How to Start a Private Practice in Psychology

Co-authored by Chloe Carmichael, PhD

Last Updated: May 23, 2021 Approved

Many clinicians are attracted to the idea of starting their own private psychology practice, but are daunted by the steps needed to build a business. This can be especially the case for those without training in business or marketing. But, with some hard work and dedication, you can succeed in starting a practice of your own.

Part 1

Part 1 of 3:

Earning Your Credentials

1
Decide which kind of psychology degree you’d like to earn. Depending on which kind of psychology you’d like to practice, you’ll need to obtain the required schooling, degrees, and certification.
- If you’re interested in being a social worker or counselor, then you’ll need to get your master’s degree in one of these fields.
- If you’re interested in being a psychologist and practicing psychotherapy or other modalities, you’ll need a Ph.D. degree (Doctor of Philosophy) or a doctor in Psy.D. (Doctor of Psychology Degree). The Psy.D.is similar to the Ph.D. except that it is tailored more towards training psychologists to be clinicians in a wide range of clinical settings rather than focusing on research.
- If you’re most interested in being a psychiatrist and writing prescriptions for psychotropic drug therapies, then you’ll need a medical (M.D.) degree and complete a three or more year residency training program.
2
Think about adding some business courses. If your degree offers them, take a couple of business courses to help you get a handle on some of the basics. These will be invaluable aids when you’re faced with running your practice’s payroll, appointment booking, and other office tasks.

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3
Consider working with another practice before starting your own. It might be beneficial to start working with another practice that is already established before you go off on your own. Not only will this give you a guaranteed paycheck, but also a chance to network with patients, gain practical experience, and see how to run a business.^{[1]
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Trustworthy Source
American Psychological Association
Leading scientific and professional organization of licensed psychologists
Go to source}
4
Apply for a vocational license. After you complete your schooling and earn your degree, you’ll likely need to get a license before you can enter private practice.
- Check your local state regulations to see what kind of license you need for your type of practice.
- Typically, social workers need two years of supervised clinical experience before they can apply for a license or enter private practice.
- Psychologists usually need to complete an internship and have a couple of years of work experience before they can be licensed for private practice.
- Psychiatrists typically have to graduate from an accredited medical school, complete a residency, and then pass a licensing exam before they can begin their own private practice.
5
Apply for a business license. In addition to needing a vocational license, you’ll also need a business license before you can hang your shingle.
- There will be specific procedures for registering your business depending on where you live and what your local ordinances are. Check with your local town/city clerk’s office or your municipal zoning board for more specific information.
- In addition to following your local procedures, you can also consider registering your business as a LLC (Limited Liability Company) or a PLLC (Professional Limited Liability Company). While individual states have different laws regarding these types of companies, registering your new practice as a LLC or a PLLC can help protect yourself and your personal assets from liability and lawsuits leveled against your professional practice.^{[2]
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  Research source} This does not take the place of other types of insurance, though, and will not completely protect you from potential patient lawsuits.
6
Get insurance. It’s essential that you meet with an attorney or malpractice insurance agent to discuss what kind of liability coverage you need. It’s also a good idea to discuss income tax issues.

Part 2

Part 2 of 3:

Planning and Preparing

1
Decide on your practice's specialty. Identifying what kind of practice you’d like to have is the next vital step.^{[3]
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- Narrow down what kind of patients you’d like to see and what kinds of conditions you would like to treat based on your field of speciality, degree type, and/or certification. This will also help you narrow down things like location and office features: if you’re planning on treating children, for example, you’ll be making different office décor choices!
- See what other psychologists in your area offer, and find an area to focus on that does not have much competition. This can help you carve out your own, unique niche within the market.^{[4]
  X
  Trustworthy Source
  American Psychological Association
  Leading scientific and professional organization of licensed psychologists
  Go to source}
EXPERT TIP

Chloe Carmichael, PhD
Licensed Clinical Psychologist
Chloe Carmichael, PhD is a Licensed Clinical Psychologist who runs a private practice in New York City. With over a decade of psychological consulting experience, Dr. Chloe specializes in relationship issues, stress management, self esteem, and career coaching. She has also instructed undergraduate courses at Long Island University and has served as adjunct faculty at the City University of New York. Dr. Chloe completed her PhD in Clinical Psychology at Long Island University in Brooklyn, New York and her clinical training at Lenox Hill Hospital and Kings County Hospital. She is accredited by the American Psychological Association and is the author of “Nervous Energy: Harness the Power of Your Anxiety” and “Dr. Chloe's 10 Commandments of Dating.”

