The clinical training prepares you to do the work. It does not prepare you to run a business. Starting a private practice means becoming, at minimum, passingly competent in a set of things that have nothing to do with therapy: legal structures, billing, liability, marketing, and the administrative systems that hold it all together.
Most of this is not complicated once you know what it is. The problem is that nobody hands you a list. This post is the list.
Before you see anyone: the legal and business foundation
Confirm your licensure requirements
You need an active, unrestricted license to practice independently. The specific license required varies by credential and state. Know what yours requires for private practice, whether that means full licensure (LCSW, LPC, LMFT, licensed psychologist) or a supervised associate license if your state allows associates to see clients privately. Verify your license is in good standing with no encumbrances before you do anything else.
Consider forming a legal entity
You are not legally required to form an LLC. Many therapists practice as sole proprietors their entire careers. The reason to form one is that without it, your personal finances are directly exposed to any business liability your practice incurs. An LLC (or a PLLC if your state requires it for licensed professionals) creates a legal separation between you and your practice. It does not protect you from malpractice claims, but it does protect personal assets from other business-related liability. The post on whether therapists need an LLC covers what the protection actually means, including the DBA option and when an S-Corp election starts to make sense.
Get an EIN
An Employer Identification Number is your business's tax ID. You need one to open a business bank account, hire contractors, and handle billing properly. Getting one from the IRS is free and takes about five minutes at irs.gov. Do this before you open a bank account.
Open a dedicated business bank account
Keep your business and personal finances completely separate from day one. Commingling funds creates accounting problems and weakens the liability protection your LLC provides. Use your business account for all practice income and expenses.
Get malpractice and general liability insurance
Both are required. Malpractice insurance (professional liability) covers claims arising from your clinical work. General liability insurance covers bodily injury and property damage at your office: a client who slips and falls, damage to the space you rent, and similar. Most malpractice carriers offer a combined policy or an add-on for general liability. The two main carriers for mental health professionals are HPSO and CPH and Associates. Get both before your first session.
File a DBA if your practice name differs from your LLC name
Your LLC might be registered as "Jane Smith LCSW LLC" while you want clients to know you as "Riverbend Therapy." A DBA (Doing Business As) lets you operate and accept payments under a public-facing practice name without forming a second entity. Filing requirements and fees vary by state and county, and you will need the DBA in place before you can open a business bank account under the practice name.
Setting your fee and deciding on insurance
Two of the most consequential early decisions are how much to charge and whether to take insurance. These are connected.
On fees: most therapists set a fee that feels defensible rather than one grounded in what they actually need to earn. The right approach is to work backward from your income goal, factor in taxes, overhead, and a realistic number of sessions, and set a fee that makes the math work without requiring an unsustainable caseload. The post on how much to charge for therapy walks through this calculation.
On insurance: paneling with insurance gets you in front of more potential clients faster, but it comes with lower reimbursement rates, significant administrative overhead, and contractual constraints on your fees. The post on whether therapists should take insurance covers the trade-offs honestly. Neither choice is universally right, and many therapists change their approach as their practice matures.
If you are taking insurance: NPI, CAQH, and credentialing
If you plan to bill insurance, there are a few steps that need to happen before you can get on any panel.
Get an NPI
A National Provider Identifier is a unique 10-digit number assigned to every healthcare provider who bills insurance. You need one to submit claims. Applying is free through the NPPES website and takes about 20 minutes. Some therapists get two NPIs: one as an individual provider (Type 1) and one for their practice entity (Type 2). If you are a solo practitioner, a Type 1 NPI is typically sufficient to start.
Set up a CAQH profile
CAQH (Council for Affordable Quality Healthcare) is a centralized database that most major insurance panels use to verify provider credentials during the paneling process. Setting up and maintaining your CAQH profile is effectively a prerequisite for getting on panels. It stores your license, education, work history, malpractice insurance, and other credentialing information in one place that insurers can pull from rather than requiring you to submit the same documents repeatedly. Keep it updated. CAQH requires attestation every 120 days and panels will flag an outdated profile.
