Therapists love the language of therapy. We can talk all day long about “issues” and “reporting”, not to mention,”mood change”.  But when it comes to LLC, liability and licensing laws, we get quiet.

What sets a therapist employee apart from an entrepreneur are 3 hours and 3 pieces of paper. Insurance, a business license, and a business designation. Let’s start with the Business Designation. Most therapists starting out have a decision to make about their name: should I practice using my name and my credential or should I have a company name? I have a real preference here. Unless you are an established group with a particular focus, I think  Mary Therapist, M.S.  is the way to go. Your name will become your brand and will be easy to Google, and easy to find. A business referral source, who may not be familiar or comfortable with the language of therapy may also find it easier to refer to Mary Therapist, M.S. than a practice with an ambiguous name like “Healing Works Therapy”.

Now, let’s obey the laws of your state and local government. You can register your business with your local government as a sole proprietor or a corporation. A quick internet check allowed me to register my business online in five randomly selected states. It’s an easy process in most cases but if it feels overwhelming, you can hire a private attorney or use a service like Legal Zoom for a flat rate and the state fee. Whatever method you choose, it’s important to know why you are choosing a particular designation.

Most accountants and lawyers would probably suggest your incorporate. Why? Incorporation–whether you are a limited liability corporation or an S corporation protect you and your personal assets from legal claims. This is also a good time to start a relationship with an accountant. They can advise you on the best practices of corporate accounting and an hour consultation will clarify the corporate designation that is best for you.

Don’t forget to check with your local municipality about a business license. The fees are often generated based on a scale related to income. Again, a quick internet search will reveal the department in your town where you send your business designation and new business name to obtain your license to practice in your city.

Name? LLC? S Corp? Business License? Check. Let’s move on to Liability.

You probably have had some kind of liability insurance as an employee or a contractor. Now is the time to step it up. Find an insurance company that understands the particular needs of a mental health professional. Each of the professional organizations that attend to our licenses has a list of preferred companies with excellent ratings. Look for A++ rated companies.

How much insurance should you buy? A quick calculation will pay off here. Determine your maximum hours each week and the highest amount of coverage you can afford. Why? Because the rates are reasonable and the coverage is high. No need to skimp here.

Only one step left–if you are planning on renting your own office rather than renting from an established practice, be sure to have Liability Insurance too. It pays to shop around and look at a couple of policies.

There, you did it! You are doing business legally, with plenty of coverage AND you conquered a new, foreign language chock full of nifty new terms. Congratulations!