Eight Questions to Ask Yourself When Starting a Psychology Private Practice

More than half of psychologists who deliver health sciences are primarily independent practitioners, according to the latest data from APA’s Center for Workforce Studies. Having your own practice is definitely an attractive path, but do you have what it takes to be your own boss and employee at the same time?

Here are eight questions you need to ask yourself before starting a psychology private practice:

1. Are you Ready to Be a Business Owner As Well As A Clinician?

Once you decide to become a private practice psychologist, you have to keep in mind that what you’re doing is essentially a business, and you need to learn about the business side of things so your practice thrives in the long run. 

Creating a business plan is one of the smartest things you can do to start. This should include your projected annual income, long-term financial goals, funding options for your business, your business marketing plan, and a mapped-out goal list for the next few months and years that can help you stay motivated. 

You will also need to learn how to process bills and payments by yourself. Learning basic financial management is important so you can better understand how business taxes work, how you can better track your cash flow, and how insurance can benefit you and your practice. 

(If you’re not sure where to get started, check out this episode of the Psychbiz Podcast, all about creating a business plan as a blueprint for success!)

2. Do You Want To Be A Solo Practitioner Or Have A Group Practice?

One of the biggest things you should settle first before opening a psychology private practice is whether you want to remain a solo practitioner or if you’re open to hiring additional psychologists in the future. Establishing this as early as possible will help you strategize better in terms of your business’ finances.

Both options have pros and cons. As a single practitioner, you can keep things simple. You never have to worry about disagreements with the other clinicians, and can be truly independent. On the other hand, this means that all of the responsibility is on your shoulders, and it does limit the number of clients you can see.

A group practice has the benefit of having “all hands on deck”, especially during your business’ early years. You can take responsibility in areas where you feel stronger, and your partners can take responsibility for other tasks. But you will need to ensure good communication with the other clinicians in your group, and work through a wide range of issues – everything from profit-sharing terms, the number of patients your practice can take on, to the possibility of branching out to other locations.

3. Do You Want to Accept Insurance or Be Private Pay Only?

Deciding whether you’ll be accepting insurance-based payments or staying as a private pay-only practice would largely depend on your patients’ socio-demographics and what area you’re in.

Opening up your practice to insurance payments will help you build your client base as more patients are inclined to use insurance for all their healthcare needs. This can also give you a lot of patient referrals and increase your practice’s credibility due to your affiliation with healthcare insurance providers.

However, opting for insurance payments also has its own set of disadvantages. The credentialing process could take up a lot of your time and rejected insurance claims could mean delayed payments for your practice as well. Plus, insurance companies will be the ones determining your reimbursement rate and not the other way around.

Whether you’re looking to include insurance payment options or you want to stay in a private pay-only clinic, keep in mind that it helps to be as flexible as possible, especially during the earlier stages of your practice.

4. Do You Want to Meet with Clients in Person or Virtually?

It’s common for patients and psychologists to meet in person for all their consultations, but recent changes have ushered in a new era where patients can consult their healthcare providers from the comfort of their homes.

However, this isn’t to say that in-person consultations aren’t a thing anymore, since there is still a large percentage of patients who prefer face-to-face interactions with their doctors and psychologists.

There are pros and cons to both arrangements. Working out of an office building can help you establish yourself as a professional and can provide a better work/life balance. However, searching for and paying rent for office space can be a challenge, but may open up some opportunities that an all-virtual practice might not provide. 

It all boils down to being as adaptable as possible while prioritizing your patients’ individual needs. Investing in HIPPA-compliant technology so you can hold online consultations is as important as creating a safe, comfortable, and welcoming patient space for face-to-face consults.

5. What Outside Experts Do You Need to Consult With?

As a mental health professional getting started in your psychology private practice, there are certain areas where you need the assistance of an expert to give your practice a strong foundation.


