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Growing your solo therapy practice into a group practice is a huge leap. 

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The good news? Break it down into steps and it goes from overwhelming to totally doable.

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This guide gives you an outline of the steps you need to take so your group practice succeeds, and everyone—staff and clients alike—benefits.

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Take a hard look at the realities of running a group practice

Before you take any official steps to turn your solo practice into a group practice, make sure you have a clear understanding of how your job will change.

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When you’re the only therapist working at your practice, you’re also the only staff member who needs to be managed. Back office tasks—the admin you do to keep everything running smoothly—are much less complex than they are when you have other therapists working with (or for) you.

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But, as the head of a group practice, you should be prepared to:

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• Establish systems for staff management, client intake, scheduling, billing, and time tracking
• Take responsibility for marketing your practice and ensuring a steady stream of referrals
• Set up bookkeeping, accounting, and payroll systems
• Recruit, interview, and hire staff 
• Manage shared resources, which may include office space
• Maintain morale and resolve disputes between staff members
• Hire and retain legal support for your practice

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Most importantly, you should be prepared to take responsibility for others’ livelihood. While you may have support in the form of outside consultants, on-staff assistants, and legal counsel, it’s ultimately up to you to plan for your practice’s success and make sure your staff earn income.

Set goals for your practice

When you’re just starting to plan your practice, it’s too early to talk about month-by-month financial projections. But you can—and should—set broad goals for what your practice aims to achieve.

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Ask yourself the following:

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• Who will your practice help? What type of clients will you serve?
• What kind of people do you want working for you? What are the professional and personal qualities you’re looking for? The specializations or modalities?
• What will your impact be on the local community? On the broader therapeutic community as a whole?
• What do you want your role to be? Full-time clinical therapist, while doing admin on the side? Full-time manager?
• What’s the end goal for your practice? How big is too big? Will you eventually sell your practice?
• What do you hope to get out of running your own practice? Higher income? Savings? A sellable business?

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Make a note of your answers. They will inform your business plan, which you’ll write later, and your strategies even further down the line.

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Decide on a business structure

When you operate as a sole proprietor, your person and your business are, for tax purposes, identical. 

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That just won’t fly if you plan to run a group practice. For the sake of reducing your personal liability, and for creating an independent entity into which you can reinvest your profits, you need to convert to a new business structure.

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Your options are:

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• Limited Liability Company (LLC) or Professional Limited Liability Company (PLLC). This structure is registered and recognized at the state level, via your Secretary of State. At the federal level, your LLC can elect to be treated (for tax purposes) as an S corporation or partnership. For more info, read The Complete Guide to LLCs for Therapists.

• S corporation. An S corporation is similar to a normal (“C”) corporation, but it doesn’t pay corporate income tax. Shareholders and employees are taxed individually when they receive distributions or wages from the business. For more info, read The Complete Guide to S Corporations for Therapists.
• Partnership. Business income (and tax obligations) is divided between partners who each own a portion of the business. Rules for how the partnership is managed are set out in a partnership agreement which every partner signs.

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In most cases, the most straightforward and beneficial route—and the one we recommend at Heard—is to form an LLC or PLLC at the state level (unless you live in California) and elect S corporation status at the federal level (if you have high enough income). 

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Why? Because it gives you the most flexibility in how your income is taxed, while giving you the option to make other therapists shareholders. Check out our article, Why Should My Therapy Practice Become an S Corp?, for more info.

Decide how you will pay therapists

You have a few options for how you pay therapists at your private practice:

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• Fee split: Your practice collects a percentage of each fee payment, while the therapist keeps the rest. You can either do this by letting each therapist charge their clients, then pay a percentage of their earnings in regular installments, or by having all clients pay your practice directly, and then paying out therapists their percentages of the split.
• Flat rate/rent: Each therapist pays a monthly flat rate to operate out of your offices regardless of how many clients they see or how much they earn. This arrangement may be better suited to a client/contractor relationship.
• Salary: Your employees earn a salary, paid out biweekly, that stays the same regardless of how many clients they treat or how much they earn for your practice. Their employment contract stipulates how many hours they work or how much they are expected to charge clients each week or month.

