How to Start a Solo Practice: A Therapist's Checklist

Leaving an agency to open your own therapy practice is one of the biggest professional leaps you can take. The appeal is obvious: you set your own schedule, choose the clients you work best with, keep the fee you earn, and build something that is genuinely yours. But the first few months can feel like drinking from a firehose — business structure, licensing, insurance, HIPAA, and software all land at once, and most clinical training never covered any of it.

The good news is that starting a solo practice is a sequence of concrete steps, not a mystery. This checklist walks through the essentials in roughly the order most therapists tackle them, with a clear focus on protecting your time and your margins. Where legal, tax, or licensing questions come up, treat the guidance here as a starting point and confirm the specifics with a qualified attorney, CPA, or your licensing board.

For a broader companion list, our solo practice startup checklist covers the full launch sequence. This article is built specifically around the leave-your-agency path and the decisions that quietly shape your ongoing costs.

Run the numbers before you resign

The most common mistake therapists make is quitting before they have a realistic financial picture. Before you give notice, model what your income and expenses will actually look like in private practice: rent (or home-office overhead), liability insurance, supervision or consultation if you need it, marketing, and software. Two numbers deserve special attention: your expected client load and the recurring software you will depend on.

Use the quit-my-agency calculator to compare your agency salary against a realistic solo income after expenses. A few benchmarks to keep in mind as you plan:

• Subscription EHRs commonly run roughly $69–$99 per month for the tiers solo therapists actually use, as of mid-2026 [1][2].
• Across EHR categories, buyers report average spending near $1,200 per user per year [3] — a figure that adds up fast over a career.
• Most solo therapists need a runway of several months of expenses before income stabilizes.

Knowing these numbers first keeps you from signing up for monthly software that quietly erodes the margin you left the agency to capture.

Pick a business structure (with professional guidance)

Your structure affects liability, taxes, and how payers see you. The right choice depends on your state and profession, so treat this as general background and confirm it with a qualified professional [4].

• Sole proprietorship is the simplest to start: you and the business are the same entity, and you report income on your personal return. It offers no personal liability protection.
• LLC adds a layer of separation between personal and business assets, which many therapists want for liability reasons.
• PLLC (Professional LLC) is required for licensed professionals in some states. If your state mandates it, a standard LLC may not be an option.

Some states also have specific rules for how mental health professionals may organize, so confirm requirements with your licensing board before you file anything.

Lock in licensing, NPI, and credentialing

Before you see a single private-pay client, make sure the administrative foundation is solid.

• Confirm your state license is active and unrestricted in the state where your clients reside.
• Apply for a National Provider Identifier (NPI) through the National Plan & Provider Enumeration System if you do not already have one. It is free, and you will need it for billing and credentialing.
• Set up a CAQH profile and keep it current — insurers rely on it during credentialing.
• Decide whether you will take insurance at launch. Getting paneled can take months, so many solo therapists start private-pay and add panels later.

Credentialing timelines are unpredictable. Build them into your launch schedule rather than treating them as a last step.

Carry the right insurance

Insurance is one of those unglamorous line items that exists for the day everything goes wrong.

• Professional liability (malpractice) is essential for independent practice.
• General liability covers non-clinical risks like a client slipping in your office.
• Cyber liability is worth considering if you store any client data digitally — which most therapists do.

Ask whether your EHR and other vendors sign a Business Associate Agreement (BAA). That documentation matters for both your compliance posture and your insurer's expectations.

Separate your money with a business bank account

Mixing personal and practice finances turns tax season into a nightmare and weakens the liability separation you set up your business structure to create [6].

1. Get an Employer Identification Number (EIN) from the IRS.
2. Open a dedicated business checking account.
3. Run all practice income and expenses through it from day one.
4. Track mileage, rent, and software costs as you go — not in a panic the week before taxes are due.

Get HIPAA basics in place

HIPAA compliance for a solo practice is less about expensive tooling and more about consistent habits and clear documentation [5].

• Do a simple risk assessment of where Protected Health Information (PHI) lives: paper, laptop, phone, cloud.
• Maintain written privacy and security policies, even a short version.
• Sign BAAs with every vendor that touches PHI: your EHR, your video platform, your billing service.
• Keep a record of who has access to records and how you would respond to a breach.

You do not need to over-engineer this. You do need to take it seriously and document it.

Choose an EHR you actually own, not rent

This is the decision that most affects your long-term margin. Subscription EHRs are convenient, but you are renting access to your own clinical records forever — and when you stop paying, access stops too. (We walk through exactly what that looks like in our piece on the data-ownership nightmare.)

A flat, lifetime-license model flips that relationship: you pay once, the software is yours, and your data stays under your control. For solo therapists who left an agency partly to stop renting, owning the core tool of the trade fits the whole point of going out on your own.

A short closing thought

Starting solo is a series of small, unglamorous decisions that compound. Get the legal and financial scaffolding right early, keep your recurring costs low, and own the tools you depend on. Do that, and you give yourself the runway to build the practice you actually want.

Before you commit to a monthly EHR subscription, see what it really costs you over a career. Run the numbers in our software rent calculator, and if a flat, lifetime license sounds like a better fit, book a demo (we use sample client data, nothing real) through our contact page.

References

• [1] SimplePractice. Pricing. Accessed June 2026.
• [2] TherapyNotes. Pricing. Accessed June 2026.
• [3] Software Path. EHR Software Report. Accessed June 2026.
• [4] U.S. Small Business Administration. Choose your business structure. Accessed June 2026.
• [5] U.S. Department of Health & Human Services. HIPAA for Professionals. Accessed June 2026.
• [6] Internal Revenue Service. Small Business and Self-Employed Tax Center. Accessed June 2026.