Legal Considerations When Starting A Therapy Practice
Updated: Nov 4
If you are setting up a psychology private practice or therapy business, you'll want to consider the structure of your business from a legal point of view. There are a few important legal documents you'll need and some regulations you'll need to comply with.
Here are some of the key legal considerations when starting a therapy practice:
Are Private Therapists Sole Traders?
As a therapist, you can become a sole trader or set up a limited company. Being a sole trader means a more simplified accounting and reporting structure, but you are personally liable in some circumstances and have fewer legal protections. As a limited company, your obligations rise, but you will have the protection of a limited company to separate your personal assets from the business.
A key question to consider is how much you plan to grow. Employers find a limited company status easier for employing staff. For partner and multi-director businesses, an LTD also means you can allocate shares and pay dividends that can help a business grow through shareholder investment. However, if you plan to be self-employed and don't envisage yourself expanding your practice by employing others or raising funds, then a sole trader status is simpler to manage and can help you stay focused more on client care whilst your practice grows organically with you.
It’s important to point out that you can change your mind. Transitioning from an LTD to a sole trader or vice versa is possible and is worth revisiting as you better understand your capabilities and mould your vision for the future of your practice.
Do Private Practice Therapists Need an Accountant?
Accountants can help you with respect to the best way to structure yourself from a tax perspective. They’re usually essential in a limited company as reporting becomes more complex.
Having an accountant is advisable as it frees up your time to focus on client care and the growth of your practice. However, if you can’t afford an accountant, then a sole trader status would make it simpler to manage and report on business finances.
Do Private Practice Therapists Need Insurance?
Few businesses in the UK legally require insurance, but most have it. And for good reason. As a therapist, your risk of claims is high and can destroy a business. Just defending a claim made against you is costly. The best way to safeguard against this is to have sector-specific professional indemnity insurance. If operating face-to-face, then public liability insurance may also be necessary. You may never need to make a claim on your insurance, but it is there to protect you and your business and going without makes you vulnerable.
Regulatory Compliance in When Starting A Therapy Practice
Practitioner therapists and psychologists must register with the Health and Care Professions Council (HCPC). You should keep up to date with regulation and best practice and maintain clinical supervision in line with your governing body’s guidelines. Record keeping is also important in demonstrating compliance.
Check the specific requirements of your regulatory body and make sure that your business is complying and your legal documents meet any requirements they impose on your type of business.
Legal Documentation For Private Practice Therapy
You will need at least the following documents to properly protect you:
Website Terms & Conditions
Privacy Policy
Data consents for processing health data
Cookie Policy and cookie pop-up notice on your website
Business Terms & Conditions for use with your clients/patients
Associate / Consultancy / Freelance Agreement for any third parties that assist you in delivering your services
Employment Contracts for any employees
Download our Website Policies Toolkit for Psychologists to access all the guides, checklists and legal document templates you’ll need for your private practice website.
Are you GDPR compliant?
As with any business collecting and processing data, you need to register with the Information Commissioner's Office (the ICO).
All organisations must comply with UK GDPR when processing other people's personal and special category data (which includes health data). However, since you’re handling particularly sensitive data, it might be worth learning a bit more about data protection in psychology and what your obligations are.
To learn more, read through our Data Privacy Requirements for Private Healthcare Practitioners.
Protecting Your Therapy Private Practice’s Brand Name
When you name a business, you should ensure no other organisation in the same or an adjacent sector is using the name. You don’t want to create confusion or create unnecessary competition. Once you have chosen a business name, you may then wish to protect your practice name and/or logo to prevent anyone else from using it. You can do this by applying for a trade mark. Before you do though, be sure to check out our guide: 5 Things To Consider Before Making Your Trade Mark Application.
Aubergine Legal works with many private therapy practitioners and has advised them on all legal matters when launching a therapy private practice. Make sure you visit the Psychology Legal Services section of our website for various resources, and get in touch for legal support. Also be sure to check through our Psychology Start Up Checklist.