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Our 2024 Financial State of Private Practice Report shows that 70% of group practice use the fee split approach, with a 70/30 (23% of total respondents) or 60/40 (28% of total respondents) being the most popular.

Pick the right time to start hiring

For many solo therapists, the length of their waitlist determines when it’s time to expand into a group practice.

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The typical journey: A solo therapist fills up their client list, and starts adding new, enquiring clients to a waitlist. Once the waitlist is long enough to justify hiring another therapist to take it on, they expand from a solo practice to a group practice.

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It’s much less common for solo practice owners to hire other therapists to work at their practice and then start seeking out clients to fill their lists. 

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If you don’t have a long waitlist of clients, but you intend to expand your practice, it makes sense to hire therapists who are already well on their way to having full client lists.

Choose how you’ll hire employees

When you hire other therapists to work for your practice, you have two options: hire them as independent contractors or hire them as employees.

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Contractors work on a freelance basis. Each contractor is their own separate business, withholding and paying taxes on their own income. Typically, a contractor will send you an invoice for work completed, and you’ll pay.

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Employees work on an ongoing basis for your practice. It’s up to you to withhold income tax and FICA from their wages. Typically, it’s also up to you to track the work done by an employee and issue paychecks.

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In order to pay employees, you will need to set up a payroll system, which helps calculate employees’ pay and withhold taxes. Check out How to Set Up Payroll for Your Therapy Practice.

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Many businesses try to classify and pay their employees as contractors. It’s important not to make this mistake, as it can lead to major problems with the IRS. As a rule of thumb, if a therapist is working for you on an ongoing basis and receives regular, recurring payment, they’re an employee, not a contractor. 

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On the other hand, if you hire an individual to work for your practice for a specified period (e.g. a therapist presiding over a course of group therapy) or in order to complete a specific task (e.g. building a website for your practice), they should be treated as a contractor.

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In the 2024 Financial State of Private Practice Report, 51% of group practice owners surveyed hired contractors, while 29% hired employees and 20% hired a mixture of both. So contractors are still the most common. 

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Learn more from How to Hire Independent Contractors for your Therapy Business.

Hiring interns and associates

There are specific requirements when it comes to hiring interns. For a complete rundown, check out our guide to hiring interns for your therapy practice.

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Hiring or contracting associate therapists creates further complications. Depending on the laws in your state, there are certain requirements you need to meet to have an associate working for you—including paid supervision—and the associate likely will not be able to bill insurance companies. 

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For more information, contact the therapist licensing body in your state.

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Decide how you’ll see clients

The explosion in remote therapy has transformed how many practices do business. 

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Brick-and-mortar office space is no longer a requirement for starting a practice. At the same time, running a 100% remote practice comes with its own challenges—such as setting up a HIPAA-compliant telehealth system and potentially serving clients in multiple states.

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A mixture of in-person and remote therapy sessions makes for a happy compromise, but it still likely means finding local office space. Research the market, and make sure you know which approach you’re going to take before you start budgeting for your new practice.

Calculate your expenses

Budgeting for your new group therapy practice means figuring out how much it will cost you to open your doors (one-time expenses) plus how much it will cost you to keep operating month to month (recurring expenses). 

Group practice startup expenses

The startup expenses required to launch a group practice are covered in our article, How Much Does it Cost to Start a Group Therapy Practice?

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Besides office rent (if applicable), the bulk of your startup budget will be devoted to ongoing fees that you begin to pay when your practice launches.

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One-time expenses at launch:

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• Incorporation fees (registering an LLC)
• Professional website (hiring a designer)

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If you plan to use an office, you’ll also need to budget for:

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• Office rental, including damage deposit plus first and last month’s rent
• Office furniture

Group practice recurring expenses

In order to launch your practice, you should be prepared to start paying these recurring expenses:

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• EHR software subscription
• G suite (or other HIPAA-compliant email solution)
• Monthly bookkeeping fees
• Payroll solution and/or HR platform
• Annual tax preparation
• Teleconferencing software subscription (for remote therapy)
• Office rent (if applicable)
• Office cleaning fees (if applicable)
• Insurance
• Work phone or phones
• Marketing (see How to Set a Marketing Budget for Your Therapy Practice) 

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Monthly bookkeeping, payroll, and annual tax prep are offered through Heard at a fraction of the cost of other full-service accounting solutions. 

