The intent of this page is provide a quick and hopefully-not-too dirty guide to setting up a private mental health practice in Washington State. I practice out of Seattle, and most info here will be applicable state-wide. Disclaimer: although I have done my best to provide accurate information, I will not take responsibility if you don’t do everything right. Do your research – hopefully the pointers here will help with that. Also, this is by no means a complete guide to everything you need to know to run a practice. I am including very little about the clinical side of things, and I’m not saying much about full licensure or the exam. That said, I’m open to feedback about this page, and will attempt to change it to make it as useful as possible.
I’ll go through the tangled mess of bureaucratic footwork you need to do, then review some of the basics of getting your practice going, including finding a supervisor, setting up some forms, finances, and marketing.
You will need to set up a business structure. I recommend starting with a PLLC/LLC (Professional/Limited Liability Company. An LLC is better than a sole proprietorship because it means you are not liable for debts incurred by the business (should the business fail). I have heard that a Professional Limited Liability Company (PLLC) may be required for businesses that require state licensure. RCW 25.15.046 uses some vague language that does not clarify, to my non-lawyerspeak brain, at least, if it is actually required
You need to set up a legal business by filling out the Limited Liability Corporation application here. You are creating a Single Member LLC registered with Washington State. It takes about 15 minutes and costs $200. You will need to name your company – pick something simple, not necessarily a trade name, like Jason Foster LLC. Of course, they won’t let you use that because that’s my LLC’s name. 🙂 This application does not require a practice address, just a home address.
It costs more money to set it up ($700+), and the accounting requires more resources, but once you are making enough money, you might consider switching over to an S-Corporation, because it will save you money on tax payments, at the time of this writing, at least. Congress may change things. Talk to a CPA about this when you are ready. It probably won’t make financial sense in the first year or two. If you form an S-Corp, you may need to register it as a Professional Service Corporation with the State. Again, the RCW isn’t too clear on this. Sorry.
You will need an Employer Identification Number (EIN) from the IRS. Get it here. [free, 5 min]
You will need to apply for a Washington State Business License. With this, you’ll get a UBI number. [file online, $15-$20, 30 minutes (provide Trade Name, if applicable)]
Finally, you will need a City Business License. If you are in Seattle, use this form. This requires physical space of practice, optional trade name. [file online, 30 minutes, $56 if you plan to make less than $20K (half off if you are starting after June 30th)].
You need professional liability insurance. Not that I’m necessarily recommending them, but CPH hasn’t given me any problems (nor have I had to use them). It should cost about $130/year.
You may also want to consider Business Insurance, which covers things beyond professional liability, like Slip & Fall coverage.
LMHCA / LMFTA application
About 80% of Washington State counselors are registered as Licensed Mental Health Counselors (or Associates). The other 20% (not counting social workers, who are a significant chunk) are Licensed Marriage and Family Therapists (or Associates). LMFTs require a few extra credits from your master’s program – check with your program if you don’t know which you qualify for. You can review the credentialing requirements here.
Here is the LMHCA form.
make sure you get the ASSOCIATE package.
Here is the LMFTA form.
make sure you get the ASSOCIATE package.
These forms are quite long and may take some time to fill out completely. One of the more challenging sections is the “Course Content Identification”, which requires you to fill in the course information from your masters program. You will probably need to get this from your program. In my experience, it may take a week or two for them to get back to you. The application fee is $50.
Note that the application packet includes a “Approved Supervisor Verification Mental Health Counselor Associate” form. As far as I know, you don’t need to submit this form with your application. I have heard that you need to submit it with your application for full licensure, however. This form is to be signed by your supervisor and returned to you.
NPI (National Provider Identifier) number
If you don’t already have one from your internship, you can apply (or look up your existing number) here: https://nppes.cms.hhs.gov/NPPES/StaticForward.do?forward=static.npistart
You will need your LMCHA/LMFTA license number for this application. You will also need to provide a taxonomy code. For LMFTAs, use 106H00000X. For LMHCAs, use 101Y00000X. Those are the general codes. There are also codes for specific types of counselors, and for Art Therapists, Music Therapists, Psychologists, Social Workers and others. You can refer to this list.
