Choosing the right business structure is a crucial decision for solo licensed professional clinical counselors in California. The choice of business entity determines how the clinical counseling practice is taxed, the extent of personal liability protection and personal asset protection available to the licensed professional clinical counselor, and the administrative requirements the licensed professional clinical counselor will need to manage in operating the clinical counseling practice.

A future article titled “What are the Business Structure Options for Two or More Licensed Professional Clinical Counselors in California?” will discuss the additional options available when two or more licensed professional clinical counselors start practicing clinical counseling together, however, for licensed professional clinical counselors practicing clinical counseling solo in California, the options are limited to sole proprietorships and California Licensed Professional Clinical Counselor Corporations.

This article provides an overview of the various business structure options available to licensed professional clinical counselors practicing clinical counseling solo in California, helping these licensed professional clinical counselors to make an informed choice that aligns with their professional goals and liability concerns in the most tax efficient format possible.

Executive Summary: Putting the Conclusion First for Busy Licensed Professional Clinical Counselors

Summary of Practicing Clinical Counseling as a Sole Proprietor

The primary benefit of a sole proprietorship for licensed professional clinical counselors is its simplicity. There are few legal formalities to establish a sole proprietorship and tax reporting is equally straightforward. However, a sole proprietorship is not a separate legal entity, which means that licensed professional clinical counselor sole proprietors are personally liable for all debts, liabilities, obligations, and legal judgments (including malpractice liability) against their clinical counseling practice. The lack of a separate legal entity also means there is no distinction between personal and professional business assets for licensed professional clinical counselor sole proprietors, so the debts, liabilities, and legal judgments for which the licensed professional clinical counselor sole proprietor is liable are satisfied from the personal assets of the licensed professional clinical counselor.

Summary of Practicing Clinical Counseling with a California Licensed Professional Clinical Counselor Corporation

While inherently more complex than licensed professional clinical counselor sole proprietorships, the complexity of a California Licensed Professional Clinical Counselor Corporation may be reduced by working with the experienced corporate attorneys at San Diego Corporate Law. As a separate legal entity, California Licensed Professional Clinical Counselor Corporations significantly reduce liability risks and are more tax efficient for most licensed professional clinical counselors. For licensed professional clinical counselors in high-liability practices, this reduction in risk can be substantial. The separate legal entity status of California Licensed Professional Clinical Counselor Corporations also means there is a distinction between personal and professional business assets for the licensed professional clinical counselor, meaning the debts, liabilities, and legal judgments against the clinical counseling practice are not generally satisfied from the personal assets of the licensed professional clinical counselor.

Choosing Between a Sole Proprietorship and a California Licensed Professional Clinical Counselor Corporation

For most licensed professional clinical counselors, the California Licensed Professional Clinical Counselor Corporation is the right chose because the tax benefits coupled with limited liability protection and ability to separate personal assets from professional business assets far outweighs the increased administrative complexity compared to practicing clinical counseling as a sole proprietorship.

Contact San Diego Corporate Law for Assistance Selecting and Forming the Best Business Structure for Your Clinical Counseling Practice

Take the next step toward securing the ideal business structure for your clinical counseling practice, whether that is a California Licensed Professional Clinical Counselor Corporation or another business structure. Contact the experienced corporate attorneys at San Diego Corporate Law today to schedule a consultation and receive personalized, expert guidance tailored to your needs. Our team is here to help you make informed decisions with confidence.

Practicing Clinical Counseling as a Sole Proprietor

Practicing clinical counseling as a sole proprietor is the simplest and most straightforward business structure for solo licensed professional clinical counselors in California. It requires minimal paperwork to set up compared to other business entity options and offers flexibility in managing the clinical counseling practice. However, along with these advantages come distinct disadvantages that licensed professional clinical counselors must consider carefully before considering sole proprietorship as the business structure for their clinical counseling practice.

Administrative Requirements of Practicing Clinical Counseling as a Sole Proprietor

One of the primary benefits of a sole proprietorship for practicing clinical counseling is the simplicity of establishing a sole proprietorship and the continued simplicity of operating as a sole proprietor.

