The Complete New Speech Therapy Practice Startup Checklist

Starting a speech therapy practice involves more than clinical skills. You need to handle taxes, licensing, billing, and operations. This checklist walks you through the essential steps, with a focus on tax obligations, so you can launch with confidence.

1. Choose Your Business Structure

Your business structure affects your taxes, liability, and paperwork. For most new speech therapy practices, an LLC (Limited Liability Company) is a good choice. It offers liability protection and flexible tax options. You can elect to be taxed as an S-Corp, which can save on self-employment taxes if your net income exceeds $40,000 to $50,000 per year. Sole proprietorships are simpler but offer no liability protection. Corporations (C-Corp) are rarely needed for small practices.

Action steps:

• Compare LLC vs. sole proprietorship vs. S-Corp with a CPA or tax advisor.
• File your formation documents with your state (fees range from $50 to $500).
• Obtain an EIN (Employer Identification Number) from the IRS for free.

2. Register for State and Local Taxes

Depending on your state, you may need to register for:

• State income tax withholding (if you have employees)
• State unemployment insurance tax
• Sales tax (if you sell products, like therapy materials or teletherapy subscriptions)

Most states have a single business registration portal. For example, in California, you use the Secretary of State and the Employment Development Department (EDD). In Texas, you register with the Comptroller. Check your state’s website.

Action steps:

• Visit your state’s business portal and register for applicable taxes.
• Keep your registration numbers in a secure file.
• Set up a system to file and pay these taxes on time (quarterly or annually).

3. Get Your Professional License and NPI Number

To practice speech therapy, you must hold a state license. Requirements vary, but typically include a master’s degree, clinical hours, and passing the Praxis exam. You also need a National Provider Identifier (NPI) number, which is used for billing and insurance claims. Apply for your NPI online at the NPPES website; it’s free and takes about 20 minutes.

Action steps:

• Verify your state’s licensing requirements (fees range from $100 to $500).
• Apply for your NPI number immediately, as it’s required for all insurance claims.
• Consider getting a Medicare provider number if you plan to serve Medicare patients.

4. Set Up Your Accounting System

Good bookkeeping is essential for tax filing and financial management. You can use software like QuickBooks, Xero, or FreshBooks. Costs range from $15 to $100 per month. Alternatively, you can use a spreadsheet, but software automates tracking and reduces errors.

Action steps:

• Choose an accounting method: cash basis (simpler, common for small practices) or accrual basis.
• Open a separate business bank account and credit card to keep personal and business finances separate.
• Set up a system to track income and expenses weekly.

5. Understand Your Tax Obligations

As a practice owner, you have several tax obligations:

• Income tax: You’ll pay federal and state income tax on your net profit. If you’re a sole proprietor or LLC, you report this on Schedule C.
• Self-employment tax: You pay both the employee and employer portions of Social Security and Medicare, which is 15.3% of your net earnings.
• Estimated taxes: Since you don’t have an employer withholding taxes, you must pay estimated taxes quarterly. The IRS requires this if you expect to owe more than $1,000 in tax. Use Form 1040-ES. Penalties for underpayment can be costly.
• Payroll taxes: If you have employees, you must withhold income tax, Social Security, and Medicare, and pay unemployment tax. You’ll file Form 941 quarterly.

Action steps:

• Calculate your estimated tax payments using last year’s income or a projection.
• Set aside 25% to 35% of your net income for taxes.
• Mark the quarterly due dates on your calendar: April 15, June 15, September 15, and January 15.

6. Get Business Insurance

Insurance protects you from lawsuits and claims. At a minimum, you need professional liability insurance (malpractice) and general liability insurance. Costs vary: professional liability for speech therapists ranges from $300 to $1,500 per year, depending on coverage limits and location. General liability is often $200 to $500 per year. If you own an office, consider property insurance.

Action steps:

• Compare quotes from at least three insurers (e.g., Hiscox, The Hartford, or professional associations).
• Ensure your policy covers teletherapy if you provide services remotely.
• Review your coverage annually.

7. Set Up Billing and Credentialing

To get paid by insurance, you need to be credentialed with each payer. This process can take 60 to 120 days, so start early. You can handle billing yourself or use a billing service. Billing services typically charge 5% to 10% of collections, or a flat fee per claim ($5 to $15).

Action steps:

• Apply for credentialing with major insurers (e.g., Aetna, Cigna, UnitedHealthcare, and your state’s Medicaid program).
• Choose a billing software (e.g., SimplePractice, TherapyNotes, or Kareo) that fits your budget, ranging from $50 to $150 per month.
• Decide whether to hire a biller or do it yourself; factor in time and expertise.

8. Create a Compliance Plan

Compliance with HIPAA and other regulations is non-negotiable. You need to:

• Sign Business Associate Agreements (BAAs) with any vendors that handle patient data.
• Implement secure communication for patient information (e.g., encrypted email).
• Develop a privacy policy and train staff on HIPAA rules.

Action steps:

• Use a HIPAA-compliant EHR system (many practice management software options are).
• Conduct a risk assessment and document your compliance efforts.
• Consult with a healthcare attorney or compliance expert if needed.

9. Plan for Retirement and Benefits

As a business owner, you’re responsible for your own retirement savings. Options include:

• SEP IRA: Easy to set up, contributions up to 25% of net income (max $66,000 in 2026).
• Solo 401(k): Allows higher contributions if you have no employees (except a spouse).
• SIMPLE IRA: Good if you have a few employees.

Action steps:

• Open a retirement account with a low-cost provider (e.g., Vanguard, Fidelity, or Schwab).
• Set up automatic transfers to save consistently.
• If you have employees, research group health insurance options through your state’s marketplace or a broker.

10. Track Mileage and Deductible Expenses

Many new owners miss deductions. Common deductible expenses include:

• Home office (if you use a dedicated space for business)
• Mileage for travel to see clients (standard rate is $0.70 per mile in 2026)
• Continuing education courses and licenses
• Equipment, software, and office supplies
• Marketing and advertising costs

Action steps:

• Use an app like MileIQ or a simple log to track all business-related mileage.
• Keep receipts for all business expenses, even small ones.
• Review the IRS Publication 535 for business expenses to ensure you claim everything.

FAQ

Q: When do I need to start paying estimated taxes? A: You should start paying estimated taxes in the first year you expect to owe more than $1,000 in tax. Pay quarterly, even if your income is irregular. If you underpay, you may face penalties.

Q: Can I deduct the cost of starting my practice? A: Yes, many startup costs are deductible, but they must be amortized over 180 months (15 years) if they exceed $5,000 in the first year. Examples include legal fees, marketing, and training.

Q: Do I need a separate bank account for my practice? A: Yes, it’s essential. A separate account makes bookkeeping easier and protects your personal assets in case of an audit or lawsuit.

Q: What is the best way to handle sales tax if I sell therapy materials? A: Check your state’s rules. Some states exempt services but tax tangible goods. You may need to collect and remit sales tax on products. Register with your state’s department of revenue.

Related guides

• The Annual New Speech Therapy Practice Review Checklist
• 7 Mistakes New Speech Therapy Practices Make in Their First Year
• 7 Questions to Ask Before Buying a New Speech Therapy Practice

The bottom line

Starting a speech therapy practice is a multi-step process, but you can manage it systematically. Focus on setting up your legal structure, registering for taxes, and getting credentialed early. Keep accurate records and set aside money for taxes from day one. Use this checklist as your roadmap, and don’t hesitate to consult a CPA or practice management consultant for personalized advice. With careful planning, you’ll be ready to serve your clients and build a successful practice.