Private Practice Expenses: What’s Normal and What’s Not

When you’re running a private practice, it can be hard to know what expenses are totally normal and what might raise some eyebrows with your accountant (or the IRS). 

Some things are obvious, like your office rent. 

But others? Not so much. 

Let’s break down which private practice expenses are seen as “reasonable”… and which ones not so much from an accountant’s point of view.

The “Normal” Stuff

These are the kinds of things we see all the time. If you’re spending money on these, you’re probably in good shape.

Office Rent or Space

Depending on your location, a full-time office suite might run anywhere from $500 to $2,000 per month. Shared spaces or part-time sublets can cost as little as $150 to $600 monthly.

Malpractice Insurance

Most solo practitioners pay between $300 and $800 per year. It depends on your state, licensure, and whether you’re doing telehealth.

License Fees and Professional Dues

State license renewals typically range from $100 to $300 every year or two. Memberships like NASW or AAMFT are usually in the $150 to $300 range annually.

Practice Management Software

Platforms like SimplePractice or TherapyNotes usually cost between $30 and $80 per month, depending on the features you’re using.

Telehealth Tools

HIPAA-compliant video tools like Zoom Pro or Doxy.me tend to cost $15 to $50 per month. Some are included in your practice software.

Continuing Education (CEUs)

Budget anywhere from $100 to $1,000 per year, depending on whether you’re doing self-paced courses or live conferences.

Office Supplies and Equipment

This one can vary a lot, but think about $30 to $100 per month for day-to-day supplies. Bigger purchases like a laptop might be $800 to $2,000 and last a few years.

The Gray Area Stuff

These expenses aren’t red flags, but they do need context and documentation if you’re ever audited. Here’s what to expect cost-wise.

Home Office Deduction

If you qualify, this usually ends up being a few hundred to a few thousand dollars per year, depending on your rent or mortgage and how much space is used exclusively for the practice.

Marketing and Branding

Therapist directories like Psychology Today are around $30 to $50 per month. A basic website might be $500 to $2,000 to build, and more if you hire a designer. Ads can run from $100 to $1,000+ monthly depending on your goals.

Business Coaching or Consulting

This is all over the map. Some coaches charge $200 per session, while others offer monthly packages starting around $500. Just make sure it’s for business development, not personal growth.

Travel and Meals

Conference travel might cost $500 to $2,000 all-in with airfare, hotel, and food. Meals alone are only deductible in certain cases, and only at 50 percent.

Clothing

Generally not deductible. Even if you’re buying comfy, work-appropriate shoes or blazers, the IRS usually says no unless it’s both required and not suitable for everyday wear.

The Not-So-Normal Stuff

Now let’s talk about the things that might raise questions. These expenses don’t automatically mean you’re doing anything wrong, but they’re worth a second look.

Frequent Personal Meals

Eating out every day between sessions might be convenient, but it’s rarely a business expense. If you’re networking or meeting another therapist to talk referrals, sure — but don’t go overboard.

High-End Furniture or Decor

If it’s clearly for the office and helps the client experience, it may be deductible. But keep it reasonable. A few hundred dollars for a bookshelf or chair? Fine. A $10,000 couch? That’s pushing it.

Car Expenses

Unless you’re consistently driving to see clients, most of your driving probably won’t count. If you are, keep a mileage log and expect to write off around 65 to 67 cents per mile (based on the IRS standard rate).

Family Members on Payroll

If your partner or teen helps with social media or admin work, they need to be paid like a real employee or contractor. That means reasonable wages, tracking hours, and issuing a W-2 or 1099. No made-up jobs or inflated salaries.

How We Help at Traktion

You didn’t go into private practice to become a bookkeeper, and you shouldn’t have to figure all of this out on your own.

At Traktion, we work with therapists every day,  so we know what “normal” looks like when it comes to expenses, and we know where the red flags are too. 

We’ll help you track things properly, find deductions you didn’t know you could take, and avoid the messy stuff that could come back to bite you later.

Think of us as your financial co-pilot.

You stay focused on your clients, and we’ll make sure your numbers are clean, simple, and audit-ready.

If your expenses feel confusing or you just want a second set of eyes on things, simply head over to our Contact page to get started. You can book an introductory call right away. 

We’ll help you get clarity without the overwhelm.

Until next time!

Common Questions

Quick answers to questions therapy practice owners ask us most often.

What are the typical expenses for a private practice therapist?

The standard expense buckets for a solo therapy practice are office rent ($600 to $2,500 per month), EHR and billing platforms ($60 to $200 per month), professional liability insurance ($300 to $700 per year), continuing education ($1,500 to $5,000 per year), supervision or consultation ($200 to $600 per month), and marketing ($1,000 to $5,000 per year). Total annual overhead typically lands between $15,000 and $50,000 for a solo practice.

How much should a therapist spend on rent for a private practice office?

Office rent should generally stay between 5% and 12% of gross revenue for a sustainable solo practice. Above 15%, the practice starts feeling cash-tight quickly. Many therapists overcommit to office space in year one based on revenue projections, then carry the lease when growth lags. Subletting or shared space reduces this risk.

Are EHR and practice management software a tax-deductible expense?

Yes. EHR platforms, billing software, scheduling tools, and practice management subscriptions are ordinary and necessary business expenses for a private practice therapist and are fully tax-deductible. Track them through a business credit card or business bank account so the documentation is clean at year-end.

Can therapists deduct continuing education on their taxes?

Yes. Continuing education that maintains or improves skills required for the current professional role qualifies as a deductible business expense (IRS Pub. 535). This includes CEUs, conference fees, related travel, books, and registration costs. New-license training to enter the field is generally not deductible.

What expenses do therapists most often miss on their taxes?

Five commonly missed deductions for therapists: home office (simplified method $5 per square foot, max 300 square feet), mileage for in-person sessions or supervision, self-employed health insurance premiums (above-the-line deduction), retirement contributions (SEP-IRA or solo 401(k)), and professional membership dues (state and national associations).