You need someone to provide oversight. More importantly, I think, this should be someone you are comfortable with, or feel like you can get comfortable with as your relationship develops. A good supervisor will not just be your mentor, they will also help you work your counter-transference, help you when you are stuck or disheartened, and help you with challenging ethical issues. Legally, however, they cannot be your therapist. You may want to discuss their approach to supervision with them before signing up.
I recommend asking around – who do your colleagues go to or recommend?
To apply for a full LMFT or LMHC license, you have to meet the following hours requirements. You have 7 years to do this, but it’s good to start thinking it about right now. I suggest reviewing the credentialing requirements for full licensure.
immediate supervision (100 hours required for LMHC / 200 for LMFT, 100 of which can be group supervision)
direct counseling (1200 hours required for LMCH / 1000 for LMFT, 500 of which must be multi-body))
total supervised experience hours (3000 hours required)
Your supervisor will be signing off on your hours. That means that you will want to track your hours. Use a spreadsheet, and record Individual and Relational (multi-body) hours, Group Supervision Hours, Individual Supervision hours, Training Hours, and Administrative Hours. It may not be necessary to split out Individual and Relational hours, but I like to track that.
Administration hours are hours spent writing down session notes or making appointments. They are also any hours spent working on your business – filling out all these application forms, building your website, or organizing your finances, and reading this guide. Make a clear plan, in writing, with your supervisor about what counts for administration and training hours. Hours acquired prior to your supervisor signing the Approved Supervisor form in the application packet do not count toward licensure.
You may want to get your supervisor to sign on off on your hours frequently, and keep backup copies. I heard one sad story about an associate who had their hours signed off on, then their supervisor died, then they lost their signed-off hours forms. All those hours were lost, as far as the State was concerned.
Note that the State is likely to refuse to accept signed-off hours unless they are on the official Verification of Mental Health Counselor Supervised Postgraduate Experience form [pdf].
Disclosure / HIPAA
You will need to provide a disclosure form to all of your clients before engaging in therapy. You may use mine as a template (changing the names to protect the innocent), and I encourage you to do your research and make sure you haven’t left anything off of your version. Have your supervisor review your disclosure.
You may want to consider setting up encryption for your email transactions, or at least let your clients know that emails are not secure. I encourage you to use email only for setting up appointments, for privacy reasons (and because it can be difficult to maintain healthy boundaries if you start doing therapy over email). Here is a more detailed analysis.
Beyond that, I’m not going to get into HIPAA requirements, except to say that you should familiarize yourself with them. Keep in mind that it is very important to protect your clients’ PHI (Personal Health Information). Lock your electronic and physical files appropriately. http://www.hhs.gov/ocr/privacy/
Note that technology is covered by HIPAA. You will need to consider how you store client’s PHI. For many online services, you will need a Business Associate Agreement.
You are required to take session notes, unless your client specifically requests that you don’t, in writing. I encourage you to talk to your supervisor about this and do your own research.
Setting your rates
Know what you are worth!! Partly, this means knowing the going rate for a counselor with your level of experience. When I first wrote this article (in September 2013), I was in practice for almost two and half years, and I charged $90/hour. At the time, I knew colleagues who had been practicing for less than 18 months who had raised their rates from $90 to $100/hr. The other side of this is about how you feel about your abilities. You may feel weird about charging someone $100/hour, wondering if you are worth that much. I strongly encourage you to explore this. It may take a little experience in the chair to understand what a gift you are giving your clients, even if you are not at the level of mastery of your idealized counselor. Part of the reason this is so important is because it affects your relationship with your client. If you are constantly doubting yourself, they may pick up on that, and start to wonder if they could find a better counselor. I’m not saying their isn’t any room for doubt or questioning. Sometimes it can be useful to ask a client “how am I doing?” But when they hand you a check, if you can take it with the genuine knowledge that you helped them, they’ll get that, and that will help them want to come back.
If you are struggling with this (and I think almost every new counselor does), I encourage you to talk to your supervisor or consult group about it.