Many legal questions will come up when you are first establishing your private practice, from business licenses to zoning concerns. Consultation with a lawyer is a good idea. Some questions you may want to ask:

  • Are there any zoning laws that apply to the area where you are planning to have your private practice? (Keep in mind that this may be the case, even if you are practicing virtually from your own home.) If so, what paperwork do you need to file?
  • What business structure should you choose? (A sole proprietorship, LLC, partnership, or other? The business structure you select has a long-term impact on how your business will grow.)
  • How do you file for business registration in your state(s)?
  • What business licenses and permits do you need to begin providing services?

If the cost of a consultation with a lawyer is intimidating, keep in mind that there are some resources available to you. For example, SCORE is a wonderful organization that offers free Consulting from other small business owners and experts and has branches all over the country. 

Accountant/Bookkeeper: Understanding the tax laws that apply to your business and setting up your books correctly is an important step toward business success. Understanding issues such as: if you need to pay corporate taxes and quarterly self-employment taxes are an important issue. Even if you plan to do your bookkeeping and tax preparation yourself, having a consultation with an accountant as you get things established makes a lot of sense.

Insurance Agent: Having the right protection for yourself as you begin your private practice ly essential. Speak to a qualified insurance agent to determine which types of coverage you need. Depending on your situation, these may include some or all of the following:

  • General liability insurance
  • commercial property insurance
  • Business Income Insurance
  • Professional Liability insurance

6. How Will You Market Yourself?

Building your private psychology practice’s identity doesn’t have to be hard, even if you’re just starting to make a name for yourself in the industry.

One of the most important things you can do to market your practice is to have a streamlined, optimized website. A website will function as your “virtual front door” and will be the first point of contact that most clients will have with you. Your website is vital both to getting *found* by potential clients and to explain in a clear and empathetic way exactly who you help and how you do it. Your website is your first opportunity to build trust and connection with a new client, so make sure to use it to its full potential and have a website that is professional and effective.

You can also opt to have your clinic listed on therapist directories and work to receive referrals and word-of-mouth to build a client base for your practice. Keep in mind that all it takes is a good patient-practitioner relationship, a highly-engaging website, and an active online footprint to keep your clinic as marketable as possible.

7. What Will Your Niche Be?

If you don’t have a specialty as a psychologist yet, choosing an area of specialization will not only benefit you as a practicing psychologist but also gives your private psychology practice that much-needed advantage to thrive in your chosen niche. What’s more, this allows patients to find out whether you are the right psychologist for their specific concerns.

Many clinicians hesitate to settle on a niche. This is because they are concerned that having a niche will limit their client base, or reduce their opportunities to both help more clients and grow their practice. But the truth is that having a well-articulated niche can help the right clients to find you and help you to have more success in growing your practice. 

One important thing to remember is that having a niche doesn’t mean that you can only do one thing. There are many ways that you can articulate something unique and special about what you do in a way that will attract clients and help you stand out from the crowd. 

There are a lot of specializations you can choose from, but keep in mind that your niche should be something that fits your skills, capabilities, and your passion as a psychologist. 

8. Do You Have A Self-Care Plan In Place To Ensure That You Are Getting Support, Guidance, And Avoiding Burn Out?

Once you’ve started your practice, it’s easy to get caught up in all the work you need to do to ensure its success. This is why it’s also important to have a self-care plan in place to ensure you’re getting all the mental rest you need so you have the energy to take better care of your patients. 

A self-care plan involves not only rest days where you can calm your mind. This also includes making sure that you’re getting the right kind of support and guidance from the people around you, whether it’s your colleagues, family, or friends. Although you are of course a mental health expert, that does not mean that taking care of your mental health will always come easily to you! Keeping track of how you are doing and having steps in place to avoid burnout is crucial. Working in private practice does not have to be lonely, and seeking out the right support for yourself is important to your continued success.

Answering these questions before establishing your private psychology practice will allow you to make informed decisions about your future, give you valuable insight on what business path will suit your needs and help you grow as a person and as a practicing psychologist.

(This article is for informational purposes only and does not constitute tax or legal advice.)

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