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For a more detailed guide to budgeting, check out our article, How to Build a Budget for your Therapy Practice.

Set profit goals

Setting a goal for how much profit you’d like your group practice to earn will help you with other calculations, such as:

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• Hourly fees
• Number of clinical hours that must be filled each month 
• Employee pay
• Your own salary as head of the practice
• Savings goals
• Whether or not your practice accepts insurance

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Think about your goals for your first year in practice. Try writing them out like this:

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• “By the end of our first year, I’d like to have earned $___ as head of the practice.”
• “After one year in operation, we should have $__ in our rainy day savings account.”
• “By the end of Year One, we need $__ in the bank to reinvest in expanding the practice.”

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Determining what you’d like to achieve your first year in practice will help you set goals month-to-month and quarter-by-quarter. How much monthly income should the practice be earning three months after launch? Six months? Nine?

The profit formula

As a means of estimating your profit per month, use the following formula:

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((Practice’s total number of billed clinical hours per month) x (Hourly fee)) – (Total monthly expenses)

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By tweaking these numbers—decreasing your ideal number of billed clinical hours per week while increasing fees, for example—you can create your own rough financial projections and plans.

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Name your practice

Before naming your therapy practice, check with your Secretary of State to find out whether there are any particular naming requirements or restrictions therapy practices must adhere to. 

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Then, take some time to brainstorm some names for your practice. Our guide on How to Name Your Therapy Practice gives you a step-by-step process for choosing a name that will help you attract new clients while avoiding common pitfalls.

Create a simple business plan

Your business plan explains what your business does and how it makes money. Business plans can be long, requiring substantial research to put together, or short, no longer than a single printed page.

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The type of business plan you create will depend on your resources and goals. If you’re applying for a loan or hoping to bring on investors, you may need a longer business plan in order to prove your group practice is a worthy investment. 

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On the other hand, if you’re looking for a clear, concise document to help guide your business decisions and keep you on the right track, a one-page plan could do the trick.

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Traditionally, your business includes:

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• Executive summary, explaining what your practice does, its mission, who it serves, its location, and key personnel
• Services, or a summary of what you provide clients
• Market analysis, looking at the state of the industry and your competition
• Marketing strategy, the ways in which your practice will take advantage of current market conditions to attract clients and earn a profit
• Financial planning, including projections and target for your first two to three years in business

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Think of your business plan as a handbook for your first few years of operation. When it comes time to decide how you’ll reinvest profits, when to hire new staff, or how to plan your marketing, you’ll turn to your business plan for guidance.

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Incorporate

Registering your business as an LLC or PLLC typically means filing with your Secretary of State. The exact process varies state by state. Be prepared to pay a registration fee, and pay a renewal fee each following year.

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Check out our Complete Guide to LLCs and PLLCs for Therapists. And don’t put off registering your practice. It’s an essential step before you can open a bank account and move ahead with getting your group practice off the ground.

Get an EIN

If you don’t already have one, get an employer identification number (EIN). It will allow you to open a checking account for your practice. 

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Check out our guide to EINs for therapists. 

Get an NPI-2

If you plan for your practice to accept insurance, now is the time to get an NPI-2. 

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A regular national provider identification number (NPI, aka NPI-1) is used by individuals paneled with insurance companies. An NPI-2 is used by organizations.

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You can register for an NPI-2 with the National Plan & Provider Enumeration System (NPPES).  

Open a business bank account

You need a separate checking account for your therapy practice in order to run a bookkeeping and payroll system. Many banks offer free business checking accounts so long as you maintain a minimum balance. 

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For help choosing where to open an account, have a look at How to Choose a Checking Account for your Therapy Practice

Set up payroll for your group practice

Running your own payroll system creates a lot of extra work for you, the employer. And minor errors could result in tax trouble or seriously dissatisfied employees. The best plan is to outsource your payroll to a third-party payroll provider. 

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Even if you plan to hire contractors and not employees, a payroll system can make it simpler to track and pay invoices and manage your accounts payable. Plus, some payroll providers offer discounted subscriptions to businesses exclusively paying contractors. 

