How to Start a Private Practice as a Therapist: Checklist

Most guides on how to start a private practice therapy business hand you a long list and leave the order to you. The order is where the weeks go. Your bank wants an EIN, the IRS wants your company formed first, a Good Faith Estimate needs your NPI, and insurance panels ask for your malpractice policy when you apply. This guide puts the work in an order that holds up: 13 steps from checking your license to seeing your first client, a 90-day timeline, a start-up cost worksheet and a master checklist you can copy.

It's written for licensed therapists in the US (counselors, marriage and family therapists, clinical social workers and psychologists), whether you're leaving an agency job or starting with a few evening hours alongside one. Each step links to our detailed guide on that topic, so this page is the map and the others are the directions.

The 13 steps at a glance

What has to come before what

Step 1: Decide whether to start full time or part time

Many therapists open with a few evening or weekend hours while keeping a salaried job. Your paycheck and benefits carry you through the months when the caseload is small, and you can test your fee and your focus before you depend on them. One counselor told ACA's Counseling Today that she "regretted quitting my part-time agency work while building my practice" (Counseling Today, March 2019). The cost is your time: you'd be running a business in the hours you'd otherwise rest, which is a real burnout risk to plan around.

If you'll keep your job, check five things first

Which start fits you

Part time tends to fit if you need a steady income, want to try a niche or fee first, or plan to take insurance and expect to wait for credentialing.

Full time from the start tends to fit if you have savings or a partner's income to cover several slow months, colleagues and referral sources who already know your work, and a plan for your own health insurance and retirement savings.

Either way, decide in advance what would make you change course: a number of sessions a week, a few months of income above your costs, or a short waitlist.

Step 2: Confirm your license and supervision status

In general, you need an independent license (LPC, LMHC, LPCC, LMFT, LCSW or licensed psychologist, depending on your profession and state) before you open your own practice. Associates and provisional licensees usually practice under supervision, often as employees, and some boards limit where they can work:

Our guide to becoming a private practice therapist walks through the full licensure path, with state examples and the directories where you can look up your own board's rules.

Check where your clients will be

What counts is the state the client is in during the session, not where you are. HHS lists the ways to practice across state lines: a full license in that state, temporary practice rules, reciprocity, a licensure compact or a telehealth registration (Telehealth.HHS.gov, Licensing across state lines). Counselors can check which states have joined the Counseling Compact, and psychologists can check PSYPACT.

Questions to ask your board

Ask in writing if you can, and keep the answers:

Step 3: Choose a business structure and get an EIN

You don't have to form a company to start. The SBA notes that "you're automatically considered to be a sole proprietorship if you do business activities but don't register as any other kind of business" (SBA, Launch your business). Many therapists form a professional LLC (PLLC) or a professional corporation (PC) instead, and some states make the choice for you. In New York, California, Illinois and Texas, for example, a regular LLC isn't the route for licensed clinical work, and California doesn't offer therapists an LLC of any kind. Our PLLC vs LLC guide for therapists covers those states, the forming steps, costs and the S corporation question.

Two points to settle before you file anything:

Then work in this order:

Step 4: Get your NPI

The National Provider Identifier is the 10-digit number that identifies you as a health care provider. You apply online through NPPES, the CMS system that issues NPIs. There are two kinds (CMS, NPI fact sheet):

Why you need one even if you never bill insurance

A Good Faith Estimate for a self-pay client must include the "Name, National Provider Identifier, and Tax Identification Number" of each provider on it (45 CFR 149.610(c)(1)(v)). Insurers need your NPI on every claim. And if you plan to see Medicare clients, the NPI is only the first step: "Obtaining an NPI does not replace the Medicare certification or enrollment process," says the CMS fact sheet.

Having an NPI doesn't make you a HIPAA covered entity. The regulation says a provider "that is not a covered entity may obtain" one (45 CFR 162.410). What makes you covered is billing health plans electronically, which step 8 explains.

Before you type your home address

NPPES data is public. CMS says that "in accordance with FOIA, NPPES address data, including provider mailing address and provider location address, is publicly available on the internet," and anyone can look you up in the NPI Registry. Since 2024, an individual (Type 1) provider who has no physical location other than home, such as a therapist who sees clients only by video from a home office, may enter a USPS post office box or a private mailbox as the practice location instead (Federal Register, NPPES data changes, March 4, 2024). If you have an office, list the office.

