Are You Ready for Independence? The Pros and Cons of Starting a Private Practice in Psychology
What comes to your mind when you dream about starting a private practice in psychology? Perhaps it’s taking a quick break between sessions and the freedom to make your own schedule.
Even the most pragmatic individuals have some version of this fantasy tucked away. We imagine the world of self-employment bringing freedom, autonomy, and the ability to set the tone of our day and pitch of our message.
However, self-employment also brings the added stress of managing your own business, marketing yourself, and potentially experiencing financial instability. Learn how two practitioners weighed the pros and cons of starting a private practice in psychology, then chose their direction.
Is starting a private practice in psychology right for me?
There are many factors to consider when starting a practice. Among them, the financial and social impact, administrative benefits, and personal and professional fulfillment. Many self-employed psychologists have characteristics like:
Anything can happen day-to-day, so having enough resolve to face matters head-on and enough creativity to come up with solutions equals success.
Discover your motivations for establishing a private practice
Before you start a private practice, take the time to consider why you want to have a private practice. Is it because you want to be your own boss, or grow your specialty in a particular area? Writing down your reasons can help figure out if starting a private practice is right for you. It can also help you stay motivated down the line.Psychotherapist Helen Child Villiers began her private practice three years ago and said the transition was challenging for her, but she was determined to leap. “I struggled with imposter syndrome and the lack of cohort support. Motivation came down to wanting to work for myself and having the confidence to do so.”When looking at ways to grow her practice, she decided to focus on her specialty and began running workshops. Villiers stresses, though, how important it is for a practitioner first to know who they are. She suggests getting into therapy and working through your own experiences until you “have increased your self-awareness to the highest possible level.”
Should I start a private practice or stick with a group or network?
Self-employment affords you the freedom to make your schedule, set your own income goals, and choose your associates. Still, it requires substantial planning along with a whole new and unfamiliar skill set unrelated to psychology. If you’re torn between private practice versus group practice, then ask yourself these questions:
- Do you know the difference between an LLC, an EIN, and the SBA?
- What is WordPress, and why do I need a skin?
- Do you know how to create your brand and market yourself on social media?
Plus, accounting and marketing—welcome to the beautiful world of administration. Good habits are essential when working for yourself. Recordkeeping, phone calls, and paperwork are tedious tasks that stack up quickly if left unattended. But, with the right mindset, you can balance the business side with your private psychology practice. You also have options that give you independence and offer added benefits of a group or network. For Evan Greenwald, Ph.D., executive director of the Counseling Center in New Hampshire and Maine, the decision to go with a group practice was pretty straightforward. As he explained to the New England Psychologist, he wanted to split his time between clinical work and running a business. “At the time, I was hoping to eventually not do full-time clinical work,” he said. “It is the balance I wanted.” He went on to say that it’s become even more challenging over the years to start a private practice. Instead, he suggests looking at several existing group practices and comparing the options each offer.
The highs and lows of business autonomy
Now that you know if being self-employed is right for you, let’s examine some benefits and challenges you might face. Autonomy, money, and fulfillment—professional and personal—top the benefits of being your own boss. Yet, you also trade-off with a different type of pressure and new obligations. Before leaping, dig into the rewards and disadvantages of business ownership.
Pros: Freedom and flexibility are significant advantages of self-employment
From the location and decor of your office to the platform used for online therapy sessions, you get to determine the policies and mission of your practice. The freedom to direct your practice combined with built-in flexibility is why many psychologists start a private practice. Benefits of self-employment include:
- Work whatever schedule you want to
- Choose your clients and associates
- No asking for permission or input
- No company meetings or long commutes
- Complete autonomy
Cons: Business autonomy comes with a price
Making every decision and performing every duty day in and day out can be a daunting task. You’re in charge of marketing, client retention, accounting, and so much more. Tackling the administrative side eats into your free time. As a private practitioner, you must:
- Advocate for yourself
- Find external peer groups to lean on
- Make business decisions without a team
- Own your complete autonomy
Earning potential and pitfalls
If you’ve hit an income wall at your current practice, then self-employment may seem like the answer. And in many cases, it is. But, your potential earning hinges on more than your psychology services. For instance, it’s critical to develop your business and marketing strategies to their fullest. You want to optimize every dollar spent in your business while creating a steady flow of new and current clients. Often, private practitioners enlist contractors to assist with accounting, PR, or virtual tasks. In return, you give up employer benefits and face increased costs. Like many decisions, it’s crucial to determine your level of risk before you start a therapy practice.