Adjusted Fee Scale
You might also consider setting up adjusted fees. Here is one way to do it. First, you will want to calculate the amount the client makes after certain expenses (based on Third Root’s guide, adjusted for 2019).
a. Number of dependents x $267 monthly deduction
b. Unusual Medical Expenses
c. Transitioning Expenses (for Trans-Identified Clients)
d. HIV and AIDS medications and related services
e. Child Care
f. Tuition/Educational Expenses
g. Immigration-related Expenses
h. Other medical expenses not covered by insurance or extenuating circumstances
Then set up a graduated scale for certain income brackets, and apply the percentage to your full rate (rounding to the nearest $5 if that makes sense). Here is one example. Feel free to change the percentages:
$80,001+ 100% $90
When considering this, you might want to cap the number of adjusted fee clients that you take at one time. See the business plan section below.
Set up a separate bank account
You are legally required to keep your personal funds and assets separate from your business funds and assets. Talk to your bank about creating a separate business account, get checks, and a business credit card.
Track your expenses / taxes
You need to do some basic bookkeeping. When I first started, I kept a Google Doc spreadsheet with all of my transactions: client payments, rent, office supplies, marketing expenses, training/education, taxes and licenses, etc. When it comes time to do your taxes, you can break everything down into the appropriate categories.
After a few years, it made sense for me to get some better bookkeeping software, and the expense wasn’t a big deal. I have been using the Zoho Books basic plan, and I really like it.
You will probably lose money your first year (how’s that for optimism?), which is good from a tax point of view! Be sure to track all of your start-up costs. If you are a Single Member LLC, your business taxes are the same as your personal taxes, meaning if you lose money through the LLC, that comes off of your income from your soon-to-be-obselete-because-your-practice-is-doing-so-well job (right?), so you pay less taxes.
When you start making money, you will need to pay yourself. Record you transfers from your business bank account to your personal bank account as “payment to self”.
Another thing about taxes: as a business, the IRS wants you to pay estimated taxes 4 times a year. You don’t have to pay these taxes until you make a profit. Furthermore, if you don’t make any money the first tax year, you don’t have to submit your quarterly estimated taxes, because those are based off of the previous year’s income. I’m not saying this is a good idea – you may want to pay quarterly anyway, so you aren’t hit by a big tax bill when you finally add everything up at the end of the tax year. [update: my accountant files quarterly tax reports for me now, but I don’t pay anything except end-of-the-year taxes. I’m not sure what rules govern this.]
Familiarize yourself with this stuff, get a bookkeeper if you aren’t good with numbers and/or you don’t have time for bookkeeping. Another option is to use TurboTax. You’ll still have to educate yourself about the nuances of deductions and how to pay estimated taxes.
You will also have to eventually pay Washington State Excise Tax, but probably not until you start making more money than you will make in your first year. I pay a “Services and Other Activities” B&O tax at a rate of 0.015. In 2018, my business got a $530 tax credit – so if I had grossed (made before expenses) less than $35,333 I wouldn’t have to pay B&O tax (but I would still have to file). This article shows current credits.
If your business is in Seattle, you have to make over $100,000 before they start taxing you. At that point, you will probably be paying someone to do your taxes for you, so you hardly have to worry about it. 😊
Make a business plan
This might sound unappealing, but it can be worth it, and it isn’t as hard as you might image. Basically, create a spreadsheet and figure out what your monthly business costs are (including your annual costs spread out over twelve months). For example:
– rent: $250/month
– office supplies: $20/month
– licenses: $25/month
– insurance: $10/month
– supervision: $130/month per 5 clients*
*That’s a made-up figure, but it is based roughly on the idea that some supervisors ask that you spend x hours with them for every y client hours. You may have to spend more on supervision the more clients you have. Fortunately, the more clients you have, the easier it will be to pay for supervision.
So, $320/month. Then figure out how much money you need to live (personal stuff, not business expenses). Let’s say $2000/month. It’s a good idea to break this out into specifics, too. Add up those two numbers: $2320/month.
