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How to start a cash-pay practice in 2026: the full checklist

Entity, NPI type 1 and 2, EIN, malpractice, office versus telehealth, software, HIPAA policies and a realistic startup cost table for a cash-pay practice.

August 18, 2026 · 7 min read

Opening a cash-pay practice is the simplest way to go independent that has ever existed: no payer contracts, no credentialing that drags for six months, no billing department before you have your first patient. It is still a licensed medical business in a regulated country, so there is a sequence, and doing it out of order costs weeks. This is the sequence we would follow ourselves in 2026, with real numbers and the honest ranges where costs vary by state. Standard caveat on every item: rules differ by state, confirm with your board and a local attorney or CPA.

Step 1: pick and form the entity

You will practice through a legal entity, both for liability separation and because most states require licensed professionals to use a professional entity: a PLLC (professional limited liability company) or a PC (professional corporation). Which one is not your choice in some states:

• California does not allow PLLCs. Physicians and most licensed clinicians form a Professional Corporation. Budget the $100 filing plus the annual $800 franchise tax that hits every California entity regardless of income.
• Texas and Florida both allow PLLCs; filing fees are roughly $300 (TX) and around $125-160 (FL).
• New York allows PLLCs but adds a publication requirement that can cost anywhere from a couple hundred to over a thousand dollars depending on county.

Also check your state's corporate practice of medicine doctrine: in many states only a licensed physician can own a medical practice, which matters the moment a spouse or investor appears on the cap table. An hour with a healthcare attorney here, typically $300-500, is the best-spent money of the whole project.

Tax election (S-corp or not) is a CPA conversation once you can project income; it changes nothing about opening.

Step 2: EIN, free and immediate

The Employer Identification Number is your federal tax ID. Apply on the IRS website after the entity exists: free, online, and you usually have the number in minutes. Anyone charging you to "obtain your EIN" is selling you a form you could file yourself. You need the EIN for the bank account, payroll and, relevant to us, for your superbills.

Step 3: NPI type 1 and type 2, also free

The National Provider Identifier comes in two flavors and a cash-pay practice usually wants both:

• Type 1 identifies you, the individual clinician. You probably already have one from residency or a previous job; it follows you forever.
• Type 2 identifies the organization, your new entity.

Both are free at NPPES and typically issue within about 1 to 10 days. "But I don't bill insurance, do I need an NPI?" Yes, for three practical reasons: your patients' superbills need it or their claims get rejected, e-prescribing and lab ordering systems ask for it, and pharmacies use it to identify you. It costs nothing and takes twenty minutes; there is no scenario where skipping it pays off. We wrote a full piece on how superbills and out-of-network reimbursement work, because they are the cash-pay answer to "do you take my insurance."

Step 4: license, DEA and local permits

• Your state professional license must be active in the state where the patient is located, which is the detail that governs telehealth too: seeing a patient who is sitting in another state generally requires a license there. The Interstate Medical Licensure Compact speeds up multi-state licensure for physicians; PSYPACT does something similar for psychologists.
• DEA registration only if you will prescribe controlled substances: $888 for three years.
• Local business license and, in some cities, an occupancy permit for the office. Usually under $200.
• If you use a trade name ("Sunrise Direct Care" instead of your legal entity name), file the DBA or fictitious name registration; California physicians need a fictitious name permit from the medical board.

Step 5: malpractice and the other policies

Malpractice insurance is priced by specialty, state and history. Realistic ranges: therapists and counselors often $400-1,500 per year, nurse practitioners commonly $1,500-4,000, primary care physicians commonly $4,000-12,000, procedural specialties higher. Two questions to ask the broker: claims-made or occurrence (claims-made is cheaper now but requires tail coverage when you leave), and whether telehealth across state lines is covered. Add cyber liability (roughly $500-2,000 a year) and general liability for the office (roughly $400-1,000). The full legal layer, HIPAA, TCPA consent, the Good Faith Estimate that has been mandatory for self-pay patients since 2022, is its own topic; we laid it out in the legal checklist for cash-pay clinics.