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How to Set Up Payroll for Your Therapy Practice will get you started.

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Plan how therapists at your practice will work together

Part of being the head of your own group practice means managing staff. Whether your team is office-based or fully remote, you’ll need to set up processes for how you share resources and manage day-to-day operations.

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Now is the time to sit down and sketch out plans and policies for:

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• Recurring meetings. Weekly or biweekly meetings keep everybody on the same page.
• Front desk. Even if your practice is 100% remote, you need a point of contact—an email address and phone number—where the outside world can get in touch with your practice as a whole.
• Scheduling. If you’re sharing office space, it’s essential to have a smoothly-operating system for booking rooms.
• New referrals or queries. How do new clients get in touch with therapists at your practice? If they contact the front desk, whose duty is it to forward them to the relevant therapist?
• Software. What platforms—email, EHR and teleconferencing software—do team members need access to? Who is responsible for managing accounts and helping recover lost passwords?
• Hardware. If your team members need work computers and/or phones, are they expected to provide their own? 
• Hours and pay. You need to determine how work hours will be tracked, and how therapists will accept payments. Payroll software often includes features for managing this.
• Rates and cuts. You might set it up so payments from clients go directly to your therapy practice, with the practice paying them their cut in turn. Or else clients pay therapists directly, with each therapist sending the practice a cut of what they collect. Or, a third option: Therapists earn a salary (plus benefits), regardless of their number of sessions, with all client payments going directly to the practice.

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The plans you sketch out now can be altered later on as you hire therapists and your practice begins operations. The most important thing is to start thinking now about how all these moving pieces will fit together, rather than assembling them later on an as-needed basis.

Decide on whether (and how) you will accept insurance

If therapists working at your practice accept payments individually from clients, then it’s up to them to accept (or not accept) insurance payments individually.

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If clients pay your practice directly for treatment, however, you’ll need to determine whether your practice as a whole accepts insurance. Then, with your NPI-2 number, you’ll need to get credentialed with insurance panels. Check out our guide to getting credentialed.

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The benefits of accepting insurance include the chance to serve clients who might not otherwise be able to afford therapy and referrals, due to being part of the insurer’s referral network.

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Drawbacks include extra paperwork, and a good likelihood your practice will earn less on a per-session basis due to insurance reimbursement rates being lower than cash pay. Our 2024 Financial State of Private Practice Report breaks down average pay rates for the most common insurance providers.

Start the recruitment process

Once your practice is incorporated, you’ve determined whether you’re planning to hire contractors or employees, and you’ve got systems in place for paying them, it’s time to start recruiting.

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Here’s how:

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• List the qualities you’re looking for in new hires. Think beyond modalities and specializations to personal qualities like professionalism, resilience, and dedication. Consider examples of these qualities you’ve seen in other therapists and how they might have the chance to shine at your practice.
• Write job descriptions. This therapist job description example includes all the essentials, and should give you a place to start from. Be as clear as possible about duties, expectations, and payment.
• Reach out to your personal network. Before going public with a job listing, get in touch with other therapists in your professional network. Put out feelers: Is there anyone you know—or anyone they know—who is dissatisfied with their current position? Who’s been operating solo, but would rather work with other therapists?
• Post job listings. Fees for posting job listings online vary. Posts on social media come at no cost, and—depending on your accounts’ reach—may put you in touch with higher-intent candidates. If you’re launching an office-based practice, consider posting job listings in local periodicals and Facebook groups.
• Begin intake. Prepare a form email to send applicants once you’ve received their applications. You may also prepare a form rejection email. Unless pickings are particularly slim or you happen to receive a small number of perfect candidates, chances are good you’ll be turning more people down than you will accept.

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Interview candidates

If your goal is to hire long-term employees who will learn and grow alongside your practice, a quick phone chat isn’t enough to determine whether a candidate is the right fit.

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You need a multi-step hiring process. Sketching out that process before you actually begin speaking to candidates ensures you’re organized and ready to go before a CV even crosses your desk.

