The Practical Guide to Opening a Private Mental Health Practice

Opening a private mental health practice is both an exciting opportunity and a serious responsibility. Whether you're a licensed therapist, counselor, psychologist, or clinical social worker, stepping into private practice means taking control of your professional path, offering personalized care, and building a business that reflects your values and expertise.

This guide offers a practical, step-by-step overview of how to open a private mental health practice—from licensing and logistics to marketing and sustainability.

how to start a private practice

Learning how to start a private practice begins with ensuring you're fully licensed for independent clinical work in your state. Choose a niche, decide whether to offer in-person or telehealth services, and create a business structure (like an LLC or sole proprietorship). Secure a HIPAA-compliant EHR, obtain liability insurance, and develop clear policies for fees, cancellations, and client communication. Set up a private, welcoming space or virtual office, and market your services through a professional website and therapy directories. With the right planning, starting a private practice becomes a rewarding way to serve clients while building your own business.

1. Assess Your Readiness

Before launching your practice, take time to assess your personal, clinical, and financial readiness. Ask yourself:

  • Am I fully licensed for independent practice in my state?



  • Do I have the clinical experience and supervision hours required?



  • Am I ready to manage administrative and business tasks?



  • Do I have a financial cushion to cover startup costs?



If you're newly licensed, consider working in group practice first to build confidence and experience. Private practice requires more than just clinical skill—it also demands self-discipline, organization, and a business mindset.

2. Choose Your Niche and Services

Defining your niche helps you attract the right clients and distinguish your practice. Consider:

  • Client population: Children, teens, adults, couples, families.



  • Specialty areas: Anxiety, trauma, LGBTQ+ issues, addiction, grief, etc.



  • Modalities: CBT, EMDR, DBT, mindfulness-based therapy, etc.



  • Service format: In-person, telehealth, hybrid.



By narrowing your focus, you can become known as an expert in a particular area, which helps build trust and credibility.

3. Understand Legal and Licensing Requirements

Each state has different requirements for private practice. Generally, you will need:

  • Full independent licensure (e.g., LCSW, LPC, LMFT, PsyD, etc.).



  • A National Provider Identifier (NPI) number.



  • Business license or registration with your city or county.



  • Liability and malpractice insurance.



  • HIPAA-compliant practices for protecting client information.



You may also need an Employer Identification Number (EIN) from the IRS, even if you're a sole proprietor, especially if you plan to hire staff or open a business bank account.

4. Choose a Business Structure

Select a legal business structure that aligns with your goals. Common options include:

  • Sole Proprietorship: Easiest to set up, but offers no legal separation.



  • Limited Liability Company (LLC): Offers legal protection and flexibility.



  • S-Corp or Professional Corporation (PC): May offer tax benefits but adds complexity.



Consult with a business attorney or accountant to decide what structure works best for your situation.

5. Set Up Your Office (Physical or Virtual)

Decide if you'll work in-person, via telehealth, or a combination of both. For a physical office:

  • Choose a quiet, private location accessible to clients.



  • Make sure the space meets ADA and safety requirements.



  • Furnish your space to feel warm, calming, and professional.



For telehealth-only practices, choose a HIPAA-compliant video platform and ensure you have:

  • A private, quiet room with good lighting and a neutral background.



  • High-speed internet and a secure computer setup.



  • Consent forms and policies tailored to telehealth.

6. Register for Insurance Panels (or Decide to Stay Private Pay)

You can choose to:

  • Accept insurance: This expands access to clients but involves credentialing, billing complexities, and lower reimbursement rates.



  • Stay private pay: Offers simplicity, higher income per session, and fewer constraints, but may limit your client base.



If you choose insurance, start the credentialing process early—it can take several months. Consider using a billing service to help manage claims and denials.

7. Set Your Fees and Policies

Determine your rates based on your experience, market rates, and overhead. Create policies for:

  • Session lengths (e.g., 45 or 60 minutes)



  • Cancellation and no-show fees



  • Sliding scale availability



  • Intake process and paperwork



  • Confidentiality and consent



Post your fees and policies clearly on your website or client intake forms to set expectations from the start.

8. Create HIPAA-Compliant Systems

Protecting client privacy is a legal and ethical necessity. You'll need:

  • A secure electronic health record (EHR) system for scheduling, notes, and billing (e.g., SimplePractice, TherapyNotes, TheraNest)



  • Encrypted email and messaging systems



  • HIPAA-compliant video platforms



  • Secure file storage for client records



  • Signed Business Associate Agreements (BAAs) with any third-party services

9. Build Your Brand and Market Your Practice

Branding and marketing are essential to attract clients. Steps include:

  • Naming your practice: Choose a name that reflects your values or services.



  • Building a website: Include services, specialties, location, fees, and a contact form.



  • Listing on directories: Psychology Today, TherapyDen, GoodTherapy, etc.



  • Social media presence: Share educational content to build credibility.



  • Networking: Connect with doctors, schools, and other therapists for referrals.



Consider offering free consultations, writing blog posts, or speaking at local events to build trust and visibility.

10. Manage Finances and Plan for Sustainability

Track all income and expenses from the start. Use accounting software like QuickBooks or Wave, and consider hiring an accountant familiar with therapy practices. Set aside money for:

  • Taxes (typically 25–30% of income)



  • Continuing education



  • Office upgrades or tech needs



  • Marketing and advertising



Build a sustainable schedule and avoid overbooking. Prioritize work-life balance to prevent burnout—your well-being matters just as much as your clients.

starting a telehealth private practice

Starting a telehealth private practice allows licensed clinicians to offer therapy services remotely while reaching a broader client base. Begin by ensuring your license permits telehealth in your state—and any other states where clients may reside. Choose a HIPAA-compliant video platform, secure electronic health records (EHR), and encrypted communication tools. Create clear policies for informed consent, emergencies, and technology issues. Set up a professional, private home office space with good lighting and sound. Market your practice through online directories and a dedicated website. Telehealth offers flexibility, accessibility, and lower overhead—making it an ideal option for modern mental health care delivery.

Final Thoughts

Opening a private mental health practice is a journey that blends clinical expertise with entrepreneurship. It takes planning, patience, and a willingness to learn new skills. But with the right systems and mindset, you can create a fulfilling, client-centered practice that grows over time.

Remember: this isn't just a business—it's a space for healing, connection, and transformation.