More About Professional Corporations

Helping others through social work is a calling, and whoever wants to enter this profession must have the passion to pursue this call. In their desire to grow in their profession, many licensed clinical social workers decide to put up their own businesses. Starting an LCSW private practice in California is similar to starting any professional corporation — a proper legal process has to be followed correctly. Otherwise, a plethora of legal problems will arise later on.

What is a Licensed Clinical Social
Worker Corporation?

A Licensed Clinical Social Worker corporation is a professional corporation registered with the California Secretary of State. This specific type of professional corporation is engaged in rendering the professional services of a Licensed Clinical Social Worker.

What Government Agency Regulates LCSW Corporations?

The California Corporation Code § 13401(b) requires all professional corporations to be registered with the government agency that manages their respective profession. All LCSW private practices are regulated by the California Board of Behavioral Services. Licensed clinical social workers must abide by the rules and regulations of this government agency, in order to avoid sanctions and penalties.

Client Question: I’m a licensed clinical social worker based in San Diego. I was planning to start my own LCSW private practice in California. A few of my friends have recommended that I do all the paperwork and incorporation online, rather than through an attorney. They say it is faster and saves a lot of money. Is this a good idea?

Most professionals would agree that it makes sense to have a professional help you form your corporation as it will be the foundation of your business. If there is any mistake or anything lacking in the process of forming your company, you are setting yourself up for a ton of legal problems that will arise in the future. These problems might cost you more than hiring a corporate attorney in the first place. To help you start an LCSW private practice in California, contact an attorney experienced in forming a Licensed Clinical Social Worker Corporation. Click here!
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Considerations When Starting a Licensed Clinical Social Worker Professional Corporation in California

If you’re starting an LCSW private practice in California, you need to keep in mind the following considerations:

What are the California State Laws that Regulate the Formation of a Licensed Clinical Social Worker Corporation?

Registered LCSW private practices in California must abide by the following State laws and codes:

California Corporations Code

Business and Professions Code – The Licensed Clinical Social Worker Practice Act is in the California Business and Professions Code starting with Section 4998.

California Code of Regulations

It is important to seek the counsel of an expert corporate lawyer regarding the interpretation and application of these laws and codes so that the company can adhere to them accordingly.

Go to the last section of this page to read about these State laws.

Need help naming your LCSW private practice? Talk with a Professional
Corporation specialist!

Naming a Startup LCSW Private Practice in California

The name of the licensed clinical social worker corporation must comply with the California Business and Professions Code 4998.2. The chosen business name must contain the words “licensed clinical social worker” and wording or abbreviations denoting corporate existence.

Changing Your LCSW Corporation Name  

You are permitted to change your corporation name as long as you follow these state laws:  

  • 4998.2. NAME Notwithstanding Section 4996: your corporation name includes the words “licensed clinical social worker” and wording or abbreviations denoting corporate existence.  
  • 16 CCR § 1850.6 Name of Corporation. The wording or abbreviation denoting corporate existence shall be limited to one of the following: “Professional Corporation,” “Prof. Corp.,” “Corporation,” “Corp.,” “Incorporated,” or “Inc.” 

Here’s an example of a business name to help guide you: ‘Integrative Counseling, a Licensed Clinical Social Worker Corporation”. This name meets the state laws as it includes the word “licensed clinical social worker” and an abbreviation denoting corporation existence.  

Are LCSW Professional Corporations Permitted to Use a DBA or Fictitious Name?

According to the California Board of Behavioral Services, LCSW private practices are allowed to use a fictitious name or a “Doing-Business-As.”, on the condition that the fictitious business name shall not use a name that is false, misleading, or deceptive, and shall inform the patient, prior to the commencement of treatment, of the name and license designation of the owner or owners of the practice. 

We also recommend that you communicate with the enforcement division of the California Board of Behavioral Sciences if you want to use a fictitious name that does not comply with state law and get their consent in writing so if you’re challenged in the future, you have something to defend yourself. 

The Exact State Laws 

Here are the exact state laws in creating a corporation name for your corporation:  

  • 4998.2. NAME Notwithstanding Section 4996, the name of a licensed clinical social worker corporation and any name or names under which it may be rendering professional services shall contain the words “licensed clinical social worker” and wording or abbreviations denoting corporate existence. A licensed clinical social worker corporation that conducts business under a fictitious business name shall not use any name which is false, misleading, or deceptive, and shall inform the patient, prior to the commencement of treatment, that the business is conducted by a licensed clinical social worker corporation. 
  • 16 CCR § 1850.6 Name of Corporation. The wording or abbreviation denoting corporate existence shall be limited to one of the following: “Professional Corporation,” “Prof. Corp.,” “Corporation,” “Corp.,” “Incorporated,” or “Inc.” 
  • 4992.10. FICTITIOUS BUSINESS NAME A licensed clinical social worker who conducts a private practice under a fictitious business name shall not use a name that is false, misleading, or deceptive, and shall inform the patient, prior to the commencement of treatment, of the name and license designation of the owner or owners of the practice.

Does my Incorporation Name have to be on my website?  

We recommend that you have the words “licensed clinical social worker” placed prominently throughout your website.

Setting Up the Bylaws of the Licensed Clinical Social Worker Professional Corporation

All professional corporations in California need to have bylaws established so that they can operate efficiently. These bylaws must be created at the formation of the LCSW private practice. Without a clear set of bylaws, a licensed clinical social worker private practice can potentially face many corporate problems in the future.

Understanding Who Can and Can’t Be a Shareholder or Owner in a Licensed Clinical Social Worker Private Practice in California

Who can be a Shareholder of an LCSW Private Practice?

Shares of a licensed clinical social worker professional corporation can be sold to individuals who are legally licensed by the California Board of Behavioral Services. Only licensed persons as defined in the Moscone-Knox Professional Corporation Act can be shareholders of the company.

 

Client Question: If my husband was the owner of a clinical social worker business, would he then be able to be a 1099 qualified therapist? Considering he isn’t a therapist.

No, only a licensed licensed clinical social worker can own shares in a clinical social worker corporation in California. The therapist needs to be an employee or incorporated themselves. If you are looking into independent contractors, you can view more about the Dynamix Ruling here and how it affects independent contractors in general. However, since professional services operating in California have more precise rules with who can work in their field, be share owners, etc. we highly recommend you consult with a specialist lawyer.

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Who can be an Officer or Director in a Licensed Clinical Social Worker Corporation in California?

The officers and directors are dependent on the number of shareholders of the licensed clinical worker corporation. An LCSW professional corporation that has only one shareholder needs to have only one director who shall be such a shareholder and who shall also serve as the president and treasurer of the corporation. The other officers of the corporation in such a situation need not be licensed persons. On the other hand, an LCSW private practice that has only two shareholders need to have only two directors who shall be such shareholders.
The two shareholders between them shall fill the offices of the president, vice president, secretary, and treasurer.

Is there a Need for a Certificate of Registration as a Licensed Clinical Social Worker Corporation?

No, there isn’t. Any professional corporation or foreign professional corporation rendering professional services by persons duly licensed by the California Board of Behavioral Services is not required to obtain a certificate of registration.

Full California Law for Licensed Clinical Social Worker’s Business Entities

Expert Corporate Lawyer Can Help in Starting an LCSW Private Practice in California

Incorporation Attorney is a trusted firm of corporate lawyers well-experienced in the formation of licensed clinical social worker professional corporations. If you’re starting your own LCSW private practice in California, our team can help you complete the formation process correctly and successfully. Give us a call today at +1 (714) 634-4838!