Guide to Starting a Private Practice (Part One)

If you’re one of the many counsellors, psychotherapists or psychologists due to graduate and fully qualify this year, then congratulations! I remember my own journey vividly and the excitement as I hit the required clinical hours for my qualification, and the time, growth and passion that goes into studying this unique vocation.

You may now be thinking about how to use your qualification, and an option you might be considering is starting a private practice. Alternatively, you might have worked in the mentla health sector for many years in public, charity or private sector roles and now want to strike out on your own. In either case, this two-part guide is for you!

There are many benefits to working in private practice, but also a lot of challenges. The benefits certainly include the experience of being your own boss, with complete freedom to set your own working hours, but also your own style of working with clients, free from the constraints of limited session models or specific organisational procedures that might not fit your chosen modality.

There are downsides however, including possible isolation as you’re no longer working within a team, as well as navigating the complex legal and business issues you will need to think about and plan when setting yourself up.

Here’s some suggestions to work through:

1. Decide what legal model you want your practice to take

This might sound like an odd thing to think about when considering private practice, surely it’s more about your modality and how to get clients? Actually the first step here is to think about your legal identity for your practice – this means are you practicing (trading) as yourself (sole trader) or through a limited company. Getting this distinction right and choosing the right model for you is crucial.

Being a sole trader is by far the simplest method, as it simply means your practice runs through your own personal accounts and you don’t need to worry about complex legal processes involved in setting up a company. You will need to register for Self Assessment with HMRC by 5^th October in your second year of trading, and complete a Self Assessment Tax Return the following January. This is a form that you complete yourself and can be submitted online.

Forming a limited company is more complicated, but has better protections and tax efficiency long-term. A limited company is a separate legal entity from you, with you effectively employed by your own company as Director. If the company gets into trouble, say through an insurance claim or bankruptcy, you have certain levels of protection as you’re separate to the company. 

It also changes the way you get paid; the most efficient way to do this is to pay yourself a salary up to the Tax-Free Personal Allowance, with the rest paid as dividends which is taxed at a lower rate than Income Tax. The reporting requirements for limited companies are greater however, and you’ll be required to do more paperwork with HMRC and Companies House.

2. Work out how you’re going to do your accounts

Excel spreadsheets may seem boring to many and even fill some with dread. The business of being a counsellor is much more than just therapy; keeping accurate accounts is crusical both to be able to track your income and expenditure, as well as to be able to prepare your accounts with HMRC. It’s also a legal requirement to keep these for a long time in case HMRC ever decide to do an audit, which might seem scary.

There is an easy way to avoid all this, and that’s to hire a third-party accountant. Depending on the service level you want, they can run your books, prepare your accounts, incorporate you with Companies House and make sure you’re fully compliant. You will have to do very little yourself once you give them permission to act as your agent. The downside is this service is expensive, with basic packages costing at least £120 per month. 

The good news however is that is a legitimate business expense, and can be used to offset your tax bill along with any other legitimate business costs you have, such as room hire, supervision, advertising, websites and CPD.

If you decide to save money and do your own books and taxes, you’ll need to set time aside to make sure these are kept up to date, and to research HMRC’s systems which are often very complicated. Even if you’re an Excel wizz you might decide the time saved through using an accountant means you have more time to see paying clients and grow your practice.

3. Set your boundaries and working hours

Being a counsellor is a very emotionally challenging job. We will often work with clients who are in deep levels of distress, and as much as we want to help, it can also drain us. Being in private practice takes this up another level, with all the stress of working on your own and also being responsible for making so many client and business decisions.

It is crucially important to protect yourself and safeguard your own wellbeing. One of the best things you can do before starting private practice is to decide what hours you want to work. This can be difficult to balance as many clients work or attend education and will only be available to see you in evenings or weekends, which might not work well with your own personal life. Especially when you’re starting out and want to build a healthy client list, it can feel like a trade off between protecting your work-life balance and maximising new clients and income.

It’s important to remember that – because you’re your own boss – you’re in complete control of this and you can also change your working hours at any time. Just remember to think about any existing clients you’re working with and when and how to communicate any changes; it may mean some clients can no longer see you and you might have to refer them elsewhere. Remember that your own wellbeing and life comes first; if you get burned out you won’t be able to help others.

4. Work out how much to charge for sessions

Working out how much to charge for your therapy sessions can be a deeply uncomfortable subject for many. By definition, we’re choosing to do a job where we want to help people, and many clients are deeply affected by the ongoing cost of living and economic instability. Charging a large amount for sessions can prohibit many clients from being able to afford your services, and it’s natural to feel bad about charging for your work.

It's important to remember, too, that you’re also a human being and you need to keep a roof over your head. You have bills to pay and we’re just as affected by the economic conditions as our clients.

Like part 3 above, we also have to work out how many clients we can realistically see each week, and we have to balance that with working out how much income we want to gain. We also need to work out our business costs, such as room hire and other expenses. We also have to accept it will take time to have enough clients to meet our desired profit, and we need to factor in that we won’t be fully booked every week and need to take time off for annual leave and sickness, too.

This was part one of our two part series on how to start a private mental healthcare practice. Read part two here.

--

Tom is a Person-Centred Psychotherapist and Managing Director of The Empathy Project CIC. A Registered Member of the BACP, Tom specialises in working with depression and trauma, having started his clinical work with young people during Covid-19. 

The Empathy Project is a non-profit community interest company supporting people through low-cost, long-term counselling. They also run a series of CPD workshops for therapists with all proceeds supporting the project. You can find their website here: www.empathyproject.org.uk