Start a counseling center by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your counseling center. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a counseling center?
Generally, therapists need only a waiting room and an office with a couch or comfortable chair to begin their work. Should you get an office, you will need a Certificate of Occupancy that states you’ve complied with all zoning and building standards. Costs for this will be dependent on the neighborhood you choose for the business. Counseling centers with just one or two people in the practice can sometimes be run out of a home, which can save you a considerable amount of overhead. In this case, you’ll need to visit your local authorities to ensure that your home meets the safety regulations of the area.
What are the ongoing expenses for a counseling center?
Owners should budget in the following expenses:
- Rent/license renewals
- Administration supplies
- Commercial insurance
- Office equipment replacement
- Website costs
Who is the target market?
There are few people who won’t benefit from seeing a counselor. The unbiased advice and opinions can be priceless to people who can’t see past their next move in life. Persons who are wrestling with depression, anxiety, anger issues, or other emotional or interpersonal problems can all get relief from regular counseling. However, there is still a stigma when it comes to counseling services in certain areas of the country. The target market is composed of those who are open to the idea of getting outside help for self-improvement, parents who hope to stem behavioral issues when kids are young, or those who were mandated by the courts to receive counseling.
How does a counseling center make money?
Counselors make money by charging for their time. All entrepreneurs need to set their fees based on the therapist’s experience, as well as the overhead costs of the business.
How much can you charge customers?
Therapists can charge anywhere from $20 to $120 or more for a one-hour session. The amount is generally based on experience, education level, and the demand for services. Beware of charging too low for services. Offering a sliding scale for those with low incomes typically devalues the work done, and can sometimes give people an excuse to skip their sessions.
How much profit can a counseling center make?
Because therapists primarily pay for the therapist's time rather than fancy offices or equipment, profit can be considerable. Charging $60 an hour with a $10 overhead can lead to a $300 day of pure profit.
How can you make your business more profitable?
Expanding your services to include online sessions can be a smart move for any counseling center. Should you choose to do so, you’ll need to ensure that your computer software follows HIPAA rules. Consider giving sessions to current patients before branching out to strangers over the virtual space.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your counseling center is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a counseling center business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
In addition, to be able to practice as a counselor, you need to obtain a relevant academic degree from an accredited university or college.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
A counseling center business is generally run out of an office building. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a counseling center business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your counseling center business will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a counseling center
Professionals will tell you that you’re going to get the most business from referrals rather than expensive advertising. However, you’ll still need a way to drum up clients at the very beginning. Focus on creating a professional website or passing out flyers that clearly detail how your practice runs and who you service.
How to keep customers coming back
Ideally, you don’t want your clients to need your services forever, but they will likely need to see someone for multiple weeks (or even years.) The best way to generate word of mouth is to establish a rapport and relationship with the client, and to promote progress whenever and wherever possible. The more tangible results a person sees from their therapy (e.g., healthier lifestyle, a job promotion, etc), the more they will continue to want to see a therapist.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Counseling Center In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This business is good for those who enjoy helping others discover their best selves. Navigating relationships, jobs, and life decisions can be overwhelming, but therapists can make the path that much clearer for those they serve. The best possible people for this job are those who find order in their own lives by helping others find order in theirs.
What happens during a typical day at a counseling center?
A typical day for an owner will involve the following:
- Registering patients
- Counseling patients
- Reviewing past treatment plans
- Follow-ups with previous medical professionals
- Advertising the business
What are some skills and experiences that will help you build a successful counseling center?
Those who wish to start this business should have a professional background. All employees will need to have at least a Master’s degree before they can become licensed counselors, and they'll need their Doctorate degree to be considered a licensed psychologist.
Theoretically, an entrepreneur can start the business merely by finding the space and then hiring licensed professionals to do the actual counseling. In that case, a person would need to have the capital, people skills, and drive behind them to attract the clients necessary to attract quality business partners and employees.
What is the growth potential for a counseling center?
While counselors may be more popular in certain neighborhoods, there is still a lot of growth potential for counseling centers regardless of where you live. In addition to traditional offices and private one-on-one therapy, there are a number of other ways that clients can get mental health services. Between group therapy, online counseling, and regular private sessions, counseling centers have a variety of ways to reach their target market.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a counseling center?
Professionals will tell you to consider who you want your patients to be before you get started. You may want to focus solely on those with chemical dependency issues, or those who are dealing with the loss of a loved one. Narrowing down your practice also helps you to create a brand, which can make it easier for the public to remember your demographic. If you’re planning to partner with the courts, you need to know that all of your therapists are comfortable with counseling criminal offenders. You may also want to consider joining professional networks and organizations. These not only keep you informed of new trends in the world of counseling, but can also help you network and expand your business.
How and when to build a team
A counseling center may consist of anywhere from one to 10 or more counselors. For brand new practices, a counselor may want to start on their own out of their home. If there’s a large need for counselors in any given area, then it may make sense to hire a team right away. When you’re hiring, look for professionals who have similar philosophies to your own. Practices that run with a religious slant may not be compatible with a secular counselor. Having a consistent overall mission and brand for your organization will help to attract regular clients.