Lonnie Mullet MA, LPC shares some basic tips and helpful advice for starting a private counseling practice. Unfortunately, most mental health providers were taught very little in graduate school about some of the practical aspects of running and starting a private counseling practice. The idea of starting out on your own can be scary and overwhelming. That’s where Help for Counselors can provide information and education to fill in the knowledge gaps to help you run the best private counseling practice you can. We know you are capable and have so much to offer your clients. Let us help you help clients while making a living.
Transcript of Video:
Hi! Lonnie Mullet here with helpforcounselors.com where we help clients while making a living. What I want to do today is talk a little bit about business startup. The first thing I want to tell you about is writing a simple business plan. Now what this means is making a list of all your initial start up costs (weather that goes toward a down payment for an office, to marketing, utilities, licensure) to start thinking about what the expenses might be and then what are your month to month expenses to keep your business moving forward.
Write Down Your Expenses
The next thing I want you to do is think about is how much money do you need to earn in this business. This is going to be different for many of you because for some of you this business is going to be a second job with the 9-5 job you already have. And for some of you, you are wanting to start a practice that will support your family. So those numbers will be very different. This is very important that you write this number down because based on this number and your expenses, then you talk about how much money you might have for office space, how much you might have for marketing because this is going to dictate what these numbers are. And even though it feels like this is kind of hypothetical, this is where we need to start, with these numbers.
How to Form a PLLC
Now once you have that the next thing you need to think about doing is starting a PLLC. A PLLC is a Professional Limited Liability Company. What this does is it protects your assets like your family home, your family car from the liability incurred from your counseling practice so this is extremely important. Now in order to set up a PLLC you can go to a website like lawdepot.com or blumberg.com and you can look up and find a template about how to write articles of organization for a PLLC. Now once you do that you can send that template or written document to your board which could be the licensing board of professional counselors, it could be the LCSW board, it could be the LMFT board, because you really need the board’s permission in order to open a business. Now once you get that okay back from the board, then you can go ahead and send that paperwork into the Secretary of State. In North Carolina that cost is about $175. Once you get the okay back from the Secretary of State that they filed those articles for you, now you need to do the third step of sending it right back to your board because your board is going to give you the “official” okay to go ahead and start your business.
Get a Tax ID Number
Now once you have that, now you can go ahead and talk to the IRS. Don’t be afraid now! Because what I’m talking about is becoming a company that has a TIN or what’s called a Tax ID Number. Think of it as a social security number for your business. And what this does it protects your social security number from being given out to BueCross or your clients, but it’s a way just to separate your social security number (personal) from your business TIN or Tax ID Number. Now once you have that number (and you can do that online at IRS.gov, it only take maybe 10 or 15 minutes).
Get a Business Bank Account
You can then take that Tax ID Number into your bank and open a free banking account (probably at the back you already use for your personal business). This is EXTREMELY important and a lot of counselors and frankly small business people fail at this step because they co-mingle their funds and they just run their business out of their personal checking account. And this creates a nightmare for tax time because then later you can’t remember “Was that lunch I paid for with another therapist or was that my friend?” “And what was that paper that I bought at Wal-Mart? Was that for my office?” What we want to do is stay honest and also an understanding of really what our business is earning and it’s really simply done is that you get that separate bank account with a separate debit card for your business that is very separate from your personal bank account. And then you pay yourself kind of what would be like a paycheck out of that account into your personal account. And your tax person will thank you and even if you do your own taxes you will really thank yourself for doing that because it will really save yourself a lot of trouble in the future.
Increase Your Professional Liability Insurance
So now that you have done that, now you can start thinking about insurance. You probably already carry professional liability insurance, HPSO is a good company (Health Provider Services Organization) or I use a company now called CPH and you can Google those and find those online. Or you can use your existing insurance that you already carry and add a rider for business and what this does is it ensures your business against loss that may occur in running your business. This could be someone, a client, coming into your office and tripping on a rug, it could be a break in, anything like that that is incurred as part of your business. And this usually runs about $300 to $500 with your other insurance, and that is per year, but it’s worth a phone call to call few organizations because you could save $100 to $150 a year and for me that’s worth a phone call.
Now the next thing you want to think about is marketing and we are going to have future videos here at helpforcounselors.com where we talk about marketing, where we talk about branding, or building a niche, or even operations and all kinds of the problems that counselors run into. But right now we just want to thank you for watching our video here today. I’m Lonnie Mullet with helpforcounselors.com.