Sole proprietorships require minimal effort to establish, with few legal formalities involved. Typically, the initial steps of setting up a sole proprietorship include obtaining a local business license to operate legally in the municipal jurisdiction in which the practice will operate and, if applicable, registering a fictitious business name (often referred to as a d/b/a).

Unlike other business structures, there is no need to file complex paperwork or create a formal business entity, which saves both time and money, but as discussed below, there are tradeoffs in exchange for this simplicity.

Taxation of Licensed Professional Clinical Counselor Sole Proprietors

Tax considerations are a critical aspect to be examined when planning to practice clinical counseling as a sole proprietor. Sole proprietors are subject to business income taxation, self-employment taxation, and additional Medicare taxes. Understanding how these taxes apply to clinical counseling practices is essential for licensed professional clinical counselors when choosing a business structure in which to operate their clinical counseling practice.

Business Income Taxation When Practicing Clinical Counseling as a Sole Proprietor

For licensed professional clinical counselor sole proprietors, business income taxation is both simple and straightforward compared to that of other business entities. Sole proprietors report their business income and expenses on Schedule C (Profit or Loss from Business) to their personal income tax return, using Internal Revenue Service Form 1040. This allows licensed professional clinical counselors to consolidate both personal and business income on a single tax form.

Self-Employment Tax When Practicing Clinical Counseling as a Sole Proprietor

While simple and straightforward, taxation of licensed professional clinical counselor sole proprietors is not tax efficient. One significant consideration for licensed professional clinical counselor sole proprietors is self-employment tax. Since a sole proprietor does not receive a salary from their business, they are responsible for paying self-employment taxes to cover Social Security and Medicare contributions. This self-employment tax is reported on Schedule SE, with the current rate at the time of this writing totaling 15.3% of net profit in addition to federal and state income taxes (however, a sole proprietor can deduct half of the self-employment tax paid as an adjustment on their tax return, which provides some financial relief).

Additional Medicare Tax When Practicing Clinical Counseling as a Sole Proprietor

High-earning licensed professional clinical counselor sole proprietors may also be subject to the Additional Medicare Tax. This tax applies to individuals whose income exceeds certain thresholds, which are determined based on filing status. For licensed professional clinical counselor sole proprietors filing as single, the threshold is $200,000, while it is $250,000 for licensed professional clinical counselor sole proprietors filing a joint tax return with a spouse. The Additional Medicare Tax rate is 0.9% and applies only to the earnings above the specified threshold. Sole proprietors must calculate and report this tax on Form 8959, ensuring compliance with Internal Revenue Service requirements. It is important for high-earning licensed professional clinical counselors to account for this additional tax in their financial planning to avoid unexpected liabilities.

Conclusions About Taxation of Licensed Professional Clinical Counselor Sole Proprietors

Understanding the tax implications of a sole proprietorship is integral when deciding which of the available business entities will be the most tax efficient, and understanding self-employment and the Additional Medicare Tax liabilities is the first step in planning and efficiently managing future tax liabilities.

Personal Liability Protection and Personal Asset Protection When Practicing Clinical Counseling as a Sole Proprietor

Practicing clinical counseling as a sole proprietor, while simple, also comes with challenges regarding personal liability protection and asset protection because a sole proprietorship is not a separate legal entity, and thus does not offer a legal distinction between the licensed professional clinical counselor and the clinical counseling practice.

Personal Liability for Licensed Professional Clinical Counselors When Practicing Clinical Counseling as a Sole Proprietor

One of the primary risks faced by licensed professional clinical counselor sole proprietors is personal liability. The lack of distinction between the licensed professional clinical counselor and the clinical counseling practice means that the licensed professional clinical counselor sole proprietor is personally liable for all debts, liabilities, obligations, and legal judgments incurred by the clinical counseling practice personally, including claims for professional negligence, better known as malpractice, for errors and omissions.

Personal Asset Protection for Licensed Professional Clinical Counselors When Practicing Clinical Counseling as Sole Proprietors

The lack of distinction between the licensed professional clinical counselor and the clinical counseling practice that makes personal liability a primary risk to licensed professional clinical counselor sole proprietors also means that all assets of the licensed professional clinical counselor, be they strictly personal assets or assets used in the clinical counseling practice, are subject to claims by creditors and legal claimants against the personal assets of the licensed professional clinical counselor (such as homes, bank accounts, investments, and other property).

