How to Start a Private Practice as a Therapist: A Step-by-Step Checklist for LPCs, LCSWs and LMFTs

To start a private practice as a therapist, make sure you hold a full independent license (LPC or LMHC, LCSW or LMFT), form your business and get a tax ID, set up your NPI with the right taxonomy, get malpractice insurance, choose an EHR, decide between insurance and private pay, complete your CAQH profile and apply to insurance plans 3 to 6 months before you want insured clients. Credentialing is the longest step, so many therapists open with private-pay clients and add insurance plans as each one approves them.

Starting a private practice is one of the most common goals for licensed therapists, and the clinical work is the part you already know. The business steps, including setup, insurance networks, billing and compliance, are where most new practices lose time and money. This checklist puts them in order.

The checklist at a glance

Step	What to do	Typical time
1	Confirm your license allows independent practice	1 week
2	Form your business, get an EIN and open a business bank account	1 to 3 weeks
3	Get your NPI with the right taxonomy	1 to 2 weeks
4	Get malpractice and business insurance	1 to 2 weeks
5	Choose an EHR and telehealth tool	1 to 2 weeks
6	Decide: insurance, private pay or both	1 week
7	Complete CAQH and apply to insurance plans	60 to 120+ days
8	Plan telehealth and any additional states	Varies by state
9	Set your fees, policies and HIPAA basics	1 to 2 weeks
10	Set up billing and send your first claims	When each plan approves you

Several steps run at the same time. If you plan to take insurance, start credentialing as early as you can, because it takes the longest.

Step 1: Confirm your license allows independent practice

To open your own practice and join insurance networks in your own name, you generally need a full, independent license:

License	Common titles
Professional counselor	LPC, LMHC, LPCC, LCPC (titles vary by state)
Clinical social worker	LCSW, LICSW
Marriage and family therapist	LMFT

Associate or pre-licensed clinicians (for example LPC-Associate, LMSW or AMFT) usually cannot practice independently, and most commercial insurance plans will not credential them. Some plans and Medicaid programs allow supervised billing under specific rules. Check your state licensing board before you plan your opening date. Our therapist licensing by state tool lists each state’s license titles and official boards.

Step 2: Form your business

• Choose a business structure. Many therapists form a PLLC or LLC. Some states limit which entity types licensed professionals can use, so check your state’s rules or ask a local attorney or accountant.
• Get an EIN (federal tax ID) from the IRS. It is free.
• Open a business bank account and keep practice money separate from personal money.
• Register with your state and city or county as required, including any business license.
• Choose a location: an office, a shared or sublet office, or telehealth only. Telehealth-only practices still need a business address for insurance applications.

Step 3: Get your NPI with the right taxonomy

Insurance plans identify you by your NPI and taxonomy code. Use the taxonomy that matches your license:

License	Taxonomy code	Description
LPC	101YP2500X	Counselor, Professional
LMHC and similar titles	101YM0800X	Counselor, Mental Health
LCSW	1041C0700X	Social Worker, Clinical
LMFT	106H00000X	Marriage and Family Therapist

• Individual NPI (Type 1) for you as a clinician.
• Group NPI (Type 2) if you will bill under your business’s tax ID and the plan requires it. Some plans let a solo therapist bill under the individual NPI with the business tax ID.
• Make sure your name, address and taxonomy match across NPPES, CAQH and every application. Mismatches are a common reason for denials.

Step 4: Get insurance for the practice

• Malpractice (professional liability) insurance in your own name, covering telehealth and every state where you see clients. Many insurance plans ask for limits of $1 million per claim and $3 million aggregate; check each plan’s requirement.
• General liability insurance if you rent office space.
• Cyber liability insurance is worth considering because you will store client records.

Step 5: Choose your EHR and telehealth tools

Look for an EHR that includes scheduling, intake forms, progress notes, built-in telehealth or a HIPAA-compliant video tool that signs a BAA, a client portal, and insurance claims with ERA support. Common choices for therapists include SimplePractice, TherapyNotes and Tebra.

Step 6: Decide on insurance, private pay or both

Model	Pros	Cons
Insurance	More referrals, steadier caseload, clients pay less out of pocket	Credentialing wait, lower rates, billing and denials
Private pay	Simpler, set your own rates, no credentialing	Fewer clients can afford it; slower to fill a caseload
Hybrid	Start private pay, add a few plans	You manage both workflows

If you stay out of network with some plans, you can give clients a superbill so they can ask their plan for reimbursement. Self-pay and uninsured clients are generally entitled to a Good Faith Estimate of expected charges under the No Surprises Act.

