Starting a Mental Health Business: What You Actually Need to Know

You’re tired of working for someone else. You’re burnt out. Your paycheck doesn’t reflect the value you provide. You want more freedom and flexibility to live life on your own terms. Or maybe you’re just ready to build something that’s yours—your name, your practice, your way.

If any of that hits home, it might be time to consider private practice. Whether you're a therapist, psychologist, counselor, or psychiatrist, I’ve seen (and helped) many mental health professionals like you make the leap—and I’m here to tell you, it is possible.

With the right planning, support, and guidance, starting your own successful mental health business can absolutely become a reality!

Starting a Mental Health Business: Plan, Plan, and… Plan

I can’t emphasize this enough! It’s tempting to jump in fast, but planning ahead is key when it comes to your mental health business. Let’s focus on a few core areas:

Licensure

Make sure you’re properly licensed in the state(s) where you plan to see clients—both in-person and virtually. 

For example, if you’re based in New York but also seeing clients in California via telehealth, you’ll need to be licensed in both states.

Most start in their home state and expand later.

Define your Niche

Many avoid choosing a niche because they think it will limit their potential. I used to think the same thing early in my business (as a financial advisor).

But when I finally niched down to working with mental health professionals—offering financial planning for medical professionals—it changed everything. I went from trying to market to “everyone” to becoming the expert advisor for a specific community. And my business grew in all the right ways. The same goes for you!

So ask yourself:

• Who do I love working with—and why?
• What is my expertise or specialty?
• Who can I provide the most value to?

Mental health awareness keeps growing, which is amazing - but so does saturation and competition. Defining your niche helps you stand out and makes marketing easier.

Build a Marketing Strategy

Once you know your audience, start thinking about how you’ll reach those people.

• Website: Keep it simple, clear, and focused on your ideal client. Visitors should immediately think, “This person gets me.”
• Social Media: Set up professional accounts (Instagram, LinkedIn, Facebook). Post regularly to stay visible and top-of-mind.
• Networking: Build referral relationships with other clinicians, doctors, schools, and local orgs. Conferences help too.
• Directories: Platforms like Psychology Today and GoodTherapy are great for visibility.

Reminder: Keep all marketing HIPAA-compliant—it’s easy to overlook, but super important.

Know The Startup and Ongoing Costs for a Mental Health Business

Thankfully, starting a private practice doesn’t cost as much as, say, opening a restaurant—but it’s not free either.

Common Startup Costs:

• State business registration
• Office furniture (if needed)
• Tech (laptop, iPad, testing materials, etc.)
• Website and branding
• Malpractice insurance
• Help from a financial advisor, CPA, or attorney

Ongoing costs might include:

• Office rent (if applicable)
• EHR (Electronic Health Record) system
• HIPAA-compliant platforms (Gmail, Zoom Health, etc.)
• Ongoing professional help (bookkeeping, financial planning, legal)

Budget tip: Add a cushion! If startup costs are $5,000 and monthly expenses are $2,000, aim to save $6,000 upfront and $3,000/month early on. Consider building a 3–6 month “business emergency fund” to reduce stressing about monthly expenses.

And of course, do the same for your personal finances!

Set Your Rates and Project Revenue

Here’s the part where you can charge what you're worth. You choose what to charge. No more being undervalued!

Start by researching what others in your area and specialty charge. Decide if you’ll be private-pay, take insurance, offer a sliding scale, or a mix of all three. Then, figure out how many sessions per week you need to cover business costs and still pay yourself a livable income. Don’t forget to account for admin time and the occasional no-show.

And please—don’t undersell yourself. This is your career, your income, your life!

Should I Form an LLC? Choosing a Legal Structure

You may be wondering… Should I form an LLC? PLLC? Sole Proprietorship? S-Corp?

In many cases, an LLC or PLLC (depending on your state) is the best choice. It protects your personal assets and sets you up as a separate legal entity. In New York, for example, licensed professionals must form a PLLC. In California, LLCs for licensed mental health professionals aren’t even allowed.

S-Corp status may help with taxes as your income grows—but usually not worth it when you’re just starting out.

Work with a professional (CPA, financial advisor, or attorney) to make sure you set things up right from day one.

Handle the Admin Stuff

Not the fun part, but 100% necessary. Make sure you:

• Confirm licensure and scope of practice
• Choose your business name
• Register your business with your state
• Apply for an EIN (free from the IRS!)
• Get your NPI (for billing/insurance)
• Secure malpractice insurance
• Choose an EHR (like SimplePractice, TherapyNotes, etc.)
• Set up HIPAA-compliant email/phone/text systems
• Review non-compete agreements from past jobs
• Create compliant forms (intake forms, disclosures, etc.)
• Insurance credentialing (if applicable)

Financial Reporting and Tax Planning: Foundations & Obligations

Starting and running your mental health business is exciting, but it comes with new responsibilities.

Open business checking and savings accounts. Get a business credit card, too (get those points!). Use a bookkeeping tool like QuickBooks to track everything.

And of course…taxes (ew). No one’s withholding taxes automatically for you. You’ll need to start paying quarterly estimated taxes (federal and state), so plan ahead. 

The good news? You can deduct much more as a business owner. Some common tax deductions for therapists include expenses such as office rent, malpractice insurance, professional fees, travel, and more! 

I highly recommend working with a tax pro and financial advisor - it makes all of this much easier.

Benefits

You might wonder how to save for retirement or get insurance now that you’re on your own.

• Retirement: Solo 401(k) or SEP IRA are both solid options when you’re ready.
• Health Insurance: Join your spouse/partner’s plan, or use your state’s marketplace or a professional association.
• Disability & Life Insurance: Often overlooked, but crucial for protecting your income and family.

Take Care of You

Starting your own practice is exciting—but also exhausting. It’s easy to burn out while trying to do it all.

So breathe. Rest. Go on that walk. Watch Netflix. Take the day off.

You’re the engine of your practice. If you’re not well, your practice won’t be either. Find the balance that works for you.

Starting a Mental Health Business: Final Thoughts

You give so much of yourself to others. It’s time someone helps you. 

At Marrone Wealth Management, we specialize in financial planning for mental health & medical professionals—supporting you through every step of starting and growing your private practice.

You don’t have to figure it all out alone. Let’s connect when you’re ready!