Covered providers must report changes to their NPPES record within 30 days (45 CFR 162.410(a)(4)). Moving offices counts.

Step 5: Buy professional liability insurance

Buy your own policy, and set its start date before your first session. Our buyer's guide to therapist liability insurance explains what each part of a policy does and gives a checklist for comparing quotes. What matters at startup:

Step 6: Open a business bank account and set up bookkeeping

Open the account once you have your EIN. The SBA lists what banks commonly ask for: an EIN "(or a Social Security number, if you're a sole proprietorship)," your formation documents, ownership agreements and any business license (SBA). Many owners open two accounts: one for practice income and expenses, and a savings account that holds money for taxes.

If clients will pay by card, compare payment processors on the costs the SBA lists, such as the percentage taken from each payment, per-transaction fees and monthly minimums. A small percentage on every session adds up, so include it in your fee math in step 7.

A bookkeeping routine you can keep:

Step 7: Set your fees and write your policies

Your fee

Find out what licensed therapists with your training charge locally, then test that number against your costs with the income worksheet in our private practice therapist guide. If you want to offer reduced-fee places, our sliding fee schedule guide shows two structures to copy and how many places you can afford.

The ethics codes ask you to settle fees early and think about the client's circumstances. The APA code says that "as early as is feasible," psychologists and their clients "reach an agreement specifying compensation and billing arrangements" (APA 6.04(a)). Counselors "consider the financial status of clients and locality" when setting fees (ACA A.10.c), and explain "fees and billing arrangements, including procedures for nonpayment of fees" (ACA A.2.b).

Your policies

Write these down before your first client books:

If you'll see clients with Medicare, CMS allows a missed-appointment charge only if your policy "applies equally to all patients (Medicare and non-Medicare)" and the amount is the same for everyone (Medicare Claims Processing Manual, chapter 1, section 30.3.13).

Here is a fees and cancellation policy you can adapt. It belongs in your informed consent and, in short form, on your website.

Good Faith Estimates for self-pay clients

The No Surprises Act rules apply to "uninsured (or self-pay)" clients: people with no coverage for the service, and people with private coverage who choose not to have a claim submitted (45 CFR 149.610). In a self-pay practice, that is nearly everyone. What the rule asks:

CMS publishes a model Good Faith Estimate form, and says it "considers use of the model notice to be good faith compliance." Its provider requirements page has training slides on the estimate and the dispute process.

If you'll see clients who have Medicare

The Good Faith Estimate rules don't apply to people with Medicare, Medicaid or other federal programs, which have their own protections (CMS, provider requirements page). Medicare has a rule of its own that catches self-pay practices. Clinical psychologists, clinical social workers, marriage and family therapists and mental health counselors are all Medicare "practitioners" (42 CFR 405.400). For one of them to charge a Medicare Part B client privately for a service Medicare would cover, the route is a private contract with the client plus an opt-out affidavit filed with Medicare, which starts a 2-year opt-out period that renews unless you cancel it properly (42 CFR 405.405 and 405.410). If the opt-out isn't done properly, the regulation says the private contracts and the opt-out are "null and void." Since marriage and family therapists and mental health counselors became able to bill Medicare in 2024 (CMS), this now reaches far more therapists than it used to. Decide before a client over 65 books, and ask your Medicare contractor or a health care attorney which route fits.

Step 8: Cover HIPAA basics and sign BAAs

HIPAA applies to health care providers "only if they transmit any information in an electronic form in connection with a transaction for which HHS has adopted a standard," such as an insurance claim or an eligibility check (HHS, Covered Entities and Business Associates). Using a billing service to send claims for you counts. Our guide to who HIPAA applies to sorts the common situations, including the self-pay therapist who may not be covered at all. Many private-pay therapists follow HIPAA anyway: state privacy laws and the ethics codes still apply, and the day you bill one plan electronically, HIPAA reaches your whole practice.

The startup HIPAA kit:

Keep a one-page log of your vendors. HIPAA asks you to keep Security Rule documentation for six years (45 CFR 164.316), so file it with your risk analysis.

Step 9: Prepare your paperwork

Your intake packet does several different jobs, and each document has its own rules. Keep them as separate documents.