Step 6: the office question, physical or telehealth-first

The biggest cost fork in the whole plan. Run both scenarios before signing a lease:

Item	Telehealth-first solo	Physical office solo
Space	$0, or $150-400/month for occasional hourly rooms	Sublease a room $500-1,500/month, or full lease $2,000-5,000+
Build-out and furniture	$0-500	$3,000-20,000 depending on condition and specialty
Deposit and first/last month	$0	Commonly 2-3 months of rent up front
Equipment	Computer, camera, light: $500-1,500	Exam table, instruments, supplies: $2,000-15,000+
Break-even patients (at $150/visit average)	Often 15-25 visits/month	Often 40-80 visits/month

A pattern that works well: start with hourly or subleased space two days a week, prove demand, then commit to a lease with actual numbers behind you. Landlords negotiate better with a practice that already has revenue.

Step 7: HIPAA before the first patient, not after

You need, in writing, before the first visit: a security risk assessment (the free HHS SRA tool takes an afternoon), privacy and breach policies, a Notice of Privacy Practices for patients, staff training if you have staff, and a signed BAA with every vendor that touches patient data. This costs almost nothing and it is the difference between an incident and a fine. Fines are tiered and reach past $50,000 per violation at the top tier, so "we were going to get to it" is not a plan.

Step 8: the software stack, and the GFE workflow

A cash-pay practice needs far less software than an insurance practice, which is worth money every month. The working list:

• Practice management and charting with scheduling, notes, patient portal, telehealth, reminders and superbills. Because you skip claims software entirely, this layer should cost tens of dollars, not hundreds; compare what is included per plan on any vendor's pricing page and confirm the BAA is included at every tier, not sold separately. The feature set to check is scheduling, charting, payments, reminders and the superbill PDF.
• Payments: a processor around 2.6-2.9% + $0.30 per card transaction. Set it up before opening; taking payment at booking is also your no-show policy.
• A Good Faith Estimate template. Mandatory for self-pay patients since January 2022. With flat published prices it takes minutes per patient, and if the final bill exceeds the estimate by $400 or more the patient can dispute it federally, so build the habit from day one.
• e-prescribing, only if you prescribe in a mandate state (California, New York, Florida and others): a standalone e-Rx tool runs about $30-80 per prescriber per month.
• What you do not need: a clearinghouse, eligibility checks, denial management, credentialing services. That entire industry exists for insurance billing, and you just opted out of it.

Data practices matter more than logos: encryption, audit trails, export of your data without ransom. Ask every vendor the questions on our security page and keep the answers in writing.

The realistic startup budget

Conservative totals for a solo practice, excluding your living expenses while you ramp:

Line	Telehealth-first	With physical office
Entity, filings, DBA, local licenses	$300-1,200	$300-1,200
Attorney + CPA setup hours	$500-1,500	$500-1,500
EIN + NPI 1 and 2	$0	$0
Malpractice + cyber + general liability (year 1)	$900-5,000	$1,300-13,000
Space, deposit, build-out	$0-1,000	$8,000-40,000
Equipment	$500-1,500	$2,000-15,000
Software (year 1: PM/EHR, payments setup, phone)	$800-2,000	$800-2,000
Website, Google Business Profile, initial marketing	$500-3,000	$1,000-5,000
Total	$3,500-15,000	$14,000-78,000

The spread is honest: a telehealth therapy practice genuinely opens for a few thousand dollars, and a procedural office in a major metro genuinely costs tens of thousands. What both have in common is that none of it goes to insurance infrastructure.

Add working capital on top: most new practices take 3 to 6 months to reach a full schedule, so budget living and operating expenses for that ramp separately. The clinics that struggle in month four are rarely the ones that overspent on furniture; they are the ones that spent the whole budget opening and kept nothing to survive the quiet first quarter.

The order of operations, compressed

1. Healthcare attorney consult, entity choice and formation
2. EIN, bank account
3. NPI type 2 (type 1 if you somehow lack it)
4. Malpractice bound, other policies quoted
5. License verifications, DEA if needed, local permits
6. Space decision, lease or telehealth setup
7. HIPAA paperwork, BAAs, policies
8. Software configured: schedule, prices, GFE template, superbill fields (NPI, EIN, your CPT list)
9. Payments live, test a booking end to end yourself
10. Google Business Profile, website, first availability published

Most solo practices that follow this order are seeing patients in 6 to 10 weeks, with the entity paperwork and malpractice underwriting as the slowest items. Start those two first and everything else fits in the gaps.

DrinCloud is the practice software for step 8: scheduling, charting, telehealth, reminders, payments and superbills from $49 a month, with the BAA included. Fifteen days free with sample data, no card: start here.

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