Leaving a platform such as Headway, Alma, Grow or Rula? See how to leave a therapy platform and compare earnings with our platform fee calculator.

Step 7: Get credentialed with insurance plans

1. Complete your CAQH ProView profile and attest it. See our CAQH guide.
2. Pick your plans. Look at which plans your target clients have in your area.
3. Watch for behavioral health carve-outs. Many health plans send mental health to a separate company, such as Optum, Carelon or Evernorth, which needs its own application.
4. Medicare. LCSWs could already enroll, and since January 1, 2024, LPCs (as mental health counselors) and LMFTs can enroll too. Medicare pays these clinicians 75% of the clinical psychologist amount for the same service. See Medicare for LPCs and LMFTs.
5. Medicaid, if you will see Medicaid clients. In Georgia, see our Georgia Medicaid credentialing guide.
6. Follow up every week until each plan sends a signed contract and an effective date.

Commercial plans often take 60 to 120 days, and behavioral health networks can take longer. See how to get paneled with insurance and how long credentialing takes, by payer.

Step 8: Telehealth and practicing in more than one state

The rule for telehealth: the client’s location at the time of the session sets the requirements. You need a license, or a compact privilege, in that state.

License	Multistate option (as of October 2026)
LPC / LMHC	The Counseling Compact was issuing privileges to practice in 10 states as of October 2026, including Georgia. Both your home state and the client’s state must be issuing privileges. Applications go through the compact’s CompactConnect system.
LCSW	The Social Work Licensure Compact has been enacted in many states but was not yet issuing multistate licenses. You still need a license in each state.
LMFT	There is no compact for LMFTs. You need a license in each state where your clients are located.

Check the current status with your licensing board and the compact’s official website before you see clients in another state. Our therapist licensing by state tool shows each state’s Counseling Compact and Social Work Compact status.

For each additional state, also plan for credentialing with that state’s insurance plans (Blue Cross Blue Shield plans are separate companies in each state), that state’s Medicaid program if needed, malpractice coverage for that state, and that state’s telehealth and consent rules. Payers use different place-of-service codes and modifiers for telehealth; see POS 02 vs 10 and modifier 95.

Step 9: Fees, policies and HIPAA

• Private-pay rates for intakes and sessions, based on your local market.
• Good Faith Estimates for self-pay and uninsured clients.
• Policies: informed consent, cancellations and no-shows, communication between sessions, and crisis and after-hours guidance.
• HIPAA basics: a risk assessment, written policies, and a business associate agreement (BAA) with every vendor that handles client information, including your EHR, telehealth tool and billing company.

Step 10: Billing and your first claims

The codes most therapy practices bill:

Code	What it is
90791	Psychiatric diagnostic evaluation (intake)
90832, 90834, 90837	Psychotherapy, about 30, 45 and 60 minutes
90846, 90847	Family psychotherapy without and with the client present
90853	Group psychotherapy
90839, 90840	Psychotherapy for crisis
90785	Interactive complexity add-on, when it applies

See 90837 vs 90834 vs 90832, family therapy codes, group therapy billing and how to bill insurance as a therapist.

Before your first insured session, confirm each plan’s effective date, set up electronic claims, ERA and EFT, and verify every client’s benefits, including behavioral health carve-outs.

A realistic timeline

When	What to do
3 to 6 months before opening	Confirm your license, form the business, get EIN and NPI, start CAQH and credentialing
2 months before	Malpractice insurance, choose EHR, decide on fees and insurance mix
1 month before	Set policies and forms, set up telehealth, set up billing
Opening	See private-pay clients, and insured clients for plans that have approved you
First 6 months	Add remaining plans as they approve you; review collections and denials monthly

Common mistakes

• Starting credentialing too late, then waiting months for insured clients.
• Seeing insured clients before the effective date, which leads to out-of-network denials.
• Missing behavioral health carve-outs, so claims go to the wrong company.
• Using the wrong taxonomy code or mismatched addresses across NPPES, CAQH and applications.
• Billing a session code that does not match the documented time.
• Seeing clients located in a state where you are not licensed, including by telehealth.

This guide is general information, not legal, tax or clinical advice. Licensing, compact and payer rules change, so confirm current requirements with your state licensing board and each payer before you act.

How RevenueCTRL can help

We help therapists open and run their own practices. We handle mental health credentialing with commercial plans, Medicare and Medicaid in all 50 states, at $80 per payer, with 5 commercial payers credentialed free when you sign up for billing. Then we run your billing at 2.5% of collections, with no setup fee, no monthly minimum and no long-term contract. See billing for therapists, billing for solo and private practices, or what billing companies charge. PMHNP? See how to start a PMHNP private practice.

Frequently asked questions