Starting a private practice is two projects at once. One is paperwork: your license, a business entity, tax and provider numbers, privacy and consent. The other is getting clients to find you and book. Most checklists cover the first and wave at the second.
This guide is for licensed therapists and counselors opening a private-pay or hybrid practice in the US. It takes the steps in the order they depend on each other, links the official source for each rule, and ends with a checklist table. Every rule, fee and price below was checked against its source on 8 October 2026. Where the answer depends on your state, we say what to check rather than guess. Fill The Lobby is a marketing agency, not your attorney, accountant or compliance officer.
Step 1: Choose your model
Three decisions shape everything after them.
- Solo or group. A solo practice is you, one license and one calendar. A group adds hiring, contracts with other clinicians and often a different business structure. You can start solo and add clinicians later.
- Private pay, insurance or both. With private pay you set the fee and there are no claims, but you bring in every client yourself. Insurance brings people who want to use their benefits, at rates the plan sets, with credentialing and claims to manage. A hybrid practice does both, for example a few plans plus a private-pay fee for everyone else.
- Your own contracts or a platform. Instead of contracting with each insurance plan yourself, you can join an insurance platform. Our comparison of Grow Therapy, Headway and Alma covers what each charges and what happens to your clients if you leave.
Write down your niche as well: who you want to see and what you treat. It decides your fee, your website, and which directories and searches matter. You can change it later, but start with one.
Step 2: Confirm you can practice independently
Your license is the practice, and the rules for practicing without supervision are set by your state's licensing board for your profession. The rules can differ by profession as well as by state, so a colleague's answer from another state or profession doesn't carry over. Ask your board, and keep its answer:
- Does my license allow independent practice, or do I need a higher license level or more supervised hours first?
- Do I need any separate registration to own a practice or use a business name?
- What must my website, advertising and intake paperwork say about my license?
- Can I see clients by telehealth while they are in another state, and under what rules?
Our state pages link each state's counseling board alongside its compact status and advertising rules. If you're a psychologist, social worker or MFT, go to the board that licenses your profession in your state.
Step 3: Set up the business
Choose a business structure
The SBA's guide to business structures sets out the main options:
- Sole proprietorship. You're one automatically if you do business without registering as any other kind of business. It isn't a separate entity, so you can be held personally liable for the business's debts and obligations.
- LLC. The SBA says an LLC protects your personal assets from the business's bankruptcy or lawsuits in most instances, and that members are considered self-employed and pay self-employment tax.
- Corporation. More record-keeping and reporting. An S corp election is made with the IRS, separately from registering with your state.
For federal tax, the IRS treats an LLC with one member as disregarded from its owner unless it elects to be treated as a corporation, and says each state may regulate LLCs differently.
Licensed clinicians have one more thing to check: ask your secretary of state and your board whether you must use a professional entity, such as a professional LLC (PLLC) or professional corporation (PC), and what it requires. Then decide with an accountant and an attorney. The SBA warns that converting to a different structure later can bring tax consequences and other complications.
Get an EIN
An Employer Identification Number is your business's federal tax ID. The IRS issues one online for free and says you never have to pay a fee for it. It says you generally need one to hire employees or to operate a partnership or corporation, and that an LLC or corporation should be formed with your secretary of state before you apply.
A sole proprietor with no staff isn't on that list, but an EIN is still worth having. A good faith estimate must show each provider's tax ID (45 CFR 149.610(c)), and an EIN keeps your Social Security number off them.
Get your NPI
A National Provider Identifier is the 10-digit number that identifies you as a health care provider. You apply on NPPES, and under the NPI final rule providers aren't charged a fee to get one or to update their record.
- Type 1 NPIs go to individuals. Each clinician has their own.
- Type 2 NPIs go to organizations, such as a group practice. The NPPES application says a sole proprietorship isn't eligible for an organizational NPI, so a sole proprietor uses their Type 1.
Get your Type 1 even if you plan to be fully private pay. Providers who send claims electronically must have one (45 CFR 162.410), and good faith estimates must list it. The same rule requires covered providers to report changes to their NPPES details, such as a new practice address, within 30 days.
Open a business bank account
The SBA says to open a business account as soon as you start accepting or spending money as a business, that you can open one once you have your EIN, and that keeping business and personal funds separate gives some limited personal liability protection. Run client payments, platform payouts and practice expenses through it.
Get insured
The SBA describes professional liability insurance as cover against financial loss from malpractice, errors and negligence, and general liability as cover for things like bodily injury and property damage. It also says the protection an LLC or corporation gives your personal property has limits, and that laws requiring insurance vary by state. Get professional liability quotes before you see your first client, and if you plan to hire, check what your state requires first.
