If you’re a licensed clinical social worker, you SHOULD form a Clinical Social Worker Corporation taxed as an S-Corporation.
California law prohibits licensed clinical social workers from forming LLCs or a traditional corporations. Instead licensed clinical social worker practices must register as a Professional Corporation.
If done incorrectly, your Professional Corporation can be rejected by the Secretary of State, leaving you vulnerable to potential lawsuits and fines from various government agencies, and even the California State Board.
As a Business Lawyer for Professionals, I’m assisted hundreds of professionals just like you start their Professional Corporation and I can definitely help you start yours.
Licensed Clinical Social Worker Corporation
A Professional Licensed Clinical Social Worker Corporation Corporation is a professional corporation which is registered and hold a certificate with the California Secretary of State and the California Board of Behavioral Sciences.
3 Steps to Starting a Professional Licensed Clinical Social Worker Corporation
The 3 steps to starting a Professional Licensed Clinical Social Worker Corporation are:
- File the Articles of Incorporation of a Professional Corporation with the Secretary of State to form the Professional Corporation
- Notify your Profession’s state agency that manages your profession, hold a Board of Director’s Meeting and appoint directors, get your Professional Corporation Bylaws drafted, apply for your EIN, file your Statement of Information, file Form 2553 for S-Corporation tax election, pay California corporate taxes to the California Franchise Tax Board, register with the EDD if you will be hiring employees, and apply for local business registration and licenses.
- Do all the steps above yourself or hire a Business Lawyer to do everything for you.
Benefits of Starting a Professional Licensed Clinical Social Worker Corporation
Incorporating a Professional Licensed Clinical Social Worker Corporation in California will limit your personal liability against creditors and lawsuits, minimize the self-employment taxes of the shareholders, allow you to build corporate business credit, and much more.
Name Requirements of a Professional Licensed Clinical Social Worker Corporation
The Professional Licensed Clinical Social Worker Corporation’s name must include the words “licensed clinical social worker.”
It must also include a corporate ending such as: “A Professional Corporation”, “Professional Corporation”, “APC”, “A.P.C.” “PC”,”P.C.”,”Prof. Corp.”,”Inc.”, “Incorporated”, “Corporation”, “A California Professional Corporation” or words or abbreviations which denote its corporate existence.
A Licensed Clinical Social Worker is required to inform patients, at the outset of treatment, that the business is conducted by a Licensed Clinical Social Worker corporation. This information may be noted in the Disclosure Statement or the Informed Consent Form.
Also, “LLC” is not permitted as a corporate designation, and California does not certify an “LLC” for the purposes of practicing Licensed Clinical Social Work, based on underlying Corporate Code concerning Professional Corporations.
Who Can Be A Shareholder Of The Professional Licensed Clinical Social Worker Corporation?
In a Licensed Clinical Social Worker corporation, 51% of the corporation’s shares must be owned by a licensed clinical social worker. The remaining 49% of the outstanding shares can be owned by one of the following licensed professionals in California: licensed physicians and surgeons, licensed psychologists, licensed marriage and family therapists, registered nurses, licensed chiropractors, licensed acupuncturists, or naturopathic doctors.
Any shares issued to others who do not are not the professionals listed above are void.
Also, shares in the Professional Licensed Clinical Social Worker Corporation may only be transferred to those who are licensed to practice marriage and family therapy, to a shareholder of the corporation or to the professional marriage and family therapy corporation itself.
If a shareholder becomes ineligible to practice licensed clinical social work in California or is legally disqualified from rendering professional services to the Licensed Clinical Social Worker corporation, she must sell or transfer her shares to a qualified shareholder within 90 days of her ineligibility or disqualification.
Can A Licensed Clinical Social Worker Corporation Be Opened As An LLC In California?
A Licensed Clinical Social Worker Corporation can’t be opened as an LLC in California. The California Corporations Code does not certify LLCs (Limited Liability Companies) for the purpose of practicing licensed clinical social work.
For a licensed clinical social worker to provide professional services in California, they must open a Professional Corporation.
Can a Professional Licensed Clinical Social Worker Corporation Use a DBA Or Fictitious Name?
In California, a Licensed Clinical Social Worker Corporation can use a fictitious name so long as they file a fictitious business name statement within 40 days of starting the Licensed Clinical Social Worker Corporation.
You must also make a fictitious name filing in every local county recorder’s office for which you are practicing.
Also, Licensed Clinical Social Worker corporations may use fictitious business names, so long as such names are not false, misleading or deceptive.
How To Form A California Professional Licensed Clinical Social Worker Corporation
- File the Articles of Incorporation with Secretary of State and pay the filing fee. The filing fee is currently $100. You must also state within its Articles of Incorporation that its purpose is “Clinical Social Work”.
- Register the Corporation with the California Board of Behavioral Sciences by providing the Board with an original proof of your Articles of Incorporation from the Secretary of State.
- Conduct a corporate meeting where you will issue shares and elect officials and directors for the Professional Licensed Clinical Social Worker Corporation
- Create custom Professional Licensed Clinical Social Worker Corporation bylaws
- Apply for an EIN
- File the Statement of Information with the Secretary of State
- File Form 2553 for S-Corporation Tax Election for the Professional Licensed Clinical Social Worker Corporation
- Pay California Corporate Taxes and Fees to the California Franchise Tax
- Register with the EDD if you will be hiring employees
- Apply for local business registration and licenses
What To Do Next
While these following these steps above might seem straight forward, one mistake while creating your Professional Corporation can cause your corporation to be rejected by the Secretary of State, costing you money and time.
As a Business Lawyer for Professionals, I’ve assisted hundreds of professionals just like you start their Professional Licensed Clinical Social Worker Corporations and I can definitely help you with yours.
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