What does starting up a private practice really cost?

New counsellors and therapists often ask, “what will starting up a private practice really cost me?”

Believe it or not, you can begin in private practice for as little as a few hundred dollars!

Below, are the necessary costs, as well as a few common additional ones, of starting up your private practice.

Professional Associations

Regardless of which province or territory you live in, you will most likely be required to register with a governing or regulatory body in order to practice as a counsellor, psychotherapist, social worker or psychologist.

These fees can run as low as $200 per year, up to $1000 per year depending on the organization and if you register with more than one professional association.

Business Registration

You might not necessarily be required to register your business right at the outset. Often, people wait until they have earned at least $30,000 gross annual salary, which is the point when you will need to start charging GST/HST (depending on your designation).

In Canada, it costs about $60-$80 to register your business.

Business Permit and/or license

Not every city, province, or territory requires business to have a permit or licence. For those that do, expect to pay between $50 - $100.

Insurance

There are several forms of insurance you will need to operate your business, including professional liability insurance, commercial general liability insurance, and a few optional add-ons like cyber risk coverage.

In Canada, you can expect to pay between $200 - $450 annually for insurance, depending on your provider and your coverage.

Clinical Supervisor

If you are a new therapist or counsellor, who is also new to private practice, you will likely need to hire a Clinical Supervisor to oversee you and your practice. Typical rates run between $125 - $200 per hour. You may need to see your Supervisor once per month, or as much as once or twice per week. If you need a lot of supervision, it might be a better option to receive some of your hours as group supervision, which is typically offered at a reduced rate (around $50 per 1 to 2 hours of supervision).

Expect to pay in the ballpark of $150 - $500 per month for Clinical Supervision.

Website

Having a website is a great idea for marketing and referrals. If you are tech savvy, you can create your own for as little as $100 - $200 for the hosting and domain name. If you prefer to have someone create it for you, you’re looking at something in the range of $500 - $1000 for a basic website. You might also opt for a monthly fee (which can range from $15 - $50) to have a company create and maintain your website for you.

Business cards

Business cards are an important marketing tool, especially at the outset of your practice. You can get decent business cards from VistaPrint for as little as $25 - $50 for 100 – 200 cards.

Office Space

Office space will likely end up being one of your biggest expenditures. A full time space can cost anywhere between $400 - $1000 per month (or more in larger cities).

When you are first starting out, see if you can rent something part-time (only a few days per week), or by the hour if possible. In that case, you are looking at a small portion of each client session going to office rent. For part-time use, you will pay more in the range of $100 - $400 per month depending on your set up and how many clients you have.

Practice Management System

It is not absolutely necessary, but having a practice management system to track your client records and notes, and do online scheduling and booking, can be really helpful (and a big time-saver!).

A system like OWL Practice or Jane App costs between $30 - $90 per month depending on the option you choose. There are usually discounts available for new therapists, and those in part-time private practice.

Credit Card Processing Fees

If you plan to accept payment via credit card, you will need to use a processing system such as Square, Stripe, or PayPal. There isn’t usually a cost associated with start up, but you can expect to pay anywhere from 2.75% - 3.5% in processing fees. The monthly cost will depend on the amount of money you process via credit card and will generally range from $0 - $200 per month.

Marketing

The amount you spend on marketing can vary vastly. At the outset of private practice, you will likely be trying to keep your costs low. In general, word-of-mouth is always the best referral source, and your website and business cards will help. Lots of folks choose to create a profile on an online directory like Psychology Today, which costs about $40/month.

Computer and Internet

Chances are, you already have a computer. If you don’t, you will likely need one for your private practice and can expect to pay between $1000 - $2000. Your office space may already include internet, but if it doesn’t, that will cost between $30 - $100 per month for a good internet connection.

If you have been doing the math as you go along, and you already have some of the basics in place, like a computer and some tech skills to build your own website, you can launch a private practice for as little as $500 - $1000 in start-up costs (Professional Association membership, business registration/license, Insurance, website, business cards), and as little as $500 - $750 per month in business expenses (office space, clinical supervision, practice management system, credit card processing fees, marketing, internet).

Of course, you can pay a lot more than this as well, and costs vary widely if you are living in a large city vs. a rural area. You may also be able to gain more information by asking other counsellors and therapists in your area what their start-up costs were, and what they pay on a monthly basis in business expenses.

There are few business that can be created with such a relatively small financial investment. After all of your education expenses, another $500 - $1000 might seem like a lot, but if you start thinking in terms of the number of clients you need to cover that cost, it start to become more manageable. If you are charging $120 per client, you only need to conduct 4 – 8 client sessions to cover your start-up costs, and 4-6 clients per month to cover your monthly operating expenses.

If you need support on the financial end of operating your business, feel free to check out our Private Practice Readiness Workbook and if you are needing more support you can check out our other BYPP Programs.