With the expansion and explosion of online coaching, many licensed therapists are looking to expand their reach into coaching, allowing them to serve individuals in a coaching capacity outside state (and even country!) lines. Unlike counseling, the coaching industry is largely unregulated, does not require any certifications, licenses, or qualifications, (though they are definitely encouraged) and does not limit individuals by state or country. Plus, many therapists are realizing they are extremely qualified to coach individuals, and are seeing it as an opportunity to serve more clients, broaden their scope, and expand on their current practice.
However, there are a few important legal considerations to keep in mind when adding coaching to the list of services therapists provide, as coaching is absolutely not the same as (nor a substitute for) therapy, and must operate as a completely different service. In order for a licensed therapist to succeed as a coach, whether he/she is closing the practice and moving entirely to coaching, or simply adding it as another service, there are a few key things to keep in mind, from a legal and business perspective, to make sure you don’t end up in trouble with your state licensing board. I always recommend that therapists check in with their state’s licensing board with any specific questions regarding how to legally operate a coaching business alongside a private practice.
Before beginning your coaching business, you’ll want to familiarize yourself with the general differences between coaching and counseling. The International Coaching Federation (ICF) defines coaching as “partnering with clients in a through-provoking and creative process that inspires them to maximize their personal and professional potential.” In other words, as a coach, you’re working with an objectively “healthy” individual, “inspiring” them to work toward a personal or professional goal, whether that be in health and wellness, relationships, business, or general personal development.
By contrast, Counseling or Therapy – as you all know – is much more rooted in the medical field, and is defined as form of treatment to an individual who has been diagnosed with a medical condition of some sort, and is working toward healing, becoming objectively healthy or whole again. Many have often noted a difference in the type of conversations that go on between therapists, versus that of coaches, citing therapy as an experience where the individual is asked to look into the past for hidden or unresolved issues, and to work toward healing those in order to become a successful person in the present. On the other hand, coaching is more present and future-based, working on inspiring in the here and now, and how the individual would like to proceed in the future.
In addition to the overall concepts, there are a few other legal and business considerations that are important:
1. Create a Separate Coaching Business Entity, so it’s totally separate from your Practice
One of the biggest principles to abide by when working as a therapist and a coach, is to completely separate your coaching business from your private practice, in all aspects of the business. This means, for those starting a coaching business, it’s a good idea to create a completely new business entity under which you will house your coaching. This could mean forming a new LLC, operating as a sole proprietor, or otherwise operating separately. In addition, I’d also recommend opening a separate bank account, just as you did with your private practice, as this is a completely new business venture, separate from your personal assets, and separate from your private practice. Additionally, many states have regulations regarding what types of business entities professional individuals may operate under; for example, in California, businesses which require a professional license, such as lawyers, therapists, physicians, etc., may not operate as Limited Liability Companies (LLCs) – they must be a Professional Corporation (PC). Other states allow for a Professional Limited Liability Company (PLLC). If you’re in one of those states, and operate your private practice under a professional entity, you’ll likely be able to create an LLC (or operate as a sole proprietor if you’d like) when serving as a coach. As always, I highly recommend speaking with a CPA or tax expert, as well as an attorney in your state to determine the right business entity and structure for your coaching business.
- Create a new, separate coaching website
This is the tip that usually gets the most grumbles from my audience, as most would like to simply add “coaching” as a service they offer to the website they already have going for their private practice. While this isn’t objectively wrong, it’s not ideal, and here’s why: remember our general principal that our coaching and therapy practice should remain 100% separate in all facets, so as to avoid confusion in services. Keeping this in mind, offering these services on the same website may cause potential patients or clients to become confused about the services, and when each may be right for them.
For example, let’s say potential patient Carol finds your website after recently being diagnosed with depression, looking for a counselor to help her through this time. While on your website, she stumbles onto the “coaching” tab and begins reading about how you work with coaching clients. Carol may become confused about which service she needs, and end up purchasing a coaching course or other coaching package from you, perhaps because it’s more cost effective, doesn’t require her to come in for sessions, or any number of reasons. When that occurs, Carol may now not get the treatment she needs, simply because she strayed off path into your coaching services, and ended up in the wrong place.
When your coaching website is completely separate from your private practice, these potential confusion cases are greatly reduced, if not eliminated. Those who are looking for coaching will be able to seek you out there, and those looking for therapy will be able to find your private practice site.
- Coaching Certification
While not mandatory, many state license boards recommend or look highly upon therapists obtaining a coaching certification in order to provide coaching services. The theory behind this, is that you are already educated and licensed in therapy, with all the required qualifications, and it would serve you and the board well to also become certified in the additional form of services you’re looking to provide. Plus, obtaining this additional education and training will likely allow you to learn even more about coaching and how it differs from therapy, so you are better equipped to provide these services (and not veer over into counseling) when working with coaching clients.
As a therapist, you likely have all the required documentation needed to operate your private practice. (If not, look into hiring an attorney to draft these for you ASAP!) When starting a coaching business, it’s equally important to obtain the correct documentation, which will be different from your private practice documents. If you find you need some or all of these documents, I do offer a Legal Bundle for Therapists Offering Coaching Services, which includes the top 6 documents needed, drafted specifically for therapist offering coaching services. FIND MORE INFO HERE. Here’s a basic rundown of what you may need:
B) Coaching client agreement
This is likely the most important document you will need in your coaching business. This document outlines exactly what you are providing to your coaching client, as well as all relevant terms, including payment, any payment plans you offer, how disputes will be resolved, etc. It also includes all your disclaimers, including those which advise your client that while you are a licensed counselor, your coaching services do not include any counseling, are not a substitute for counseling, and bear no similarities to counseling treatment. It also advises them that during your work with them, if you determine they are in need of treatment, not coaching, you will cease your work with them and point the in the direction of a therapist (or type of therapy) they should obtain. The importance of this document cannot be understated. This is NOT something you want to try and draft yourself, piece together from things you find online, or use from someone else. You need something drafted specifically for therapists offering coaching services!
- Do not mix coaching clients with private practice patients
If someone is a patient of yours, they cannot be a coaching clients, and vice versa. If you are coaching someone and you see, based on your experience and expertise, that they are in need of counseling, do not simply begin counseling them – refer them to someone in their area, or advise them you are pausing the coaching work until they can be treated by a local therapist in their area.
- Market yourself as a coach, not a therapist
Often times I’m asked how or when a therapist may use his or her credentials and licenses in marketing as a coach. While there is no black and white answer – my recommendation is this: you do not need to hide or lie about your credentials, so it’s okay to keep the letters at the end of your signature, or answer honestly if someone asks about your credentials. However, do not use the credentials as a marketing method in order to obtain coaching clients. In other words, don’t market yourself as a credible coach because of your therapy background, even if that might absolutely make you more qualified as a coach than another individual with no training.
instead of doing this, focus on your years of experience working with individuals in a 1:1 capacity, guiding them toward their goals. Have 20 years of experience as a therapist, working with a specific type of individual or problem? Focus on that! Tell your coaching audience that you have 20 years of experience working with the exact problem they’d like support on, without using your degrees or licenses to lure people to your coaching.
Overall, the biggest thing to keep in mind is the separation. If you are always thinking from that mentality, and ensuring your coaching services and therapy practice do not overlap, merge, or blend, you’re off to a good start. Congratulations on your new coaching business!
Disclaimer: While I am a licensed attorney with knowledge and education in this field, this article does not constitute legal advice, nor am I your attorney. No attorney-client relationship is formed by you reading this post. Please consult an attorney in your state for personalized legal advice.