Office expenses represent a significant expenditure for most practitioners. Consider whether you can justify your costs in this area. Margaret Norris, PhD, a psychologist in independent practice in College Station, Texas, says that having a large office in a high-rent district doesn’t necessarily translate into increased income. She touts the benefits of having a less sizeable office in a well-managed building, in a location that is easily accessible to clients. “I could be spending twice as much in rent and I don't believe it would produce any more income than what I earn now,” says Norris.
Setting up a home office where you can handle administrative tasks can significantly reduce your overhead costs. Similarly, some psychologists find that they can see clients in an office connected to their residence. In both cases, you may be able to claim tax deductions for your use of the space.
Carol Lee Hilewick, PhD, a psychologist in private practice in Silver Spring, MD, has significantly cut back on expenses by having a home office. “In a high-cost area like Washington, DC, having an office of any size or quality can eliminate most profits,” says Hilewick. “The best thing I did to save money was to purchase a two-story home. I live upstairs, and the downstairs, which is above-ground, is dedicated to my office space. The layout is that of a professional office, which has a totally separate entrance.” Hilewick adds that while this arrangement offers benefits, she is careful to set up boundaries with her clients and to separate her professional life from her home life.