Release of information: what the form needs

HIPAA lets a covered provider share information for treatment without the client's written authorization (45 CFR 164.506), but state law, your ethics code and the federal rules for substance use disorder programs (42 CFR Part 2) can require more. Many therapists get a signed release before any contact with a client's doctor, school or family member, and disclosing psychotherapy notes needs an authorization of its own, with narrow exceptions (45 CFR 164.508). When you use an authorization, it must contain the core elements and statements in section 164.508(c), be written in plain language, and you must give the client a copy. Here is an outline built on those elements; have a lawyer in your state check your final form.

Step 10: Set up your office or telehealth space

An office

Many new practices rent by the hour or share a room before they sign a long lease, and add days as the caseload grows. Whatever you choose, check zoning and your local business license (step 3), and look at three things before you sign: sound privacy, a layout with a clear exit for you and the client, and access for clients with disabilities. Our therapist office ideas guide covers layout, sound, lighting, ADA basics and what to keep off the walls, with a checklist to copy.

Telehealth

Step 11: Build your website and booking

Many clients look you up before they contact you, and your website is where your fee, your focus and your booking link all live. Our list of what the best therapist websites have in common comes with a 100-point scorecard and a build order; these therapist website examples show how practices handle each page. Before launch, check that your site has:

Then decide how booking works: whether new clients book a short consultation call or a first session, which hours you open, and what happens after someone books (consent, intake, Good Faith Estimate).

This is where a practice platform can save setup time. In TranqBay, your practice website and online booking come together, so clients pick a time on your site. You can browse the practice website designs and see the booking page a client would use before you write any copy for your own.

Step 12: Find your first clients

How long it takes to fill your first hours depends on your area, your specialty, your fee and whether you take insurance. No one can promise a number. What you can control is how many people know you're open, and how fast you answer them.

Our marketing guide for therapists covers each channel, the ethics and HIPAA rules that apply to it, copyable referral and review templates, and a 30-day plan.

Before your first session

Step 13: Plan for interruptions: coverage and a professional will

Solo practice means there's no team to cover when you're sick, away or gone. The codes expect a plan:

In practice, that means naming a trusted colleague who agrees to contact your clients and look after your records if something happens to you, writing down where your schedule, client contacts and records are and how to reach them, and telling clients about the arrangement in your informed consent. Ask a lawyer how to give that colleague access in a way your state allows. For vacations, arrange a colleague clients can call, and put the dates and their contact in your away message.

A 90-day timeline from decision to first client

This is a plan for the order of the work, not a promise of when clients arrive. If you're starting part time, stretch each block. If you'll take insurance, credentialing may still be open at day 90.

Days 1 to 15: decide and check

Days 16 to 30: set up the business

Days 31 to 45: fees, policies and tools

Days 46 to 60: paperwork and space

Days 61 to 75: go live

Days 76 to 90: first clients

How much it costs to start a private practice

There's no reliable national figure, and it varies with whether you rent an office, your state's filing fees and whether you form a company. Some items cost nothing: the IRS charges no fee for an EIN. Published prices for an individual counselor's liability insurance start in the low hundreds of dollars a year, as our liability insurance guide shows with sources. The rest depends on choices only you can make, so fill in this worksheet with real quotes.

Compare the monthly total with the income worksheet in our private practice therapist guide to see how many sessions a week cover your costs before you pay yourself.

The private practice checklist (copy it)

Paste this into your notes and tick items off as you go. Not every line applies in every state or practice.

How this works in TranqBay

TranqBay is practice software for therapists in private practice. Steps 1 to 7 stay yours: no software forms your company, buys your insurance or sets your fee. TranqBay covers parts of steps 8 to 11:

When you reach step 11, look at the website designs and the booking page your clients would see on practice.tranqbay.health, so you know what you're writing for.

Frequently asked questions about starting a private practice

Before you open

Pick a start date, work back 90 days, and go through the steps in order: license, company and EIN, NPI, insurance, bank, fees, HIPAA, paperwork, space, website, first clients. Copy the checklist into your notes today and tick the first section this week.

When you reach the website and booking step, see the practice website designs and the client booking page on practice.tranqbay.health: it shows what a client would see when they book you, and the video sessions, notes and forms that sit behind it. If you're weighing whether to join, this page explains how joining TranqBay works. For the detailed guides linked from each step, browse all our articles for therapists.

For releases you send to other providers, lawyers or schools, our release of information form has every HIPAA element.

Sources