Forming a professional corporation in California allows therapists to practice with certain legal and tax advantages. See more about corporations in general.

Therapists in California who have a private practice and want to form a corporation must follow certain specific requirements.

What type of structure can California therapists practice under?

Therapists in California who want to practice as other than a sole proprietor must form a Professional Corporation (PC).¹Moscone-Knox Professional Corporation Act They may not practice under a regular corporation or an LLC.

Are there any restrictions on the ownership and management of a professional therapy corporation?

At least 51% of the corporation’s shares must be owned by individuals licensed in the same profession (e.g., LMFTs). The remaining shares (up to 49%) may be owned by professionals in compatible healing arts, such as licensed psychologists, LCSWs, or physicians, provided the BBS permits these affiliations.

Only licensed professionals may serve as officers, directors, or shareholders.

What are the naming requirements for corporations for California therapists?

Each license type has slightly different requirements for the corporate name. Also, if you want to operate under a name that is different from the corporate name, most license types must also inform clients that the business is conducted by a professional corporation.

Marriage and Family Therapists

The name of a marriage and family therapy corporation must contain:

• one or more of the words: “marriage,” “family,” or “child” together with one or more of the words “counseling,” “counselor,” “therapy,” or “therapist,” and
• wording or abbreviations denoting corporate existence.²BPC Sec 4987.7

If practicing under a fictitious name (other than the corporate name), the therapist must inform the client, prior to the commencement of treatment, that the business is conducted by a marriage and family therapy corporation.³BPC Sec 4987.7

Clinical Psychologists

The name of a psychological corporation and any name or names under which it may render professional services must contain:

• one of the words: “psychology,” “psychological,” “psychologist,” “psychology consultation,” “psychology consultant,” “psychometry,” “psychometrics” or “psychometrist,” “psychotherapy,” “psychotherapist,” “psychoanalysis,” or “psychoanalyst,” and
• wording or abbreviations denoting corporate existence.⁴BPC Sec 2998; Section 2902(c)

Professional Clinical Counselors

The name of a professional clinical counselor corporation and any name or names under which it may be rendering professional services must contain:

• the words “licensed professional clinical counselor” or “professional clinical counselor” and
• wording or abbreviations denoting a corporate existence.

If practicing under a fictitious name (other than the corporate name), the therapist must inform the client, prior to the commencement of treatment, that the business is conducted by a professional clinical counselor corporation.⁵BPC Sec 4999.125

Clinical Social Workers

The name of a licensed clinical social worker corporation and any name or names under which it may be rendering professional services must contain:

• the words “licensed clinical social worker” and
• wording or abbreviations denoting corporate existence.

If practicing under a fictitious name (other than the corporate name), the therapist must inform the client, prior to the commencement of treatment, that the business is conducted by a licensed clinical social worker corporation.⁶BPC Sec 4998.2

Further Resources

Guide to Legal and Ethical Requirements for Therapists in California

Guide to the Laws and Regulations for California Therapists in Private Practice

Informed Consent and Client Agreements for Therapists

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