Pro: Private practice practitioners make more money
Psychologists represent one of the largest groups of self-employed people in the United States, and for a good reason. In 2015, private sector clinical psychologists earned a median salary of $74,430, whereas clinician business owners earned $139,591, according to a National Survey of College Graduates report in the American Psychology Association.Depending on how you set up your business, you might be able to save on your taxes using the following tax deductions and credits:
- Self-employment tax deduction: You get to deduct half of your self-employment taxes from your net income and only pay self-employment tax on 92.35% of your net business income.
- Home office tax deduction: Any workspace that you use regularly and exclusively for your business, regardless of whether you rent or own, can be deducted as a home office expense.
- Health insurance premiums for you and your family: This deduction Is only allowed if you are self-employed.
- Claim interest on business loans and business credit cards: If you pay interest for business-related charges or loans, you can deduct this on your taxes, according to IRS publication 535.
- Self-employed retirement plans: Reduce your tax bill and rack up tax-deferred retirement savings by investing in individual retirement accounts (IRAs), simplified employee pension (SEP), savings incentive match plan for employees (SIMPLE) IRAs, and solo 401(k)s.
- Education: Claim any educational expenses related to your existing business, like business coaches, virtual courses, or professional certificates.
Con: Loss of stability and benefits
Although self-employment may seem like an opportunity to earn unlimited income, there are disadvantages as well. You’ll need to navigate your health insurance along with buying more coverage for your private practice. There’s no employer match for your 401(k). And if you don’t market your psychology practice, and get referrals, you won’t have clients. That’s why some private practitioners prefer to join a group and get added business support.
The balance of rewards and sacrifices
Humans crave a sense of purpose. Yet, having a steady paycheck and company-provided benefits can also be important. With that in mind, it’s best to build the framework for your private practice before quitting your day job.
Pro: Personal satisfaction of helping others on your terms
It’s not all about the money, though. Not even close. Research suggests that most people go into the field of psychology because they want to help people, and they like what the job entails. A personal practice gives you:
- A chance to understand yourself and others
- Genuine and authentic interactions with others
- Opportunities for meaningful personal connection
Your reasons for starting a private practice might go beyond income or flexibility. Working with a purpose provides peace of mind. Helen Child Villers, psychotherapist and owner of Bristol and Wales, said, “My inspiration was a lot about understanding my stuff to start with, which quickly evolved into the work that was done in the room, and the way therapy impacted clients. The reward I got from helping them was huge.”
Con: Professional and personal sacrifices
Establishing a new private practice is a considerable time investment. It may require months of long weeks before you’ll find time for vacation or even a normal 40-hour workweek. Although you appreciate schedule flexibility, being an employee comes with certain perks like:
- Access to medical journals and other subscription-based information
- Paid travel and fees to attend industry conferences
- Extra in-person networking opportunities
It’s possible to do this as a private practitioner, but you’ll need to set aside time and financial resources.
Is starting a private practice right for you?
If you embrace freedom along with scheduling, hate asking permission, but don’t mind asking for social media likes, then you have “private practitioner” written all over you. Running a small business requires a great deal of organization, self-discipline, and the magnitude of problem-solving skills. Yet, the rewards are great. As Villiers said, “Pick yourself a niche. Find a passion, something that resonates with you,” and get to work.