The cost of starting a group therapy practice depends upon two factors: Personnel and location.
More therapists working at your practice means more payroll tasks to manage, and more financial admin in general. A larger practice also typically demands a more complex business structure.
Your location—whether your therapy practice is based in an office or (as is increasingly the case) 100% remote—will determine costs like rent or HIPAA-compliant telemedicine services.
Here’s a breakdown of what you can expect to pay launching your group therapy practice.
Note: This article covers all major expenses involved in launching a group practice specifically. It doesn’t cover expenses common to all practices, for instance web hosting and business licenses. For those, see our article How Much Does It Cost to Start a Therapy Practice?
Office expenses for a group therapy practice
Renting an office for a group practice is different from renting one for a solo practice. When you’re going it alone, you may be able to sublet another therapist’s space, or even set up a home-based office.
When you have multiple therapists working at your practice, however, you’ll likely need to be able to provide more than one office for appointments. Having more than one office also means you need a reception and waiting area. For a group practice, you can expect rent to be your biggest expense.
Rent for a large therapy office space
In September 2022, the national average office space rent was $38.70 per square foot.
The rent you specifically pay will depend upon your location. Prices range from relatively low ($23.53 per square foot in Orlando, for the period listed above) to relatively high ($66.52 per square foot in San Francisco).
These rates are based on the cost of a full service lease, as opposed to a triple net lease. Each type of lease charges rent differently: Full service requires the tenant to pay only the cost of using the space, while the landlord covers operating costs, taxes, etc. for the building as a whole. Triple net requires the tenant to cover base rent (the rent for their particular space), plus a fraction of the building’s upkeep and property taxes. Learn more about full service vs. triple net rent.
When renting office space, be prepared to pay first and last months’ rent upfront, as well as a damage deposit (half of one month’s rent).
Front desk administrator
Whether you need a waiting room staffed by a front desk administrator who checks patients in and out, receives calls, etc. will depend upon the size of your practice, your therapists’ schedules, and personal preference.
For instance, a group practice with one office and a waiting area, with two therapists who share the office and each clock about 25 hours of clinical practice per week, may not require a front desk admin.
On the other hand, suppose your group practice has five therapists working full time, sharing three different offices and a waiting area. You may not only need a front desk admin to greet patients and monitor the waiting area for you, but also to schedule how the office is shared by different therapists.
The costs of hiring a front desk admin for your group practice include:
- Salary. According to Zippia, the average salary for a front desk administrator in the USA is $34,479. That does not include benefits.
- Job posting. Many job boards allow you to post open positions for free. Depending on the job market, you may choose to pay to sponsor your post and potentially increase your number of applicants. As an example, sponsored posts on Indeed.com range from $5 – $499 per day.
- Computer. Be prepared to spend about $1000 for a new budget office PC with keyboard, mouse, and monitor.
- Furniture. At minimum, your front desk admin will need a desk, chair, and possibly a filing cabinet. Costs for furniture range widely. Second hand items in good condition may cost a few hundred dollars, total; top-of-the-line new furniture could run you in the thousands.
Online expenses for a group therapy practice
Whether therapists at your group practice exclusively offer their clients remote sessions, or offer them in addition to in-office sessions, telemedicine introduces a few additional expenses.
HIPAA compliant telemedicine service
Regular video conferencing apps don’t cut it when it comes to HIPAA compliance. Luckily, many of them offer HIPAA compliant versions of their regular apps.
These are typically charged monthly or yearly on a per-user basis. The more therapists who work at your practice, the more you can expect telemedicine software to cost.
As an example, Zoom for Healthcare starts at $149.90 per year, per user.
Electronic Health Record (EHR) service
A centralized EHR service shared by all your therapists can help you manage records and bill clients in a standardized format, without depending on each provider to come up with their own solution.
EHR services may range widely in price, but to get a sense of the cost for a group practice, TherapyNotes group pricing starts at $59 per month for the first practitioner, and charges $30 for each additional practitioner.
Custom domain emails
For the sake of legitimizing both your practice and each individual provider, give every one of your therapists an email address customized to your domain name. It can either function as its own inbox, or forward inbound mail to a different account.
Keep in mind that, for the sake of patient confidentiality, your email provider must be HIPAA-compliant.
For a Business Starter package, Google Workspace charges $6 per user per month. That includes a domain name customized to one you’ve already registered (you can also purchase a domain name through Google for an additional cost). It’s HIPAA-compliant, too.
Admin expenses for a group therapy practice
Expect your administrative costs to go up if you’re transitioning from running a solo therapy practice to running a group practice. Not only do you have more people to manage (and pay), but your business is more complex.
Incorporation or business entity formation
When you have multiple therapists working for you, forming a distinct business entity—as opposed to operating as a sole proprietor—is smart. Most accountants will recommend you do so.
A separate business entity can reduce your financial and legal liability, protecting your personal assets from collection and your legal person from being sued. It may also offer tax benefits.
One route many therapy practices take is to form an LLC. You do this by registering at the state level.
At the federal level, an LLC lets you choose to file your business taxes as a partnership, S corporation, or C corporation.
To form an LLC typically costs a one-time formation fee ranging from $35 – $500. And you’ll need to pay an annual fee to keep your LLC in operation; this amount also varies widely, from $15 (Kentucky) to $800+ (California).
If the therapists at your practice are your employees, you need to set up payroll.
Payroll is the system you use to:
- Track employees’ work hours and earnings
- Pay employees
- Generate pay stubs
- Withhold taxes from paychecks
- File quarterly Form 941s with the IRS
- Store employee information
Unless you’re willing to hire someone to your staff to handle payroll for your business, you’ll need to outsource it to a third party service or platform.
Gusto is a popular choice for small businesses. The online payroll and HR service starts at $40 per month, plus $6 per employee.
Learn how to set up payroll for your therapy practice.
Bookkeeping and accounting
When you have multiple practitioners depending on you to run a financially stable, organized business, you can’t afford to do the bookkeeping yourself.
In one sense, you can’t afford it because there is so much at risk. If you make an error in your bookkeeping, it could affect your ability to pay your employees or even stay in business.
In another sense, doing bookkeeping and accounting for a group therapy practice is more complex than doing bookkeeping for your own solo venture. If you try to tackle it on your own, it will eat up your time and energy. That’s time and energy that could be much more profitably directed towards managing the rest of your practice and taking care of your patients.
A bookkeeper records day-to-day transactions and generates financial statements that tell you how your practice is performing. An accountant helps you file your taxes, take advantage of tax deductions, and navigate processes like incorporating your business, creating financial projections, or selling your practice.
Learn more from our guide to bookkeepers vs. accountants.
For yearly tax filing, an accountant can cost your practice $500 or more, depending on the complexity of your business..
The total cost of launching a group therapy practice
If you’ve read through this entire article, you likely recognize by now that the cost of starting a group practice varies widely.
Average office rent in different states can differ in price by 100% (Orlando vs. San Francisco). The cost of forming an LLC can differ by close to 500% (see Kentucky vs. California). Other expenses, like business licenses and insurance (covered in our article on the cost of starting a therapy practice), also vary widely.
These are just location-specific expenses. Others will vary according to how many therapists you have working at your therapy practice, and how they do their jobs. A brick-and-mortar office of eight therapists will have different expenses from a two person, 100% remote practice.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post.
Bryce Warnes is a West Coast writer specializing in small business finances.