What does it actually cost to start a private practice?

How much does it cost to start a private therapy practice?

Less than most therapists fear, and the space decision drives almost all of it. A telehealth-only launch — license paperwork, liability insurance, an EHR, a phone line, and a simple website — commonly lands in the low four figures for the first year. Add an office and you add rent, a deposit, and furnishings, which can multiply the number several times over. That is why this calculator makes you choose the space model first.

Is starting telehealth-only really that much cheaper?

Yes. Rent is the largest recurring line in most practice budgets, and the deposit plus furnishings are the largest one-time lines. Starting telehealth-only, or subletting an office one or two days a week once you have clients, lets your caseload pay for the office instead of your savings. You can always add space later; it is much harder to shed a lease.

Do I need an LLC before I see my first client?

Not necessarily — many therapists begin as sole proprietors and form an entity later. Some states require licensed professionals to use a professional entity (a PLLC or professional corporation) rather than a standard LLC, and filing fees and rules vary by state, so check your Secretary of State and your board before filing. An entity is not a substitute for malpractice insurance either way. This is general information, not legal advice.

Which startup costs can wait — and which cannot?

Can wait: professional web design, a polished logo, new furniture, and paid advertising — a simple one-page site and a directory listing bring in the first clients. Cannot wait: professional liability insurance active before your first session, a secure way to keep records, and a business bank account so your books are clean from day one.

Are practice startup costs tax-deductible?

Generally yes — ordinary business expenses like insurance, software, and rent are deductible, and costs you incur before opening fall under special startup-expense rules that let you deduct a portion immediately and spread the rest over time. Keep every receipt from day one, and have an accountant set this up in your first year. This is general information, not tax advice.

Do I really need a separate business bank account?

Yes. Mixing practice income with personal spending makes your bookkeeping miserable, your tax return risky, and — if you form an LLC — can undermine the liability separation the entity exists to provide. A free business checking account takes an afternoon to open and is the cheapest line in this whole budget.