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Your multi-step hiring process, including interviews, might look something like this:

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1. Google Form. The candidate completes a form confirming their certifications, experience, and references. You might include a section where they have the chance to explain why they’d like to work for your practice.
2. Fifteen minute non-negotiables interview. This is where you make first verbal contact with a candidate, and lay out the non-negotiables for the role: certifications, required work hours, payment methods (e.g. salary vs. per-session).
3. Half hour in-person interview. If you’re still interested in the candidate, a half hour sit-down interview gives you the chance to meet them face to face.
4. (Optional) Follow-up interview with peers. If you have other therapists already working at your practice, schedule a half hour job interview with your new candidate and invite some of them to sit in and take notes. This will give you a set of second impressions to work with.
5. (Optional) Peer feedback. Meet with the employees who sat in with you, so they can provide their notes on how the interview went and raise any potential objections.
6. Reference check. Once you’re satisfied you’d like to offer the candidate the position, check their references. They should have at least three.
7. Formal offer. Draft and send a formal job offer, including wages/salary, benefits info, and details about the role (hours per week, duties).  

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Once your candidate accepts their offer, it’s time to begin the onboarding process.

Onboard employees

Onboarding is the process of getting new employees up to speed on how your practice operates and making sure they have access to the tools they need to do their job. It also involves collecting bank and tax information so you can enter them into your payroll system.

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Some payroll systems, like Gusto, include integrated onboarding flows for employees. 

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The key to smooth onboarding is lists. Create two:

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1. A list for your new employee of tasks they need to complete
2. A list for you of tasks you need to complete

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The employee’s tasks might include:

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• Signing and accepting the offer letter
• Registering with your HR/payroll platform (provide a link)
• Submitting W-2 or W-4 forms via your payroll platform
• Sending you a copy of their license
• Providing CAQH and NPI numbers
• Completing HIPAA training
• Paneling with particular insurance companies
• Providing a bio and professional headshot for your website
• Providing links to their public-facing social media accounts
• Logging into their email, EHR, and teleconferencing accounts

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Your tasks might include:

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• Entering their information in your payroll software
• Adding the new employee to your malpractice insurance
• Creating email, EHR, teleconferencing, and other accounts for them
• Setting up and providing them with a work phone
• Adding them to your practice’s schedule
• Setting up benefits package in payroll
• Scheduling an in-person training session

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Once your practice starts growing, you may be able to streamline this process with onboarding videos—guides on how to set up their accounts, submit their information, and find their way around their office (if you have one).

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Start marketing your group practice

Once you have employees and an office space (virtual or visual) to work from, it’s time to start marketing your new group practice. 

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Your number one priority should be to get your practice’s website and social media accounts live. Those will be the first point of contact for many new clients, and they’re the public face of your practice.

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From that point on, the particular marketing moves you make will depend on the size of your new practice, your location, and your target clientele. Here are some of our marketing guides—written specifically for therapy practice owners—to help you get started:

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• The Complete Guide to Marketing for Therapists
• 101 Marketing Ideas for Therapists
• The Complete Guide to Local Marketing for Therapists
• Marketing Checklist for Therapists
• 11 Must Haves for Your Therapy Website: Tips from Experts
• How to Get More Referrals for Your Therapy Practice
• How to Set a Marketing Budget for Your Therapy Practice

Keep your practice (financially) healthy

Once you’re up and running, your employees rely on you to run a stable, organized practice. If your practice falls apart, they may lose their livelihoods. 

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Key to maintaining financially healthy practice is setting up a comprehensive bookkeeping, accounting, and tax solution. That means:

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• Regular day-to-day bookkeeping, recording all transactions and reconciling with your bank account(s)
• Monthly financial statements 
• Budgeting and projections based on financial data
• Accurate, on-time tax filing and payment

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If you already run your own solo practice, you’ve probably already had some experience with the financial side of business ownership. 

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But if you need a quick refresher, or you’re planning to hire professional help and aren’t sure where to start, check out our article on the difference between bookkeepers and accountants.

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—

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Launching your own group practice can be a challenge, but it can also be incredibly rewarding. If you’re still not sure whether it’s economically feasible, check out our article on how much it costs to launch a group therapy practice.

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

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Bryce Warnes is a West Coast writer specializing in small business finances.

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