A lot of people who enter the mental health profession have a passion for helping marriages and families. This is why a lot of mental health professionals want to start their own private counseling practice. In California, licensed professionals are not allowed to form limited liability companies. Instead, they are only permitted to form either a sole proprietorship or a professional corporation. This article discusses the requirements and all the basics of forming a marriage and family therapy professional corporation.  

What is a Private Counselling Practice Corporation? 

A private practice therapy corporation in California is a type of professional corporation that is authorized by the California Secretary of State. There are three subtypes of private practices, namely: marriage and family therapy corporation, licensed clinical social worker corporation, and psychological professional corporation.  

What Government Agency Regulates Private Counseling Practice Corporations?  

All professional corporations need to be registered with the appropriate government agency that regulates their line of services. The Board of Behavioral Sciences is the regulatory agency in California responsible for licensing the following private practices: 

1. Licensed Marriage and Family Therapists (LMFT) 
2. Licensed Clinical Social Workers (LCSW) 
3. Licensed Educational Psychologists (LEP) 
4. Licensed Professional Clinical Counselors (LPCC) 

The Board of Behavioral Sciences creates rules and regulations that ensure competency in the mental health profession and the protection of consumers. Currently, the agency has over 100,000 active licensees and registrants. 

What are the California State Laws and Codes that Private Counseling Practices Must Abide by? 

All marriage and family therapy corporations must abide by these three California State Laws or Codes: 

1. California Corporations Code 
2. Business and Professions Code 
3. California Code of Regulations 

To read the full text of these laws, go to the end of this page! 

Common Questions Asked When Starting a Private Practice Therapy Corporation in California 

Our corporate attorneys have had a plethora of experiences in helping many clients form their own professional corporations. The most common questions asked when starting a private practice in California are: 

What are the requirements in naming a private practice professional corporation? 

The name of a marriage and family 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. Licensed marriage and family therapists must also inform their clients at the outset of treatment that the business is conducted by a marriage and family corporation. 

If the company is a licensed clinical social worker corporation, the name or names under which it is operating must contain the words: licensed clinical social worker. The enterprise should also inform its clients that the business is conducted by a licensed clinical social worker corporation.  

If the private practice is a psychological professional corporation, its name should have one or more of the following words: psychology, psychological, psychologist, psychology consultation, psychology consultant, psychometry, psychometrics, psychometrists, psychotherapy, psychotherapist, psychoanalysis, or psychoanalysts.  

Moreover, whether it is a marriage and family corporation, a licensed clinical social worker corporation, or a psychological professional corporation, the company’s name must include a word or abbreviation that is indicative of its corporate existence. 

Are private counseling practices in California allowed to use a DBA (Fictitious Name)?  

A Doing-Business-As or a fictitious business name is any name other than the corporate name stated in its Articles of Incorporation filed with the California Secretary of State. A private counseling practice that operates under a fictitious business name must not use any name that is false, misleading, or deceptive.  

If you plan to do business under a fictitious name, you need to perform a search through your city or county’s database to make sure that the name is not already in use, submit a fictitious business name form, and pay the nominal filing fee. 

Setting Up the Bylaws of a Private Practice Corporation in California 

The bylaws of a professional corporation are set up to make sure that the business functions efficiently and effectively. Part of a company’s bylaws is the regulations on who can be issued shares and who can be an officer or director in the corporation.  

Who can be a shareholder? 

In a marriage and family therapy corporation, 51 percent of the company’s outstanding shares must be owned by a licensed marriage and family therapist. The remaining 49 percent may be owned by licensed physicians and surgeons, licensed psychologists, licensed clinical social workers, registered nurses, licensed chiropractors, licensed acupuncturists, and naturopathic doctors. The number of these licensed persons cannot exceed the number of MFTs in the corporation, and cannot surpass a combined share total of 49 percent. 

In the same way, a licensed clinical social worker must own at least 51 percent of the outstanding shares in a licensed clinical social worker corporation. The remaining stocks may be owned by licensed marriage and family therapists, licensed physicians and surgeons, licensed psychologists, registered nurses, licensed chiropractors, licensed acupuncturists, and naturopathic doctors. The number of these licensed persons cannot exceed the number of licensed clinical social workers in the corporation, and cannot surpass a combined share total of 49 percent. 

In a psychological professional corporation, a psychologist must own at least 51 percent of the outstanding shares of the business, while the remaining 49 percent may be owned by licensed physicians and surgeons, licensed doctors of podiatric medicine, registered nurses, licensed optometrists, licensed marriage and family therapists, licensed clinical social workers, licensed chiropractors, licensed acupuncturists, and naturopathic doctors. The number of these licensed persons cannot exceed the number of psychologists in the corporation and cannot surpass a combined share total of 49 percent. 

Who can be an officer/director in a private practice corporation? 

All professional corporations in California are required to have directors and officers. If you are the sole stockholder of your company, then you must also be the director while serving as both the president and the treasurer of your business. In situations like this, the other officers in your corporation, such as the secretary, do not necessarily have to be licensed professionals. 

In cases wherein there are only two shareholders in your corporation, the two of you can be the directors of the company. You can also decide among yourselves to fill the offices of president, vice president, secretary, and treasurer of the corporation.  

In cases where there are more than two owners in your professional corporation, the owners must hold a board meeting and elect directors for the corporation. The owners can also elect officers or have the elected directors choose those who will serve as officers.  

Are there Additional Certificates/Documents When Forming a Private Practice Therapy Corporation? 

Certificate of Registration 

Private counseling practice corporations do not need a certificate of registration in order to operate in California.  

Filing with the Board of Behavioral Sciences 

To register your private practice corporation with the Board of Behavioral Sciences, go their official page at http://www.bbs.ca.gov. 

Full California Law- text