That tells you how much you will need to make each month to break even. Subtract any income from a second job, and then figure out how many client-hours you will need per month to meet this figure (subtract 20% for taxes – this is an approximation). If you have sliding scale slots, you can have estimate how many of those will be filled at what rates, and leave the highest rate as your variable. Set up the spreadsheet to multiply the client-hours per week times each of the rates, and multiply by four (4 weeks/month). For example:
– x clients/week at $100/hour
– 3 clients/week at $70/hour => $840/month
– 2 clients/week at $55/hour => $440/month
$2320 – ((840 + 440) * 0.8) = $1296
$1296 / 4 * ($100 * 0.8) = 4.1 clients per week at full rate.
(The “0.8” is because Uncle Sam takes 20%.)
So this tells you if you have 5 clients per week at your full rate, plus 5 clients at the sliding scale rates listed above, you will make enough money to live. Of course, client bases tend to ebb and flow, and you won’t have everybody paying those exact rates. Some might even pay more if you decide to offer 75-minute or longer sessions (recommended!). Plus you will probably want to save some money. So perhaps, in this example, shooting for 12-14 clients per week would be a good idea.
These numbers aren’t meant to be hard and fast, they are only meant to give you a sense of what your needs are. Once you meet your break-even point, you can begin to re-evaluate. How many clients do I really want to see a week? Some therapists see upwards of 25 or 30, and for some therapists, that is exhausting. How many sliding scale spots do you want to offer? This can change as time goes on. Do you want to reserve a spot for free clients? Keep revisiting these questions.
So you’ve got all your license applications submitted, and you are ready to start marketing yourself. You are going to need a way for people to get in touch with you. I recommend getting a Google Voice number. It’s basically FREE voicemail, no strings attached. For reals. With Google Voice you don’t need to expose your personal telephone number to the world.
The cool thing about Google voice is that it will transcribe voicemails. Or, at least, it will attempt to transcribe voicemails. It isn’t always accurate, but it is often entertaining. For example: “You know I left the message a good luck. Thanks, Hey Hi Mike, you’ll a pick up Latin appointment for a applesauce point okay and I Bank. If you could please keep me at all.” Hours of entertainment. Google Voice will then email and/or text you the message. There are some apps for iPhone (and Android, I’m sure) that allow you to access some more advanced features, or you can use the web interface, or just call it like a regular voicemail service. Keep in mind that if you do this, you will have confidential client information on your phone, and must protect it according to HIPAA regulations. Technically, I’m not sure if it is enough to use a lock screen, so consider this option carefully.
Using your gmail account (which is free if you don’t have one), log in to https://www.google.com/voice . You might not be able to find a number in your area code. Google adds numbers periodically, so if having the right area code is important to you, just wait a few days or weeks and check back.
Google voice has some features that allow you to mask your personal phone as your google voice number when calling out, but I never use that. After an initial client contact has been made through my google voice number, I call my clients with my cell phone. This has never been a problem, though you may feel a greater need for privacy.
A place to hang your shingle
Unless you want to take all your clients on walks around Greenlake, you will probably want to have an office space. Ask your colleagues, look on Craigslist, figure out what the going rates are. You will probably want to start with just sub-leasing a space for one or two days a week. Things to consider: do you need a waiting area? How quiet do you want the space to be? Is easy after-hours access required? Disabled access? Is a view of the entire city and surrounding countryside important? Is a window of any sort important? Will you be providing furniture? Do you want to share an office with another therapist (recommended!), or with any old professional? Will it be unbearably hot in the summer, or freezing in the winter? Obviously you’ll want something you feel comfortable in, and you don’t want to spend massive stacks of cash until your practice is more sustainable. Fortunately, you can move if things don’t work out and your sub-lease isn’t forever. You might consider NOT putting your address on your business card.
More office space resources:
The most important part about having a web site is just having a presence. You need to give people a way to contact you, so you will need, at minimum, a page that lists your name, your phone number, your email address, and it would probably be a good idea to mention that you are a mental health counselor. That’s not very effective marketing, though. Take a look at my site and a few others to get an idea of what you want to do.
