The Financial Landscape for Therapists and Mental Health Professionals

Finance for Therapists: A Thoughtful Decision

You’ve made it. After working within a larger practice, in a different niche or industry, or finishing your formal education and certifications, you are ready to step out on your own and build a sustainable independent therapy business. Congratulations! You are making the world a healthier, calmer, safer and more peaceful place, one mind at a time.

As a methodical and thoughtful person, you’ve probably already got a website, branding, a legal structure, and maybe even accounting systems and a business plan in place. But have you built financial projections and explored all your financing options for your mental health business? As Dr Chris Stout says, “many clinicians while skilled in clinical work, often are not as expert in developing or running a small business, better known as private practice.” He goes on to say even more about your new role as an entrepreneur:

“Many healthcare providers may not have academic training or any prior experience in business operations, management, budgeting, marketing, contracting, or the other myriad of associated aspects of running a practice. But regardless of this, in order to be successful and sustainable in their work of helping others, they will need to. And arguably, the most critical aspect of establishing and running a practice is the financial.

Luckily, that’s where Noumena can step in and have your back.

Community, Tools, and Access to Financing: Free Your Money and Your Mind

Within the Noumena platform, you can get peer-to-peer advice, access freelancer-approved contract templates and educational materials, and even get free or very affordably priced customized financial coaching. Join now and see for yourself how we can specifically lend a fiscal hand to people growing in the fields of mental health, wellness, and therapeutic modalities.

One thing you may not have thought about yet is how you’d like to charge your clients. And with the flexible and evolving field of therapy, there are so many options that they could seem a bit overwhelming if you are new to running your own private practice.

How Mental Health Professionals Can Charge Clients

Zencare has a wonderful guide to how you can think about charging and building your budget overall. However you also need to decide how you will charge, and set those guidelines firmly in place. Each option comes with pros and cons, and subsequent effects to your cashflow and budgeting.

  1. Charging by the hour, for individual sessions, paid either before or after each session

  2. Setting package rates and requiring clients to pay up front

  3. Group rates

  4. Sliding scale options

  5. Different rates based on treatment needed or types of insurance being used

No matter which method(s) you choose, there can be moments at the beginning of a new practice or when waiting for a client payment to go through when your cashflow could use some support. Even very busy practices could benefit from some cushion when growing and serving their communities.

But therapists generally tend to avoid raising money, getting small business loans, or using other traditional tools to support their practices. Could you benefit from a more flexible financial ally?

Working Capital vs Growth Capital

As a mental health professional considering financing, it’s important to keep in mind the two major types of funding you can apply to your business: working capital and growth capital.

Let’s hear directly from our tax expert George Birrell on this topic:

“Working capital is a finance term used to measure an interior design / mental health care business’s ability to pay its current obligations such as credit card debt or monthly car payments. Essentially it shows how solvent a business is in the short term. Often working capital loans are to help with a business who is experiencing a short term cash crunch but overall is still profitable. In contrast growth capital is a loan or equity investments used to fund a new business that is trying to build a product or service that will generate profits in the future.”

Working capital is money that funds crucial day-to-day costs of running your business. At a very early stage it can be perfectly fine to seek funding to cover these costs, but once established, you should aim to cover your business costs with your revenues, and only look for financing when you are ready to grow your business.

Tax Deductible Expenses for Therapists

Another important thing to keep in mind while considering your finances as a mental health professional is your tax deductible expenses. Typically, as a self-employed therapist you can expect to deduct all or part of the cost of your:

  • Legal And Professional Fees

  • Bank/Credit Card Processing Fees

  • Office Supplies

  • Start-Up Expenses (think buying furnishing for your office or co-working space - like b.mindful in Louisville, KY)

  • Continuing Education

  • Office Rent

  • Membership Fees For Professional Organizations (consider joining a regional and industry specific group like Mental Health Lou)

  • Travel Expenses

  • Cell Phone and Internet

  • Insurance

  • Even your professional meals are usually deductible

So when you are thinking about seeking financing andthe startup costs involved with launching your own practice, these deductions can make it a lot less daunting.

Fearful of Fundraising? We get it.

If you don’t quite have the “seed stage fundraising” mentality for your practice, there is nothing wrong with that! Many sustainable, ambitious small business owners and solopreneurs like you just need a small infusion of capital to start on the right foot, or a bit of help smoothing their fluctuating monthly income. That is Noumena’s sweet spot.

You can join the Noumena web app (or download for mobile) and apply for all of our financing options with no commitment, in one simple form, in just a few moments. Not ready for financing yet? There is no rush to get funded, but it is always smart to prepare what you might need in case something comes up or you get an incredible growth opportunity that requires some up-front cash. Come on in the community and use our free tools, and you can even set up client payments and relationship management in our Noums.

Whatever you do, remember what Gordon Brewer, host of the Practice of Therapy podcast, says are the most important elements to starting off confidently in your private practice: mentorship, organization, and foresight. And Noumena can lend a hand in all those areas.

Join today, and continue on your journey of creating a bountiful and helpful therapeutic practice, with Noumena by your side.




Dr Chris Stout via LinkedIn:

The Practice of Therapy:

Glassner Carlton:

Special thanks to Amanda Villaveces, LMFT, Director of Mental Health Lou and Shannon Gonter, Founder of b.mindful Louisville, for their guidance and input in this article!