Plan for tax
According to the IRS, self-employed people generally pay self-employment tax (Social Security and Medicare) as well as income tax, and pay through the year with estimated tax because no employer is withholding it. Individuals generally have to make estimated tax payments if they expect to owe $1,000 or more when they file, across four payment periods. Set money aside from every payment and talk to an accountant before your first deadline.
Step 4: Privacy, consent and records
Does HIPAA apply to you?
Under 45 CFR 160.103, a health care provider is a HIPAA covered entity if it transmits any health information electronically in connection with a covered transaction. CMS puts it plainly: providers who submit HIPAA transactions, like claims, electronically are covered. It also publishes a Covered Entity Decision Tool.
If you take insurance and bill it electronically, you're covered. If you're fully private pay, work through the decision tool with your attorney rather than assuming either way. The confidentiality standards in your ethics code apply regardless; Standard 4.01 of the APA Ethics Code is one example.
If you're a covered entity
- Risk analysis. The Security Rule requires an accurate and thorough assessment of the risks to the electronic health information you hold, and policies to deal with them (45 CFR 164.308(a)(1)). ONC and the HHS Office for Civil Rights publish a downloadable Security Risk Assessment Tool aimed at small and medium providers.
- Keep the documentation. Security Rule policies and required records are kept for 6 years from when they were created or last in effect, whichever is later (45 CFR 164.316(b)(2)).
- Notice of privacy practices. A covered provider with a direct treatment relationship gives clients its notice no later than the first service, including one delivered electronically, and makes a good faith effort to get a written acknowledgment. A covered entity whose website gives information about its customer services or benefits must post the notice prominently there (45 CFR 164.520).
- Business associate agreements. A vendor that creates, receives, maintains or transmits client health information for you, such as a billing service or an online records system, is a business associate. You need a written contract with it that meets 45 CFR 164.504(e) before it handles that information (45 CFR 164.502(e)). Ask every vendor for its agreement before you sign up.
Put consent and policies in writing
The APA, ACA and NASW codes all tie informed consent to fees. APA Standard 10.01 asks psychologists to tell clients, as early as feasible, about the nature and course of therapy, fees, third-party involvement and the limits of confidentiality. The ACA Code of Ethics (A.2.b) asks counselors to explain fees and billing arrangements, including what happens if a client doesn't pay. The NASW Code (1.03) asks social workers to explain relevant costs and any limits a third-party payer places on services.
Write one consent document that covers:
- your fee, how and when it's paid, and what happens if a bill goes unpaid;
- your cancellation and late-cancellation policy;
- how clients reach you between sessions, and what to do in an emergency;
- the limits of confidentiality.
Have it reviewed against your own code and your board's rules before your first client signs it.
Good faith estimates for self-pay clients
Under 45 CFR 149.610, you give uninsured and self-pay clients a written good faith estimate when they book at least 3 business days ahead or ask about cost, and you say on your website, in the office and wherever scheduling happens that estimates are available. One estimate can cover up to 12 months of recurring sessions. Our good faith estimate guide has every requirement and a template.
Records
How long you keep clinical records is set by your state and your board, so check both before you choose a records system. The ACA Code (C.2.h) also asks counselors to plan for the transfer of clients and records to a named colleague or records custodian if they become incapacitated, die, retire or close the practice. Whatever your profession, name that person before you open.
Step 5: Set your fees
Your fee is a business decision with ethics rules attached.
- Agree it early. APA Standard 6.04 has psychologists reach an agreement on compensation and billing as early as feasible, keep fee practices consistent with law, and never misrepresent their fees.
- Consider ability to pay. The ACA Code (A.10.c) asks counselors to consider clients' financial status and locality, and where their usual fees would cause a client undue hardship, lets them adjust fees when legally permissible or help the client find comparable, affordable services. NASW 1.13 says fees should be fair, reasonable and commensurate with the services, with consideration given to clients' ability to pay. A sliding scale is one way to do this; write down how it works so you apply it the same way to everyone.
- Collections. APA 6.04(e) and ACA A.10.d both require telling a client before you use a collection agency or legal action and giving them a chance to pay. The ACA Code also asks you to include it in your informed consent documents.
Then put the fee on your website. Clients paying privately want to know the price, and often whether you provide superbills for out-of-network reimbursement. Our guide to what a superbill is covers what goes on one and what to tell clients before you issue the first.
