To start a life coaching business, choose who you will coach, pick a business structure, register the name and tax numbers your state asks for, insure the practice, set a price from the income you need, and write a one-page plan that ties it together. No US state licenses life coaches, so none of those steps involves a coaching license.

That last point matters, because it is where many new coaches lose weeks looking for a permit that does not exist. Coaching is not therapy, though. A coach who diagnoses or treats a mental health condition is practising counselling, which is licensed in every state. Our guide to life coach licensing covers that line in detail.

The steps to start a life coaching business, in order

The order matters more than it looks, because each step needs a decision from the one before it. A coach who builds a website before choosing a niche usually rewrites it, and one who sets prices before counting costs usually raises them within months. The sequence below avoids both.

Sequence / 6 stepsHow a coaching practice gets from idea to first invoiceEach step hands something to the next one
  1. 1

    Choose who you coach

    Name the group of people and the problem you help them with.

    Hands on a niche to build the offer around
  2. 2

    Pick a structure

    Decide between a sole proprietorship and an LLC.

    Hands on the name the business registers under
  3. 3

    Register and set up accounts

    File any trade name, get tax numbers and open a separate bank account.

    Hands on a business that can take payment
  4. 4

    Insure and write the contract

    Arrange liability cover and the agreement each client signs.

    Hands on the terms the price sits inside
  5. 5

    Set the price

    Work back from the income you need to a fee per session or package.

    Hands on an offer ready to sell
  6. 6

    Write the one-page plan

    Put the niche, offer, price, channels and costs on a single page.

None of the six steps is expensive, and most can be done in a few weeks alongside another job. The rest of this guide takes them one at a time, starting with the structure, which shapes everything that gets registered afterwards.

Choosing a business structure

Most new coaches choose between two structures. A sole proprietorship is the default, since anyone who starts trading without registering anything else is treated as one. An LLC, or limited liability company, is a separate legal entity that is registered with the state and usually protects personal assets from business debts.

The SBA's guide to business structures describes a sole proprietorship as a good choice for low-risk businesses and for owners who want to test an idea first. That describes many coaching practices in their first year. The trade-off is that business debts and claims can reach personal assets.

An LLC costs a state filing fee and some yearly paperwork, which varies widely by state. Many coaches start as sole proprietors and form an LLC once the practice has steady income, or sooner if they hold significant personal assets. An accountant in your state can tell you which suits your situation, and the advice is worth paying for once.

Registering the name, tax numbers and local permits

Once the structure is chosen, a short list of registrations follows. Requirements differ by state, county and city, so treat this as a checklist to confirm locally rather than a complete rule:

  • A trade name, if you trade under one. A sole proprietor using a name other than their own usually files a "doing business as" (DBA) name with the county or state.
  • Tax numbers. An EIN, the federal employer identification number, is free from the IRS and lets you keep your Social Security number off invoices. The SBA's page on tax ID numbers explains when one is required.
  • A general business license. Some cities and counties require one for any business, including a home-based practice. This is a business license, not a coaching license.
  • A separate bank account. Not a legal requirement for a sole proprietor, but it makes tax time and the self-employment tax far easier to manage.

Self-employment tax is the item that surprises new coaches most, because nobody withholds it. Our guide to life coach salary works through what it takes out of a year's revenue.

Insurance, contracts and the line between coaching and therapy

Coaching carries little physical risk, but it does carry the risk of a client claiming that advice caused them a loss. The SBA's business insurance guide lists professional liability insurance for service businesses, covering errors and negligence. Many coaches carry it alongside general liability, often bundled into one policy.

The contract does the other half of the protection. A good coaching agreement states what coaching is and is not, the fee and payment terms, the cancellation policy, confidentiality and its limits, and what happens if the client needs help beyond coaching. Our life coach contract template is a starting point to adapt with a local attorney.

That last clause is the one that keeps a practice on the right side of the law. When a client shows signs of depression, trauma or another condition that needs treatment, the coach refers them to a licensed professional. Saying so in writing before the first session protects the client and the coach.

Setting your first prices from the income you need

Pricing works best backwards. Start from what you want the practice to earn, add what it costs to run, and divide by the sessions you can realistically sell. The ledger below works an illustrative part-time practice through that calculation.

Worked number / 1 practiceWorking back from a target to a session feeAn illustration from stated assumptions, not a recommended price
Target earnings before taxWhat the coach wants from the practice$40,000
Running costsInsurance, software, website, training and marketing+$6,000
Revenue neededTarget plus costs$46,000
Sessions a year8 paid sessions a week for 46 weeks368
Fee per session$125

At eight sessions a week, $125 a session covers the costs and the target. At five sessions a week, the same target needs $200.

The number of paid sessions is the assumption that moves the answer most, so be conservative with it. Then check the fee against what coaches in your niche charge. If the market will not pay it, the fix is usually a different niche or a package, not a lower target.

A one-page life coach business plan

A lender may want a long, formal plan, but a coaching practice rarely borrows. What it needs is a plan short enough to reread every month. The SBA's business plan guide calls this a lean startup plan, and it fits on one page.

The seven parts below are what a one-page life coach business plan should answer. Each one takes a sentence or two, and together they replace the decisions made in the steps above.

Definitions / 7 partsWhat goes on a one-page coaching planA sentence or two for each, reread every month
Who
The specific group you coach, described so a stranger could recognise one.
Problem
What they want to change and what has stopped them so far.
Offer
The package you sell, its length and the result it aims at.
Price
The fee, and the sessions a week it assumes you will sell.
Channels
The two places your clients will hear about you, and how often you will show up there.
Costs
What the practice spends each year, line by line.
Next 90 days
A small number of clients to sign and the actions that should produce them.

The plan is a working document, not a pitch, and it should stay cheap to keep. Our free life coach business plan template lays out these parts with prompts.

Here at the Life and Career Institute, fewer than one in five of our graduates spend money on new software in their first year of practice, and the plan is a good reason to keep it that way until the costs line says otherwise.

How the course fits

The Life Coach Certification covers the coaching skills a practice depends on and the business setup that sits around them. In the Professional Course, Finding Your Specialty as a Life Coach covers the first step in this guide, and Creating Coaching Programs and Packages builds the offer that the price attaches to.

The Advanced Course adds Starting a Life Coach Business, which goes further into legal considerations, pricing and day-to-day operations, and Marketing Your Life Coaching Business, which fills in the channels line of the plan. Our guide on how to market yourself as a life coach is a good next read once the plan is written.