Annual Costs of Private Practice | Start a Counseling Private Practice
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This is the third video in my 3-part series on the costs of private practice. Today we’re talking about the ongoing annual costs of private practice. It’s important to account for our yearly costs of private practice when setting our rate in private practice - we don’t get to take all of the client fee home! In today’s video I cover how to calculate the annual costs of running a private practice.
This video is geared for therapists of all kinds, including psychologists, MFTs, LPCCs, social workers, and others in the clinical counseling field.
Welcome to Private Practice Skills! I’m Dr. Marie Fang, psychologist in private practice. I post videos offering tools I learned the hard way about starting and growing private practice so that you don’t have to.
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Music Credit:
"Throwback" by Ikson
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This video is not intended as professional or legal advice. Be sure to seek the services of a professional if you are in need of them.
Even after getting started in private practice, I had no idea how much to expect to spend on monthly and annual expenses once I got started. However, it’s completely possible to calculate these costs in advance. In fact, most of your ongoing expenses are reflected in your startup costs. You simply need to do a bit of math.
You will likely tailor your practice to fit what works best for you. Just because I put something on this list, doesn’t mean you have to spend money on all the same items. But you should be able to pick and choose in such a way that you can map out a full year of expenses before you even begin.
Here are some common expenses to account for in private practice. I breeze through these. If you’d like to hear about these in more detail, check out my first video in this series on the startup costs of part-time private practice:
1. Rent. This varies so widely depending on where you live, and also whether you’re full- or part-time. You might also work from home if you exclusively offer tele therapy services (more power to you!). (me: $840 x 12 = $10,080)
2. Website: $15-35/month. ($25/month X 12 = $300)
3. Liability Insurance: $400+annually ($800)
4. City Business License ($197.90)
5. File Cabinet or EHR: $39+/month (like simple practice)
6. Credit Card Processing Fees (Square takes 2.75%)
7. Phone (free up to $15/month)
8. Email (free up to $15/month) (Me $5 X 12 = $60)
9. Business Cards ($8 and up)
10. Online Directory ($30+/month X 12 = $360)
11. Teletherapy Service like Spruce ($24/month)
12. Office Supplies - Paper, pens, tissues, etc ($5/month x 12 = $60)
Also don’t forget to account for the cost of your license renewal ($430) and continuing education ($750) plus business related travel ($600). I also expense business related meals ($300). Of course, you can deduct the costs of these items from your taxes which is wonderful!
If you’ve been following along with the math of my own office, my 2018 expenses came out around $14,000 before accounting for credit card processing fees (which do amount to thousands of dollars for the year, so be mindful of that when you set your rate!)
Math is not my favorite subject. But with a little bit of elbow grease you should be able to sit down in an afternoon and sort out the annual costs of private practice before you even take the dive. This is super important to sort out early so you know how much to account for when setting your rate.
Until next time, from one therapist to another: I wish you well!