If you’re a marriage and family therapist, you SHOULD form a Marriage & Family Therapist Corporation taxed as an S-Corporation and cannot open as a traditional LLC.
California law prohibits marriage and family therapists from forming LLCs or a traditional general corporations for their marriage and family therapy practices. Instead, they 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 Board of Behavioral Sciences.
As a Business Lawyer for Professionals, I’ve assisted hundreds of professionals just like you start their Professional Corporation and I can definitely help you start yours.
If you’re a marriage and family therapist looking to start your Professional Corporation, email me at sam@mollaeilaw.com or talk to me directly at 818-925-0002
What is a Professional Marriage and Family Therapy Corporation
A Professional Marriage and Family Therapy Corporation is a professional corporation which is registered with the California Secretary of State and the California Board of Behavioral Sciences.
In California, all professional corporations must be registered with the corresponding governmental agency that is tasked to manage their profession.
California Professional Marriage and Family Therapy Corporations must hold a certificate of registration from the California Board of Behavioral Sciences.
3 Steps to Starting a Professional Marriage and Family Therapy Corporation
The 3 steps to starting a Professional Marriage and Family Therapy 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.
If you’re a family and marriage therapist looking to form your Professional Corporation, email me at sam@mollaeilaw.com or talk to me directly at 818-925-0002
Benefits Of Marriage and Family Therapy Corporation
Incorporating a Professional Marriage and Family Therapy 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 Marriage and Family Therapy Corporation
The Professional Marriage and Family Therapy Corporation’s name must include one of the following; “marriage,” “family,” or “child” together with one or more of the words: “counseling,” “counselor,” “therapy,” or “therapist.”
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 marriage and family therapy corporation is required to inform patients, at the outset of treatment, that the business is conducted by a marriage and family therapy 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 a “LLC” for the purposes of practicing marriage and family therapy, based on underlying Corporate Code concerning Professional Corporations.
Who Can Be A Shareholder Of The Professional Marriage and Family Therapy Corporation?
In a marriage and family therapy corporation, 51% of the corporation’s shares must be owned by a licensed marriage and family therapist. 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 clinical social workers, 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 Marriage and Family Therapy 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 marriage and family therapy in California or is legally disqualified from rendering professional services to the marriage and family therapy corporation, she must sell or transfer her shares to a qualified shareholder within 90 days of her ineligibility or disqualification.
Can A Marriage and Family Therapy Corporation Be Opened As An LLC In California
A Marriage and Family Therapy 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 marriage and family therapy.
For a marriage and family therapist to provide professional services in California, they must open a Professional Corporation.
Can A Professional Marriage and Family Therapy Corporation Use a DBA Or Fictitious Name?
In California, a Professional Marriage and Family Therapy Corporation can use a fictitious name so long as they file a fictitious business name statement within 40 days of starting the Professional Marriage and Family Therapy Corporation.
You must also make a fictitious name filing in every local county recorder’s office for which you are practicing. Also, Marriage and family therapy corporations may use fictitious business names, so long as such names are not false, misleading or deceptive.
How To Start a Marriage and Family Therapy Corporation
Here are the 9 steps you must take to form the California Professional Marriage and Family Therapy 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 “Marriage and Family Therapy”.
- Conduct a corporate meeting where you will issue shares and elect officials and directors for the Professional Marriage and Family Therapy Corporation
- Create custom Professional Marriage and Family Therapy 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 Marriage and Family Therapy 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
If you’re interested in forming your California Professional Corporation, email me at sam@mollaeilaw.com or talk to me directly at 818-925-0002
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 Marriage and Family Therapy Corporations and I can definitely help you with yours.
Looking to form your Professional Corporation? Email me at sam@mollaeilaw.com or talk to me directly at 818-925-0002
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