success. Going in half-ready tends to lead to burnout before you can really get started.

Now let us get to the point.

1. Determine your counseling niche

One of the most critical early decisions for your private practice is defining your counseling niche. This specialty area will not only shape your professional identity, but also streamline your marketing efforts and attract the types of clients best suited for your talents.

Perhaps you want to focus on a particular demographic like teens, new mothers, or any other community. Or maybe you’ll zone in on specific mental health issues that ignite your passion – grief counseling, addiction recovery, couples therapy, etc.

The key is zeroing in on that intersection of YOUR interests and experience, mixed with an underserved market demand.

As business owner and therapist Meaghan Rice says, “Choosing a niche is everything.” Clients gravitate toward specialists who deeply understand their specific needs and lived experiences.

So ask yourself: “Who do I most want to help, and what clientele aligns with my background?” That guiding question will illuminate the path for intentionally cultivating your expertise in a focused area over time.

While picking a niche may feel limiting initially, the opposite is true. Becoming a recognized expert within that specialty niche allows you to attract more of your potential clients through targeted marketing. It shapes your entire practice environment and burnishes your reputation.

Determine the niche that energizes you most, then lean in fully. That intentional focus and client alignment sets you up for the greatest clinical impact – and business success.

2. Create a detailed business plan

Before starting, you absolutely must develop a private counseling business plan to guide your new endeavor. This living document will serve as your operational roadmap and help secure any needed financing.

Start by articulating a crystal clear vision for your practice’s overarching goals and specialties. Follow that with a mission statement that encapsulates why you’re launching this business and who you aim to serve.

From there, dive deep into mapping out all the tactical details:

  • Executive summary of your business
  • Market analysis of your local competition and target demographic
  • Service offerings, treatment specialties, and fees
  • Startup costs and financial projections for at least 3 years
  • Marketing strategies across channels like social media, SEO, networking
  • Technological needs like EHR systems and telehealth capabilities
  • Operational logistics like office location, suppliers, permits, and regulatory requirements

As a business owner, be meticulous in thinking through every minor component. Outline worst-case scenarios and contingency plans. The most successful private practices are born from astoundingly thorough preparation and planning. You can get help from a business planning app that guides you through the entire process.

Crafting this master plan takes hard work, but it will enforce clarity while stress-testing your viability before opening the doors.

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3. Register your private practice

Officially registering your private therapy practice is a major milestone – you’re establishing the legal bedrock to support your professional vision long-term. It’s about far more than just hanging a shingle. Here’s how to lay that sturdy foundation:

Choose Your Structure Strategically

Selecting the right business entity is a cornerstone decision. For many private practitioners, the Limited Liability Company (LLC) offers an ideal balance of personal asset protection and attractive tax benefits akin to a sole proprietorship.

However, LLC isn’t always permitted for licensed psychologists based on state regulations. In those cases, a Professional Limited Liability Company (PLLC) designed specifically for licensed professionals could be your optimal route, functioning similarly but complying with applicable rules.

The S corporation (S corp) is another option worth considering, shielding personal assets while allowing you to file business profits/losses separately.

Get legal affairs organized

After you’ve decided on your structure, it’s time to do the remaining legal paperwork. Register your official business name and obtain all required local/federal tax ID numbers – the core building blocks of your legal identity.

Then ensure you’ve satisfied every relevant state licensing requirement for your field based on a careful review of regulations in your area.

Secure Qualified Legal Support

Don’t go it alone – enlist an experienced business lawyer to provide invaluable guidance on entity selection and confirm you’ve checked every compliance box from day one.

Registering your practice is more than just paperwork; it’s an important investment in credibility and sustainability. By making informed structural decisions, handling paperwork diligently, and leveraging legal expertise, you’re establishing an unshakable foundation to build lasting success.

4. Open a business bank account

Separating your business and personal finances by opening a dedicated bank account for your counseling practice is absolutely essential. This proper accounting step protects your personal assets and simplifies bookkeeping.

When first opening the account, you’ll need to provide your business registration documents and IRS Employer Identification Number (EIN). Shop around for a bank that offers small business-friendly checking and savings accounts.

You’ll also want to apply for a business credit card to keep all practice expenses completely separate from personal charges. Many business cards offer lucrative cash back or rewards programs tailored for entrepreneurial spending.

Just be diligent about paying those balances in full monthly to avoid running up interest fees or debt. Using credit cards as a financing mechanism is extremely risky if not disciplined.

With dedicated business banking and credit accounts, you’ll experience far fewer financial headaches and liabilities. Establishing this proper money management foundation sets you up for an organized, stress-free operation from day one.

5. Obtain necessary licenses and permits

One of the most vital steps in launching your private therapy practice is making sure you have all the proper licenses and permits squared away. It is vital to address every legal requirement and follow every regulatory detail from the start.

First up, you’ll need to get an Employee Identification Number (EIN) from the IRS. Think of it as a social security number for your business. You’ll use it for tax purposes, opening a business bank account, hiring employees or contractors, and more.

Next, you must obtain a National Provider Identifier (NPI) which is required for working within the healthcare system and submitting information electronically.

If you’ve been employed in healthcare before, you likely already have an NPI, but if not, you’ll have to apply through the National Plan and Provider Enumeration System.

