Basic Costs of Starting a Private Practice
I’m sure many therapists wonder, how much does it cost to start and run a private practice anyway? I decided to address that question and break down some numbers. Some of these will of course vary depending on your location and whether you decide to operate in person or telehealth.
Business license:
Every state, county and city is different and some don’t require a separate business license. This will be one thing you need to research locally. Your local small business center should be able to fill you in on the requirements for your location. This could be as low as $25 a year to several hundred. For my location in North Carolina, I did not need to pay for a separate business license.
PLLC/LLC costs:
You may chose to operate as a sole proprietorship, but if you choose to incorporate then there is usually an associated cost. Each state has different requirements for whether you must incorporate and into what structure you must incorporate. In NC, it’s about $175 for the initial registration fo a PLLC and an annual renewal of $25.
Rent:
This will again vary widely by location so you need to do some market research. If you’re trying to reduce costs, then going virtual only is a great option. However, some insurance companies require that you have an office where you can meet with clients if needed. Coworking spaces rent office space as needed with a small monthly membership fee. You may also find a local therapist who is willing to either allow you to use space as needed or sublease for as little as half a day a week. Or you may decide you want your own space fulltime. The costs could range from $50 to $1,000+ a month depending on your area.
Utilities:
These may be included in your rent. If you work from home, then you can deduct a portion of these on your taxes (That’s a whole other blog post for another time).
Liability Insurance:
You likely already are paying for this, but now that you are starting your own practice you may need to upgrade your plan. Costs will vary based on what coverage you select, whether you need general liability (which is necessary if you offer in person therapy), and what other coverages you select. I pay about $400 a year.
EHR:
If you really want to cut costs you could use paper charts. You’ll still need a secure method of storing charts as well as need to cover printing costs, but it will likely be cheaper than an electronic health record system. My 2 cents… I highly recommend an EHR for streamlining your systems and saving time. And as we know, time is money. Some therapist use a barebones system like Google Workspace. The lowest tier is currently $8.40 in 2025. Sessions Health is a popular EHR that offers comprehensive services and starts at $39 a month. Simple practice is also popular and has several tiers ranging from $50-$100 a month.
An advantage to an EHR is that it will likely include a payment processor so that you can collect session fees electronically. While checks or cash may work smoothly in person, they would be complicated to depend on for a virtual practice. An EHR’s payment processor will allow clients to store their payment information securely and will allow you to easily charge for the session. Some therapists decide to use an external payment processor such as Ivypay as they have lower processing fees. But keep in mind that the extra steps for running payment and keeping track of payment may not be worth the small percentage of savings.
Email:
This is one of those pretty essential things in this day and age. It does streamline communication and offers another option to communicate besides phone calls. I use Google Workspace which is $8.40 a month and can be set up to be HIPAA compliant. Alternatively, you could use Microsoft Office. I do recommend using a paid service and not just a free gmail account or similar.
Phone/Fax:
There are many options for communication services. Google Voice integrates nicely with the other Workspace options and can be used through an app on a mobile device. It currently is $12.89 a month. SRFax is about $6.00 a month, Faxage is $3.50 a month. Spruce Health offers a phone and fax system, with end to end encrypted secure messaging, video telehealth, and other features starting at $24 a month.
Telehealth platform:
This may be integrated into your EHR or may be an additional cost- typically about $10 a month. Google Meet is automatically included in the basic plan. Spruce Health bundles video/telehealth with it’s basic plan. Doxyme offers a free basic plan. Psychology Today offers a video/telehealth platform as part of their $30 a month directory listing.
Marketing/Online visibility:
There are many online therapist directories. Psychology Today is a popular one, but a few others include Therapy Den and Mental Health Match. Most are about $30 a month. My 2 cents… establish an online presence through a website. Yes, it’s a bit of an upfront cost— either monetarily by hiring a web development service or through time. But longevity wise, it’s well worth it. I pay about $20 a year for my domain and a little under $300 for Squarespace to host my site. While directory listings are very helpful for visibility. The amount of information you can share about yourself and the services you offer is limited. Social media pages such as a Facebook page or Instagram account are free ways to have an increased online presence.
Miscellaneous things to consider:
For ease of calculating costs, I’m going to assume you already have a private room from which to conduct virtual sessions with a desk or table. I’m also going to assume you already have a laptop or other device from which to use the software. Since you are already a therapist, I’m not going to include licensure and CEU costs as you would be paying for those regardless of what setting you are working in.
Bare Bones: