Reference · statute, regulation and the filing itself · read 11 September 2026
The entity a California therapist can actually form, and the three rules that differ by license.
A professional corporation is the only corporate form open to a California-licensed therapist, and three of its rules are written per license rather than once: what the corporation may be called, who may hold shares in it, and how fast those shares must move when an owner dies or stops being licensed. The filing itself is short — one online form and a fee — and it is the part people spend the most time on.
What it may be called →What it may be called
The name is a statutory formula, not a branding decision.
Each license has its own naming statute, and the Secretary of State will not fix a name that does not meet it. The formula is strict for marriage and family therapy corporations and strict in a different way for the other two: one is a choice of words from two lists, the others are a required phrase.
| Corporation | Section | The name must contain |
|---|---|---|
| Marriage and family therapy corporation | §4987.7 | One or more of marriage, family or child, together with one or more of counseling, counselor, therapy or therapist. |
| Licensed clinical social worker corporation | §4998.2 | The words licensed clinical social worker, in the corporate name and in any name under which it renders professional services. |
| Professional clinical counselor corporation | §4999.125 | The words licensed professional clinical counselor or professional clinical counselor. |
All three sections then add the same duty for a fictitious business name: it may not be false, misleading or deceptive, and the patient must be told before treatment begins that the business is conducted by that kind of corporation. 16 CCR §1850.6 closes the list of wording that may denote corporate existence: Professional Corporation, Prof. Corp, Corporation, Corp, Incorporated, or Inc.
The one entity that is not on the table
A California-licensed therapist cannot render professional services through a limited liability company — Corporations Code §17701.04(e) bars it for professions licensed under the Business and Professions Code. That is its own page: why the answer is never an LLC, and what the real choice is.
Who may own it
Other professions may hold a minority, and the minority has two ceilings.
| Corporation | Where the list lives | Who else may hold shares, be an officer or a director |
|---|---|---|
| Marriage and family therapy corporation | §13401.5(g) | Physicians and surgeons · psychologists · clinical social workers · registered nurses · chiropractors · acupuncturists · naturopathic doctors · professional clinical counselors · midwives |
| Licensed clinical social worker corporation | §13401.5(h) | Physicians and surgeons · psychologists · marriage and family therapists · registered nurses · chiropractors · acupuncturists · naturopathic doctors · professional clinical counselors |
| Professional clinical counselor corporation | §13401.5(o) | Physicians and surgeons · psychologists · clinical social workers · marriage and family therapists · registered nurses · chiropractors · acupuncturists · naturopathic doctors · midwives |
Two limits apply to every name on these lists at once: the shares they hold together may not exceed 49 percent of the total, and they may not outnumber the shareholders licensed by the board that regulates the corporation. A single-owner practice reaches neither limit; a partnership across professions reaches both quickly.
§13401.5 permits the arrangement “so long as the sum of all shares owned by those licensed persons does not exceed 49 percent of the total number of shares”. It is a ceiling on the group, not on each person.
The same sentence adds that the number of those licensed persons owning shares may not exceed the number of persons licensed by the agency that regulates the corporation. Two marriage and family therapists may bring in at most two others, whatever the percentages say.
Corp. Code §13403: one shareholder means one director, who is that shareholder and who also serves as president and treasurer — and the other officers need not be licensed. Two shareholders means two directors, who between them fill president, vice president, secretary and treasurer.
16 CCR §1850.7: shares may be issued or transferred only to the issuing corporation or an appropriately licensed person; a deceased shareholder’s shares are sold within six months, and a shareholder who becomes disqualified for more than 90 days has theirs sold within 90 days of the disqualification. The restriction belongs in the bylaws or articles, and the share certificates carry a legend that says so.
B&P §4988 and its counterparts: income attributable to professional services rendered while a shareholder is a disqualified person “shall not in any manner accrue to the benefit of that shareholder or his or her shares”. A suspended license is not a quiet pause in a practice’s ownership.
Each of the three articles says so in its own definition section, which is why the Board’s regulations — the name wording in 16 CCR §1850.6 and the share rules in §1850.7 — reach a corporation the Secretary of State filed.
What is actually filed
One form, one fee, and a second form ninety days later.
The Secretary of State’s own forms page lists “Articles of Incorporation - Professional” as online only, at a fee of $100.00. The general-stock articles are a different filing; a professional corporation uses this one.
16 CCR §1850.7(d) requires the transfer restriction, and where it applies the death and disqualification rule, to be set forth in the bylaws or the articles — and §1850.7(f) requires the certificates to carry either the restriction itself or a legend pointing at the provision that holds it. This is the part to have drafted rather than downloaded.
“Statement of Information - Domestic and Foreign Stock”, the Secretary of State’s page says, is due within 90 days of initial registration and every year thereafter, online only, at $25.00. Annually, not biennially — the two-year cycle on that page belongs to nonprofit corporations.
A separate bank account and books; payroll, if there is a salary; the professional liability cover the Board’s own regulation contemplates for these corporations; and the annual formalities that keep the entity real. None of that is filed with the Secretary of State, and all of it is what the entity is for.
What the corporation does to a tax return is a separate question with its own pages: the S-corp salary decision, the California SDI consequence for a corporate officer, and the tax strategy page that holds the whole picture. Forming the entity does not by itself change a federal tax classification; an S-corp election is a separate filing with the Internal Revenue Service.
Then what
The pages around this one.
The entity question
Why not an LLC
The bar, the alternatives, and what people mean when they say their accountant told them otherwise.
Where every figure came from
Sources.
The naming and ownership statutes
- Business and Professions Code §4987.7, the marriage and family therapy corporation name
- Business and Professions Code §4998.2, the clinical social worker corporation name
- Business and Professions Code §4999.125, the professional clinical counselor corporation name
- Business and Professions Code §4987.8, directors, shareholders and officers
- Corporations Code §13401.5, which other licensees may hold shares, and the 49 percent limit
- Corporations Code §13403, the one- and two-shareholder corporation
- Corporations Code §17701.04, the limited liability company bar
The Board’s regulations
The filing itself
- California Secretary of State, Corporations – California (Domestic): Articles of Incorporation – Professional, online only, $100.00; read 11 September 2026
- California Secretary of State, Corporations – Statement of Information: Domestic and Foreign Stock, within 90 days and every year thereafter, $25.00; read 11 September 2026
- California Secretary of State, bizfile Online, where the filing is made
Statutory language is quoted from the sections linked, read on 11 September 2026, and the Board’s regulations from its own compilation because the California Code of Regulations is not published on leginfo. The two fees are the Secretary of State’s published figures on the day they were read and change without notice here. Whether to incorporate, how to draft bylaws, and how an entity interacts with a particular tax position are questions for the reader’s own attorney and tax professional; this page is not legal or tax advice.