Chloe Carmichael, PhD
Licensed Clinical Psychologist

Starting your own practice can give you independence and flexibility. Licensed clinical psychologist Dr. Chloe Carmichael says: "Having your own practice means you get to choose the types of clients that you want to work with, as well as the most effective way to work with those clients. You also have a lot more latitude in your own life, so you can take off when you need to, or you can limit your client list so you don't get burnt out. Having the freedom to practice more self-care in your own life can help you be a better therapist."
2
Decide on your location and building type. Depending on what type of clients you’d like to treat, you can get a sense of where your office would be most conveniently located and what kind of space will best suit their needs.^{[5]
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- Ideally, your office will be located near a major freeway or bus routes and be easily accessible.
- If you’re thinking about a family practice or working with children, you might want to focus on suburban rather than inner-city locations.
- Look for an office space that has a reception area, a good sized treatment room, and a smaller room for your office.
- If you’re planning on seeing families, be sure to look for an office space that has meeting rooms large enough to accommodate several people at once.
- Consider sharing space with other professionals in a business suite, or sub-leasing space from another professional. This is a great option for keeping down other overhead expenses (like utilities, office equipment, or furniture).
- If you live in a large home that has a separate entrance you can always consider converting a room into a treatment space.
3
Find a mentor. It might be helpful to get advice from a fellow practitioner, especially one who started a private practice. If you have any old professors, advisors, or classmates from your degree work who have gone on to start their own practice, drop them a line and ask if they would be willing to share advice, recommendations, and to mentor you as you start your business.
4
Get up to speed with insurance billing. If you’d like to accept insurance at your practice, make arrangements with several popular insurance companies to cover their clients. It’s best to contact these companies directly to set up a billing protocol with them.
5
Hire staff. If you're not planning to handle all of the administrative duties, like appointment booking, patient record keeping, billing, and payroll, consider hiring some administrative assistants to give you a hand.

Part 3

Part 3 of 3:

Growing Your Business

1
Create a professional looking website. A strong web presence will help you catch the eye of new clients searching for help.
- Your website should include a mission statement and a detailed description of your specialties.
- Include some information about yourself and your background, too, so that clients can get to know you and see if you would be a good fit for them.
- You should also included some details about what a typical therapy session with you looks like, what insurances you cover, and what are your typical session rates. Don’t be shy about listing your rates, and remember that your hourly rate should also include business costs and overhead.
EXPERT TIP

Chloe Carmichael, PhD
Licensed Clinical Psychologist
Chloe Carmichael, PhD is a Licensed Clinical Psychologist who runs a private practice in New York City. With over a decade of psychological consulting experience, Dr. Chloe specializes in relationship issues, stress management, self esteem, and career coaching. She has also instructed undergraduate courses at Long Island University and has served as adjunct faculty at the City University of New York. Dr. Chloe completed her PhD in Clinical Psychology at Long Island University in Brooklyn, New York and her clinical training at Lenox Hill Hospital and Kings County Hospital. She is accredited by the American Psychological Association and is the author of “Nervous Energy: Harness the Power of Your Anxiety” and “Dr. Chloe's 10 Commandments of Dating.”

Chloe Carmichael, PhD
Licensed Clinical Psychologist

Try to make it as easy as possible for your clients to find you and book your services. Licensed clinical psychologist Dr. Chloe Carmichael says: "When I was starting my practice, I polished my LinkedIn page, wrote 3 or 4 blogs for my website that I thought my potential clients would be looking for, and published a professional photograph of myself. I also made an easy online booking system, a really good FAQ page, and I had a professional biller from the start. I tried to put myself in the shoes of someone who might not know anything about therapy, and to think about the obstacles they might face."
2
Advertise. You’ll have to sell your practice and your services to potential new clients in order to grow your business, and there’re several ways to get your name out there.
- If you are a member of a professional association, such as the American Association for Marriage and Family Therapy, you can list your practice in their online directory.
- You can also take out ads in your local Yellow Pages or newspaper.
3
Build your client base. Rather than waiting for new clients to find you, continue to build your client base and your practice by actively seeking them out.
- Give free talks in venues such as schools or community centers; introduce yourself and your practice to those who might benefit from your specialized services.
- Introduce yourself to other companies or professionals, such as physicians, educators, or religious leaders, who can refer clients to you. Ask them if you can leave some business cards for them to pass along to interested people.
- Network with fellow psychologists who run successful practices but are in a different field of speciality than your own. Forge a relationship with them and ask if they would refer clients to your practice for specialized treatment.
4
Continue training and developing new skills. Even after your business is up and running, both you and your practice will benefit from continuing to train, develop new skills, and expand your horizons.
- Look for advanced programs that offer specialty certifications in areas. Not only will this help you to continue to acquire new skills, but you'll also be able to network. 
- Keep an eye on professional trends. Be aware of how the profession is changing as well as public opinion and needs. If, for example, one type of therapy seems to be falling out of favor, consider shifting your practice away from this and towards what seems to be the new, in-demand and sought after type of treatment.^{[6]
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  Trustworthy Source
  American Psychological Association
  Leading scientific and professional organization of licensed psychologists
  Go to source}
- Diversify your practice by adding new specialists and joining forces with another psychological practitioner, or by branching out into other types of services like running workshops for companies or by serving as their consultant.^{[7]
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  Trustworthy Source
  American Psychological Association
  Leading scientific and professional organization of licensed psychologists
  Go to source}
5
Polish your professional image. A growing trend in business practice, including psychological private practice, is to craft an impacting, easily identifiable "brand image" for yourself and your services.^{[8]
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Trustworthy Source
American Psychological Association
Leading scientific and professional organization of licensed psychologists
Go to source}
- Put some thought into your practice's logo; ideally, it will be visually appealing, say something about you and your services, and be easy to remember.
- Get opinions from friends and professional contacts about your print materials (business cards and letterhead) and website. You want to be sure that you’re business materials are making a good impression and showing your success.
- Spend some time refining your office décor. Your office should feel comfortable and reflect some of your personal style. Consider making small updates every couple of years to stay fresh and current.
- Keep your website up to date, and consider including recent patient testimonies (with their identities concealed, of course).
- Consider increasing your web-presence and youthful, "hip" appearance by incorporating elements of social media. Tread carefully though, you don't want to look too youthful and non-professional by "tweeting" all the time.