One decision you need to make is whether or not you want to design and produce the site yourself, or hire a professional (or your tech-savvy teenage niece). You can get someone to help with any or all aspects of web page design. I’m not going to go into too many details here. Personally, I’m pretty good with computers, so I put this whole site together myself, using WordPress. WordPress basically allows you to create a template for all of your pages so you can add pages with ease. It is even capable of hosting a blog, as you can see. If you hire someone to set up your site, you can ask them to do it on WordPress, then in the future you can manage many changes yourself.
You’ll need to host your site somewhere. WordPress.com will do this for you, either for free or for $99/year. I recommend paying so you can get your own domain name and no ads. The free version might be a good way to explore the capabilities of WordPress.
Time to pick a clever domain name! Though something easy to write (short, no punctuation) may be preferable to something clever. Remember, sometimes you’ll have to give out your email address over the phone and you want to minimize the risk of error.
When writing the copy for your web page, remember: be yourself. You might be tempted to be appear as generalist as possible so as to attract the most clients, but consider this: if you don’t let some individuality come through, you might attract clients who you aren’t going to enjoy working with.
Go back and refine your copy a few times in your first year of practice, and revisit it periodically throughout your career.
Don’t bother with contact forms, use email. This is a personal preference. I don’t actually publish my email directly, but rather use obfuscation to hide it from spam-bots: jason [at] fosteringconnection[dot]com .
Make sure your web page is mobile-device friendly. Some WordPress plugins automatically reformat your page for mobile delivery.
You will probably want to market yourself. Different folks have different philosophies on marketing, especially when it comes to budgeting. I’m not going to go into the nuances of this.
I will recommend a few places to market yourself. I get a large portion of my clients from the Psychology Today online directory. As a new practitioner, you should be able to get six months (or a year?) free. It’s $30/month thereafter. If you can let them know I sent you, I think I get a free month. 🙂
I recommend tracking which sites your clients come to you by (I also track professional referral sources). This will come in handy when you decide which directories you want to continue to pay for.
I never got much out of Google Adwords or any sort of online advertising beyond the directories mentioned above, but then again, I didn’t spend much money on it.
Networking with professional organizations
I recommend attending Seattle Counselors Association monthly meetings. There are opportunities to introduce yourself and practice your elevator speech, mingle with other practitioners, and get continuing eduction credits.
If you purchase an annual membership for $85, you get a directory listing on their web page and a reduced fee for meetings. Even if you aren’t in Seattle, it can be a valuable resource – Seattle-based counselors often times need to refer out to counselors in other parts of Washington.
Marketing for Introverts
One of the
I think it was Catherine Johnson who said to the LIOS graduating class of 2012, “find a fierce shelter.” Gather with like-minded colleagues, at least once a month, with the intention of creating a space where you can all be lovingly supported. Find people you can trust with your darkest, most shameful secrets, because you want people you can talk to when your clients bring up your “stuff”. It’s useful to have colleagues you can consult on clients with, and it’s even more useful to work your counter-transference.
Workshops / Working on yourself
I’m something of a workshop junkie. Hakomi, Core Energetics, psychodrama, grief rituals, you name it, I’ve been there. Workshops can be a great way to network, to educate yourself, and to keep working on yourself. A teacher of mine once said that her first question when shopping for a therapist is “are you continuing to work on yourself?”
Part of being a therapist is dedicating yourself to a lifelong path of self-development. Keep learning, keep going deeper, keep meeting your shadow. Everything that you do here will benefit your clients.
I also recommend having some sort of contemplative practice. Meditate, pray, spend time alone in nature. Do what it takes to keep yourself centered and present.
Also, don’t forget, workshops are tax-deductible business expenses.
12 months to your ideal private practice is supposed to be a good workbook.
Having more to do with the clinical side of things, I recommend reading Yalom’s The Gift of Therapy.
Case Lovell’s blog post on what to expect, based on a survey of new therapists: http://www.caselovellcounseling.com/2015/08/11/dont-sell-the-bike-shop/
Here’s a technical article on how to set up Google Calendar and Zapier to send email and text reminders to your clients, for free.
After spending three months volunteering at the King County Crisis Line, the director took us aside and told us something very important. He said, “the most important thing that you are providing to the callers is your self. Just by being a caring human presence, you are giving people something that they may not have in their life.”
I hope that this post was useful. Again, I welcome feedback.