Consider hiring a credentialer
Credentialing is the process of applying to insurance panels and getting approved. It is time-consuming, detail-heavy, and involves a lot of follow-up. Professional credentialers handle this for a fee, typically $100 to $300 per panel application or a flat rate for a package. A good credentialer will manage the paperwork, track application status, and can advise you on which panels are worth pursuing in your area based on current reimbursement rates and panel availability. If you are paneling with multiple insurers at once, the cost of hiring a credentialer is usually worth it relative to the hours you would spend doing it yourself.
Documentation and clinical systems
Choose your documentation approach
You need a system for progress notes, treatment plans, and clinical records before you see your first client. Your options are roughly: a full EHR (SimplePractice, TherapyNotes, and similar), a standalone notes tool, or a combination. EHRs handle scheduling, billing, and documentation in one place. They cost $30 to $100 per month and are worth it if you are billing insurance, since they handle claim submission. If you are private pay only and want simpler and cheaper, a standalone documentation tool may be enough.
Choose a note format
SOAP notes are the most universally recognized format in healthcare and the safest default for most outpatient settings. DAP is a reasonable alternative for private pay practices. BIRP is common in agency settings. The post on SOAP vs DAP vs BIRP explains the differences and how to choose.
Write your informed consent and intake documents
Your informed consent is a clinical and legal document. At minimum it should cover: your credentials and licensing board, your fee and cancellation policy, limits of confidentiality, emergency procedures, the diagnosis requirement for insurance billing, and your policies around contact between sessions and social media. If you are using any AI-assisted documentation tools, your informed consent should also disclose this and explain what it means.
Getting your first clients
Psychology Today
Still the most-used therapist directory, and typically the first place to start for new private practice therapists. A $30/month listing that shows up in the first pages of local searches is a reasonable early investment. The post on how to get clients from Psychology Today covers what actually makes a profile work.
Referral relationships
The most durable source of clients over time is other people who know your work. This starts with warm introductions: former supervisors, colleagues from training, primary care providers in your area, psychiatrists, school counselors. An email or a coffee meeting with five people you already know is more effective than any directory listing in the early months.
Your own website
A simple website is not optional if you want to be taken seriously as a practice, and it does not need to be elaborate. A home page that describes who you work with and what that looks like, an about page, your fees and contact information, and a way to schedule a consultation. That is sufficient. Search engine basics (your city and specialty in your page title, a Google Business profile) help clients find you. The post on how to make a therapist website that gets clients covers what to write, how to think about SEO, and what to avoid.
Other directories
Therapy Den, Open Path (if you offer sliding scale), Inclusive Therapists, and directories specific to your specialty (EMDRIA for EMDR practitioners, AASECT for sexuality, and so on) are worth listing in once your core profiles are solid. More directories means more surface area, but they yield diminishing returns past the first few.
The overhead you need to budget for
New practice owners often underestimate their real expenses. Plan for:
- Office rent (or a home office deduction if you see clients virtually)
- EHR or documentation software
- Malpractice insurance (professional liability)
- General liability insurance for your office space
- NPI registration and CAQH profile setup if billing insurance
- Credentialer fees if you hire one for panel applications
- Directory listings (Psychology Today and others)
- Continuing education requirements for license renewal
- Clinical consultation or supervision
- Accounting software or an accountant
- Self-employment tax (budget 25 to 30% of net income for federal and state taxes combined — see the post on taxes and deductions for the full picture, including retirement accounts)
- Health insurance if you are coming off an employer plan
Running this list before you set your fee will produce a more honest number than starting with what feels comfortable.
Things that can wait
Not everything needs to be in place on day one. Things that can wait until you have a real caseload:
- A fully designed website
- Social media presence
- Group practice plans
- A newsletter or content strategy
- Specializing narrowly (some early breadth is fine while you figure out what you actually want to work with)
The honest thing about the early months
Building a practice takes longer than most therapists expect, and the timeline is genuinely hard to predict. Six months of consistent marketing effort to reach a full caseload is not unusual. In the early stages, your job is to make it easy for the right people to find you, respond quickly to every inquiry, and give every consultation call the attention of a clinical interaction, because it is one.
Most therapists who leave private practice leave in the first two years, usually because the business side was not planned for and the financial stress became unsustainable. The infrastructure covered in this post will not guarantee a full practice. It will make it structurally possible to build one without burning out in the process. See the post on therapist burnout if you are already recognizing some of those patterns in your own practice.