Conclusions About Personal Liability and Asset Protection for Licensed Professional Clinical Counselor Sole Proprietors

The exposure to personal liability for debts, liabilities, obligations, and legal judgments (including those for professional negligence) coupled with the inability to separate personal assets from professional business assets underscores the importance for licensed professional clinical counselors choosing a business structure for their clinical counseling practice to understand liability risks and take proactive measures to safeguard their personal wealth and future earnings from such claims.

Conclusions About Practicing Clinical Counseling as a Sole Proprietor

When deciding whether to practice clinical counseling as a sole proprietor, it is essential to weigh the benefits and drawbacks of this business structure. While licensed professional clinical counselor sole proprietorships offer simplicity to licensed professional clinical counselors, licensed professional clinical counselor sole proprietorships come with significant risks and limitations. The advantages and disadvantages of practicing clinical counseling as a sole proprietor are compared below together with a recommendation for when a sole proprietorship is the best legal structure for practicing clinical counseling.

Advantages of Sole Proprietorship for Licensed Professional Clinical Counselors

The primary benefit of a sole proprietorship for practicing clinical counseling is its simplicity. There are few legal formalities to establish a sole proprietorship and tax reporting is equally straightforward.

Disadvantages of Sole Proprietorship for Licensed Professional Clinical Counselors

While sole proprietorships are simple to establish, they carry significant risks and are not tax efficient for most licensed professional clinical counselors.

A sole proprietorship is not a separate legal entity, which means that licensed professional clinical counselor sole proprietors are personally liable for all debts, liabilities, obligations, and legal judgments (including malpractice liability). For licensed professional clinical counselors in high-liability clinical counseling practices, this risk can be substantial.

The lack of a separate legal entity also means there is no distinction between personal and professional business assets for licensed professional clinical counselor sole proprietors, meaning the debts, liabilities, and legal judgments for which the licensed professional clinical counselor sole proprietor is liable are satisfied from the personal assets of the licensed professional clinical counselor.

When is a Sole Proprietorship the Right Business Structure for Practicing Clinical Counseling?

A sole proprietorship can be an ideal option for licensed professional clinical counselors starting small-scale clinical counseling practices with the expectation of low net profit and low liability risks. However, before choosing to practice clinical counseling as a sole proprietor, it is essential to weigh the benefits of simplicity against the risks of personal liability and the future growth of the clinical counseling practice. For licensed professional clinical counselors in high-risk clinical counseling practice areas or those who anticipate growth in their clinical counseling practice may want to avoid practicing clinical counseling as a sole proprietorship in favor of a business entity that is more tax efficient and provides limited liability protection together with the separation of personal assets from professional business assets.

For a more detailed understanding of the differences between professional sole proprietorships and California Licensed Professional Clinical Counselor Corporations and when a sole proprietorship is the best choice of business structure for clinical counseling practices, see “When Not to Use a California Licensed Professional Clinical Counselor Corporation” for more information.

Practicing Clinical Counseling with a California Licensed Professional Clinical Counselor Corporation

Practicing clinical counseling with a California Licensed Professional Clinical Counselor Corporation is not as simple or straightforward as practicing clinical counseling as a sole proprietor, however, a California Licensed Professional Clinical Counselor Corporation provides the tax efficiency, limited liability protection, and separation of personal assets of the licensed professional clinical counselor from the professional business assets of the clinical counseling practice that licensed professional clinical counselor sole proprietorships lack.

Administrative Requirements of Practicing Clinical Counseling with a California Licensed Professional Clinical Counselor Corporation

In order to enjoy the tax efficiency, limited liability protection, and separation of personal assets a California Licensed Professional Clinical Counselor Corporation provides, licensed professional clinical counselors are faced with the complexity of establishing a California Licensed Professional Clinical Counselor Corporation. While this formation process is complex, licensed professional clinical counselors may rely upon the experienced corporate attorneys at San Diego Corporate Law to draft and file all the required legal documents for the California Licensed Professional Clinical Counselor Corporation, leaving licensed professional clinical counselors with essentially the same tasks they would undertake to establish a sole proprietorship. It is also worth noting that legal fees and costs of forming a California Licensed Professional Clinical Counselor Corporation are usually qualified business expenses that are tax deductible.