Step 6: Decide whether to take insurance
If you take insurance under your own contracts, you apply to each plan separately. Plans that use CAQH will ask you to keep a profile in the CAQH Provider Data Portal, where you enter your professional and practice information once and share it with the plans you authorize for credentialing and directories. CAQH now operates as DataSpring, which says the platform is provided at no cost to clinicians, provider groups and practices, and that profiles are maintained on a 120-day attestation cycle. The portal estimates about two hours to complete a profile the first time.
Ask each plan you want to join how it takes applications and how long credentialing usually takes there. If you'd rather not credential and bill yourself, look again at the platforms in step 1.
Medicare for counselors and MFTs
According to CMS, since 1 January 2024 marriage and family therapists and mental health counselors can bill Medicare independently for diagnosing and treating mental illness, paid at 75% of what a clinical psychologist is paid under the physician fee schedule. To enroll, CMS lists a qualifying master's or doctoral degree, a state license or certification, and at least 2 years or 3,000 hours of post-master's supervised clinical experience. You get an NPI first, then enroll through PECOS or a paper CMS-855 application.
Step 7: Telehealth and clients in other states
Telehealth widens who you can reach, but licensure is still state by state. Before you see anyone who will be in another state during a session, check that state's rules with its board, and ask every new client at booking where they'll be for sessions.
Licensure compacts change this for some professions. The Counseling Compact says it is live for licensees in ten states (Arizona, Arkansas, Georgia, Indiana, Louisiana, Minnesota, Ohio, Oklahoma, Tennessee and Wyoming), where a counselor licensed in and living in one of them can apply for a privilege to practice in the others. Our guide to PSYPACT and Counseling Compact states lists each compact's members, including PSYPACT for psychologists, and what each one means for where you can advertise.
Step 8: Office, home or virtual, and your Google profile
Where you see clients decides more than your rent. It also decides whether you can have a Google Business Profile, the listing that appears in Google Maps and local results.
Google's profile guidelines let a business create a profile if it has a physical location customers can visit, or travels to customers where they are. A rented mailing address you don't operate from (a virtual office) isn't eligible, and an office in a co-working space only qualifies if it has clear signage, receives customers during business hours and is staffed by your business during those hours. So a telehealth-only practice doesn't qualify, and a part-time sublet needs checking against those rules before you list it. The profile itself is free, according to Google.
If you'll see clients at home, check local zoning first; the SBA notes that zoning ordinances can apply even to home-based businesses. Think twice before putting your home address on a public listing. Our guide to the Google Business Profile for doctors and therapists covers setup, and what a telehealth-only practice can do instead.
Step 9: Getting your first clients
Once you can legally see clients, the job becomes being found and being easy to book. In this order:
- A website with your niche, your fee and online booking. One clear page for each service you want more of, and a way to book a consultation late at night. Ask for contact details and a time, never symptoms. Our page on therapist website design covers what the site needs, and our guide to what a medical website costs helps before you collect quotes.
- Your Google Business Profile, if you're eligible, with every field filled in.
- One or two directories. Psychology Today lists membership at $29.95 a month with no contract (checked 8 October 2026). Our guide to whether Psychology Today is worth it covers how to write the profile.
- A referral network. Tell physicians, psychiatrists, other therapists and former colleagues who you see and when you have openings. Mind your current employer's rules, covered in the FAQ below.
- Follow-up. Reply to every inquiry promptly, and follow up if it doesn't turn into a booking.
The full sequence is in our guide to marketing for therapists.
If you'd rather have this built and run for you, that's our therapist marketing work, run first on the two clinical platforms our founders own. The 30-day Proof Pilot cleans up or rebuilds your website, sets up a working booking flow and runs ads, for one flat fee of $2,500. Ad spend goes from your own accounts straight to Google and Meta.
What it costs to start a private practice
There's no honest single figure. The biggest costs, such as office space, insurance, and state filing and license fees, depend on your state, profession and setup. Here are the line items, with a published price where one exists.
| Item | Cost | Where to check |
|---|---|---|
| EIN | Free | IRS |
| NPI, Type 1 or Type 2 | Free | NPPES; NPI final rule |
| CAQH Provider Data Portal profile | No cost to clinicians and practices | DataSpring |
| Google Business Profile | Free | |
| Business entity filing | Set by your state | Your secretary of state |
| License and renewals | Set by your board | Your licensing board |
| Professional liability insurance | Quoted by insurers | Get several quotes |
| Records, scheduling and telehealth software | Set by each vendor | Vendor price pages; ask for the BAA at the same time |
| Website and booking | Depends on scope | Our medical website cost guide |
| Psychology Today listing | $29.95 a month, no contract (checked 8 October 2026) | Psychology Today |
| Office | Rent or sublet, unless you're telehealth-only | Local listings and zoning office |
| Accountant and attorney | Their fees | Ask for a fixed fee for setup |
Add up your own quotes, then plan for the months before your caseload covers them.