Finally, ensure you understand and follow all licensing requirements for your state and locality when operating a counseling business. This includes staying compliant with HIPAA laws to protect client privacy and keeping up with any mandated continuing education.

Handling all these boxes may seem tedious, but it lays the groundwork for a legitimate, above-board practice.

6. Setting up your office space

Creating an optimal counseling environment demands careful planning around client comfort, privacy, and professionalism – whether you opt for a physical office or virtual space.

For Physical Offices:

Location is critical. Seek an accessible spot with ample parking that signals convenience. The office itself should have soundproofed spaces for sessions and a warm, inviting waiting area or reception. Don’t skimp on secure record storage either.

For Virtual Setups:

Identify a dedicated, quiet room with optimized lighting, professional backdrops, and acoustics for glitch-free video conferencing. Invest in high-quality webcams and microphones. Virtual waiting room software can also enhance the experience.

Most importantly for any telehealth component, only use HIPAA-compliant platforms and communication tools to protect client privacy and records. Cybersecurity is non-negotiable.

While virtual spaces are often more cost-effective initially, intentional design and amenities are still paramount. Your office environment shapes crucial first impressions and the overall client experience.

Whether physical or virtual, thoughtful planning around location, technology, and therapeutic ambiance paves the way for your practice’s success. Prioritize these factors from the start.

7. Get a business insurance

Obtaining proper insurance is vital when starting a private practice. As a counselor, you need insurance to protect your business and clients if problems arise. Two essential policies are professional liability insurance and general liability insurance.

Professional Liability Insurance

Also called malpractice insurance, covers insurance claims of negligence or malpractice during counseling sessions. It pays for legal fees and damages should a client sue you.

General Liability Insurance

General liability insurance covers injuries or accidents that happen on your property like a client slipping and falling. It pays for clients’ medical bills and other costs.

Cyber Liability and Business Owners Insurance

For full protection, also consider cyber liability insurance and business owners’ insurance. Cyber policies cover data breaches and privacy violations. Business owners’ policies bundle general liability, property damage coverage, loss of income coverage, and more.

Work with experienced insurance agents to find the right policies for your private therapy practice. Make sure you understand what each covers, along with their coverage limits and deductibles.

Prioritizing comprehensive insurance gives peace of mind when seeing clients, knowing you have financial protection. It also shows clients you take your practice seriously by having appropriate business safeguards in place.

8. Get your finances in order

Getting your finances squared away should be job one when starting a private counseling practice. Whether you’re setting up shop downtown or in a suburban office park, the money side of things needs to be airtight from day one.

The first step is securing startup funds. How much will you need?

That depends on overhead costs like rent, utilities, insurance, marketing, and any hired help. Your funding options include personal savings, loans from friends/family, small business loans, investors, or certain grants. Just be careful not to overextend yourself financially right out of the gate.

Next, put together a detailed budget projecting your income and expenses for at least the first year. Having a financial roadmap lets you set competitive rates for counseling services while still covering your costs. It also highlights areas where you may need to rein in spending.

You’ll also need to decide if you want to accept insurance, private pay only, or a combination. Many therapists start out private pay to avoid insurance hassles, then add insurance panels as their practice grows. Make sure this decision aligns with your target clientele and financial goals.

The good news is that starting a private therapy practice has relatively low financial barriers to entry compared to some other businesses, especially with the rise of online therapy.

Typical startup costs include LLC filing fees around $100, free EIN and NPI numbers, $40-60/month for practice management software, $20-40/month for website hosting, $200-1000+/month for office rent, and an optional $400-1500 one-time fee for a website template.

Carefully forecasting and planning for costs lays the groundwork for your practice’s financial health and sustainability long-term. With smart money management from day one, you’re setting yourself up for success in this exciting new venture.

9. Marketing your counseling practice

Getting the word out about your new private practice is crucial. You’ll want to craft a marketing message that clicks with the clients you hope to serve and find effective ways to spread that message. Here are some key strategies to market your counseling business:

Build Your Brand

Branding helps your practice stand out from the crowd. This includes visuals like your logo and color scheme, but also the overall vibe and personality you present.

Consistency is key across all your marketing channels to build client familiarity and trust over time. Consider hiring pros of using online tools to develop branding elements.

Go Digital

These days, a strong online presence is non-negotiable. Your website acts as a virtual front door to your practice, providing info about services, credentials, and more. Make sure it reflects your brand identity and offers helpful resources like blogs or online scheduling.

Social media is also a must for connecting with prospective clients where they’re already hanging out online. Research which platforms your target clients use most, then focus your efforts there with engaging, shareable content.

Network Away

Online marketing is powerful, but don’t overlook tried-and-true in-person networking too. Attend events, conferences, and meetups related to counseling to build connections and potential referral sources. Getting involved with local community groups is another way to expand your reach.

Put these marketing techniques into practice, and you’ll be well on your way to attracting a steady stream of clients excited about the unique services you offer. Stay flexible, keep refining your approach, and watch your private practice thrive!


Launching your own private counseling practice provides meaningful independence and financial upside for mental health professionals. However, achieving success requires a private counseling business plan, passion, and hard work.

Follow the steps in this guide to create a practice you enjoy while providing meaningful care to your community. The journey will stretch you, inspire you, and allow you to reach your greatest potential as a counselor.

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About the Author


Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more


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