In addition to the initial formation of a California Licensed Professional Clinical Counselor Corporation, every year after the initial formation of a California Licensed Professional Clinical Counselor Corporation a Statement of Information must be filed with the California Secretary of State and a shareholder and board of directors meeting must be held. Just as with the formation of a California Licensed Professional Clinical Counselor Corporation, San Diego Corporate Law can assist in the annual requirements of practicing clinical counseling with a California Licensed Professional Clinical Counselor Corporation.

Despite the additional administrative requirements of practicing clinical counseling with a California Licensed Professional Clinical Counselor Corporation compared to practicing clinical counseling as a sole proprietorship, an experienced corporate attorney can make the difference in requirements comparable.

For a more detailed understanding of the administrative requirements for forming and maintaining a California Corporation, see “The 7 Steps for Forming a California Licensed Professional Clinical Counselor Corporation” for more information.

Taxation of California Licensed Professional Clinical Counselor Corporations

As with licensed professional clinical counselor sole proprietorships, tax considerations are a critical aspect to be examined when planning to practice clinical counseling with a California Licensed Professional Clinical Counselor Corporation. While licensed professional clinical counselors practicing clinical counseling with a California Licensed Professional Clinical Counselor Corporation are subject to business income taxation, payroll taxes for wages, and franchise taxes paid to the California Franchise Tax Board, licensed professional clinical counselors practicing clinical counseling with a California Licensed Professional Clinical Counselor Corporation are not subject to self-employment taxation or additional Medicare taxes. Understanding how these taxes apply to clinical counseling practices is essential for licensed professional clinical counselors choosing a business structure in which to operate their clinical counseling practices.

Business Income Taxation When Practicing Clinical Counseling with a California Licensed Professional Clinical Counselor Corporation

A California Licensed Professional Clinical Counselor Corporation is by default taxed as a personal service corporation (sometimes referred to as a professional service corporation), which is essentially a C Corporation (commonly referred to as a C-Corp) wherein corporate taxes applied to corporate profits are taxed directly at the federal and state levels at the corporate income tax rate, and any distributed dividends are subject to taxation again against the individuals receiving the dividends (referred to as “double taxation”). However, a California Licensed Professional Clinical Counselor Corporation may (and almost always should) elect to be treated as an S Corporation (commonly referred to as an S-Corp), which fundamentally changes how income is taxed. This article will focus on S Corporation taxation of California Licensed Professional Clinical Counselor Corporations.

Electing S Corporation status alters the tax treatment by enabling pass-through taxation. This means the profits and losses of the California Licensed Professional Clinical Counselor Corporation after payment of a reasonable salary to the licensed professional clinical counselor are passed directly to the licensed professional clinical counselor as the shareholder who in turn pay taxes on those profits on their personal income tax returns to pay federal income tax and state income tax on the net profit of the California Licensed Professional Clinical Counselor Corporation to pay personal income tax of the net profits of the clinical counseling practice.

For more information about the election of S Corporation status for a California Licensed Professional Clinical Counselor Corporation, see “Can a California Licensed Professional Clinical Counselor Corporation Be an S-Corp?” for more information.

Self-Employment Tax When Practicing Clinical Counseling with a California Licensed Professional Clinical Counselor Corporation

Unlike licensed professional clinical counselor sole proprietorships, which require the licensed professional clinical counselor sole proprietor to pay self-employment tax on the entire net profit of the professional practice, the licensed professional clinical counselor-shareholder of a California Licensed Professional Clinical Counselor Corporation is not subject to self-employment taxes.

