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Can An LCSW Have An LLC In California?

An LCSW or a licensed clinical social worker provides mental healthcare in our society. The person uses personalized treatment plans and prevention schemes to help people cope with hardships.

If you have completed your MSW, clinical hours (supervised), and finally obtained the license, your next task is to establish a private practice.

But can an LCSW have an LLC in California without any hurdle? What does the law in the State say about this decision? Read on to discover more on the topic.

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Can An LCSW Have An LLC in California?

The answer is no. Then what should you do? Let us explain everything step by step for you to understand in one go.

LLC

Sometimes we make up our minds without realizing what the terms mean. LLC is known as a Limited Liability Company.

It is like a structure where the owner cannot be held personally liable for the company’s liabilities or debts.

This is why we often opt for LLCs when setting up a private practice. However, LLC is not a corporation despite acting as one.

Nevertheless, California law prohibits most LLC-based establishments in the medical, psychology, or behavioral sciences sector.

LCSW And LLC

Since LCSW falls under the Behavioral Sciences sector, an LCSW cannot practice within an LLC structure or traditional corporation in California.

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How Can An LCSW Set Up Practice?

The shortcut to this question is by forming a Licensed Clinical Social Worker Corporation. It should be taxed as an S-Corp.
It might sound unclear if you do not go into detail.

Professional Corporation

Clinical Social Worker Corporation is within the Professional Corporation. So a little insight can help you further.

It allows you to provide clinical services professionally after attaining a certain license, certificate, or registration.

Remember that the Secretary of State can reject your form for an incorrect step in registering for Professional Corporation. You can also be accountable for fines and lawsuits via government agencies.

Government Agency

The government agency is conducted according to the California Corporation Code. Its job is to oversee your profession to correspond with the professional corporation.

Government agencies can file lawsuits against you or hold you responsible for penalties if you fail to adhere to their rules and regulations.

California Board of Behavioral Sciences

You must have a certificate from this sector as well. In short, you must get a Professional Licensed Clinical Social Worker Corporation (a professional corporation).

It must be registered with both the California Secretary of State and the California Board of Behavioral Sciences.

Consequently, you will acquire a certificate after registration.

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Advantages of Professional Licensed Clinical Social Worker Corporation

It is alright if you cannot get LLC because Professional Corporation provides benefits too:

  • It can protect personal assets if a party sues the service. So, your private properties will be secure from personal liability claims since they are unrelated to the professional service.
  • Your corporation will achieve minimization in income tax during self-employment.
  • It provides the ability to build corporate business credit.
  • Only the corporation is accountable for debts, losses, or obligations as it is treated as a natural person.

Who Is Entitled to Be Shareholder in Professional LCSW Corporation?

The eligibility of owning a professional LCSW corporation is slightly tricky but not too complex either. You just have to understand the concept of shareholders and the number of shares they can own.

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Professional LCSW Corporation Owner

According to California State law, only a licensed clinical social worker can become the owner of the corporation. Of course, you can have partners in the business but within the regulation.

Only the following licensed professionals can become your fellow shareholders:

  • Physicians
  • Surgeons
  • Psychologists
  • Registered nurses or RN
  • Marriage and family therapists
  • Naturopathic doctors
  • Acupuncturists
  • Chiropractors

Share Percentage

Pay close attention to this section. If you are an LCSW, you must own 51% of the shares or be the 51% shareholder. This will allow you to become the corporation’s director, president, or treasurer.

Now, suppose you have a partner who is licensed in one of the listed professions. He/she can own only 49% of the shares. It is how the California law acts.

The short version is the LCSW must have 51% of shares in the Professional LCSW Corporation, while the rest of the shareholders must not exceed 49%.

Anyone without the listed licensed professionals with the shares will become void automatically.

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Transferring Share

One of the current shareholders can only transfer his/her shares to a corporation shareholder, marriage and family therapy corporation itself, or marriage and family therapists within the corporation.

On the other hand, a shareholder must sell his/her shares to an eligible shareholder within ninety days if the person has been legally disqualified or become unentitled to practice LCSW.

Conclusion

So can an LCSW have an LLC in California? Even though the answer to this question is quite broad, it is wise to know everything in detail if you want to practice LCSW legally.

We hope the guide has assisted you with a quick revision of the overviews. However, we recommend you consult a business attorney for further information.

 

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