Private practice checklist
| # | Step | Done when |
|---|---|---|
| 1 | Choose solo or group; private pay, insurance or both; your niche | Written down |
| 2 | Confirm independent practice with your board | You have the board's answer or the rule |
| 3 | Choose a structure; check professional entity rules | Entity filed, or a decision to stay a sole proprietor |
| 4 | Get an EIN | IRS confirmation letter saved |
| 5 | Get your Type 1 NPI, and a Type 2 for an entity | Numbers saved; NPPES details current |
| 6 | Open a business bank account | Client payments go into it |
| 7 | Buy professional liability insurance | Policy starts before your first client |
| 8 | Set up estimated tax payments | Payment dates in your calendar |
| 9 | Work out whether HIPAA covers you | Decision tool done with your attorney |
| 10 | If covered: risk analysis, policies, notice of privacy practices | Documents written and kept |
| 11 | Business associate agreements with vendors | Signed before any client information flows |
| 12 | Informed consent, fee and cancellation policy | Reviewed against your code and board |
| 13 | Good faith estimate notice and process | Notice on your website; template ready |
| 14 | Records retention and a records custodian | State rule checked; custodian named |
| 15 | Set your fee and any sliding scale | Published on your website |
| 16 | If taking insurance: CAQH profile and plan applications | Applications submitted |
| 17 | Telehealth: list the states you can serve | Booking asks where the client will be |
| 18 | Office: Google profile eligibility and zoning | Checked against Google's guidelines |
| 19 | Website with your niche, fee and online booking | A stranger can book at night |
| 20 | Google Business Profile, if eligible | Every field filled in |
| 21 | One or two directory listings | Profile live with fee and booking link |
| 22 | Referral network and inquiry follow-up | A list of contacts and a reply routine |
Sources
- U.S. Small Business Administration — Launch your business (business structure, tax IDs, bank account, business insurance, location), checked 8 October 2026
- IRS — Get an employer identification number, checked 8 October 2026
- IRS — Limited liability company (LLC), checked 8 October 2026
- IRS — Self-employed individuals tax center, checked 8 October 2026
- IRS — Estimated taxes, checked 8 October 2026
- CMS — National Provider Identifier Standard (NPI), checked 8 October 2026
- CMS — HIPAA Administrative Simplification: Standard Unique Health Identifier for Health Care Providers, final rule, 69 FR 3434, 23 January 2004 (PDF), checked 8 October 2026
- CMS — National Plan and Provider Enumeration System (NPPES), checked 8 October 2026
- eCFR — 45 CFR 162.410, Implementation specifications: Health care providers, checked 8 October 2026
- eCFR — 45 CFR 160.103, Definitions, checked 8 October 2026
- CMS — Are you a covered entity?, checked 8 October 2026
- eCFR — 45 CFR 164.308, Administrative safeguards, checked 8 October 2026
- eCFR — 45 CFR 164.316, Policies and procedures and documentation requirements, checked 8 October 2026
- eCFR — 45 CFR 164.502, Uses and disclosures of protected health information: General rules, checked 8 October 2026
- eCFR — 45 CFR 164.504, Uses and disclosures: Organizational requirements (business associate contracts), checked 8 October 2026
- eCFR — 45 CFR 164.520, Notice of privacy practices for protected health information, checked 8 October 2026
- ONC — Security Risk Assessment Tool, checked 8 October 2026
- eCFR — 45 CFR 149.610, Requirements for provision of good faith estimates of expected charges for uninsured (or self-pay) individuals, checked 8 October 2026
- American Psychological Association — Ethical Principles of Psychologists and Code of Conduct (2002, amended effective 1 June 2010 and 1 January 2017), checked 8 October 2026
- American Counseling Association — 2014 ACA Code of Ethics (PDF), checked 8 October 2026; ACA's ethics page says the 2014 code remains current while a revision is under way
- National Association of Social Workers — Code of Ethics: Social workers' ethical responsibilities to clients, checked 8 October 2026
- CAQH Provider Data Portal, checked 8 October 2026
- DataSpring — Clinicians and office staff, checked 8 October 2026
- CMS — Marriage and Family Therapists & Mental Health Counselors, checked 8 October 2026
- Counseling Compact — Home, checked 8 October 2026
- Google Business Profile Help — Guidelines for representing your business on Google, checked 8 October 2026
- Google — Business Profile, checked 8 October 2026
- Psychology Today — Join Psychology Today, checked 8 October 2026