Instead of self-employment taxes on the entire net profit of the clinical counseling practice, with a California Licensed Professional Clinical Counselor Corporation employee and employer contributions to payroll tax are only paid on the reasonable salary of the licensed professional clinical counselor. While the sum of the employee and employer contributions total 15.3% (the same percentage as self-employment tax), the calculation of the tax is based upon the reasonable salary of the licensed professional clinical counselor only and not the net profit of the California Licensed Professional Clinical Counselor Corporation, which may result in significant annual tax savings compared to a sole proprietorship.

Additional Medicare Tax When Practicing Clinical Counseling with a California Licensed Professional Clinical Counselor Corporation

As discussed above for licensed professional clinical counselor sole proprietorships, the Additional Medicare Tax is an extra 0.9% tax applied to earned income exceeding certain thresholds. However, because the Additional Medicare Tax is only applied to earned income and the net profit of a California Licensed Professional Clinical Counselor Corporation is not deemed to be “earned” income, the Additional Medicare Tax would only be applicable to licensed professional clinical counselors practicing clinical counseling with a California Licensed Professional Clinical Counselor Corporation if the reasonable salary of the licensed professional clinical counselor exceeded the thresholds, meaning for all intents and purposes, practicing clinical counseling with a California Licensed Professional Clinical Counselor Corporation does not subject licensed professional clinical counselors to the Additional Medicare Tax.

Annual Franchise Tax for California Licensed Professional Clinical Counselor Corporations

California Licensed Professional Clinical Counselor Corporations must pay an annual franchise tax that licensed professional clinical counselor sole proprietorships do not pay. The franchise tax paid by a California Licensed Professional Clinical Counselor Corporation taxed as an S Corporation is 1.5% of net profit with a minimum of $800 annually. While this is a tax not paid by licensed professional clinical counselor sole proprietorships, the annual franchise tax is very small in comparison to self-employment taxes and the Additional Medicare Taxes paid by licensed professional clinical counselor sole proprietors.

Conclusions About Taxation of California Licensed Professional Clinical Counselor Corporations

Understanding the tax benefits of a California Licensed Professional Clinical Counselor Corporation is integral when deciding which of the available business entities will be the most tax efficient, and understanding self-employment and the Additional Medicare Tax liabilities is the first step in planning and efficiently managing future tax liabilities.

For a more detailed understanding of the taxation of California Licensed Professional Clinical Counselor Corporations, see “What Tax Benefits Does a California Licensed Professional Clinical Counselor Corporation Provide?” for more information or receive personalized tax advice from your tax advisor.

Personal Liability Protection and Personal Asset Protection When Practicing Clinical Counseling with a California Licensed Professional Clinical Counselor Corporation

Practicing clinical counseling with a California Licensed Professional Clinical Counselor Corporation, while more complex than practicing clinical counseling as a sole proprietorship, overcomes many of the personal liability protection and asset protection shortcomings of licensed professional clinical counselor sole proprietorships. A California Licensed Professional Clinical Counselor Corporation is a separate legal entity distinct from the licensed professional clinical counselor, thus offering a legal distinction between the licensed professional clinical counselor and the clinical counseling practice as well as personal and business assets of the licensed professional clinical counselor.

Personal Liability Protection for Licensed Professional Clinical Counselors When Practicing Clinical Counseling with a California Licensed Professional Clinical Counselor Corporation

Practicing clinical counseling with a California Licensed Professional Clinical Counselor Corporation resolves most of the risks faced by licensed professional clinical counselor sole proprietors for personal liability. California Licensed Professional Clinical Counselor Corporations provide a separate legal entity distinct from the licensed professional clinical counselor, meaning the licensed professional clinical counselor is generally not personally liable for the debts, liabilities, obligations, and legal judgments incurred by the clinical counseling practice.

Under California law, claims for professional negligence, better known as malpractice, for errors and omissions of licensed professional clinical counselors are personal to the licensed professional clinical counselors and not shielded by the existence of the California Licensed Professional Clinical Counselor Corporation, however, malpractice is an insurable risk and appropriately apportioned professional liability insurance may be used to indemnify the licensed professional clinical counselor from this risk.

Personal Asset Protection for Licensed Professional Clinical Counselors When Practicing Clinical Counseling with a California Licensed Professional Clinical Counselor Corporation

The separate legal entity and distinction between the licensed professional clinical counselor and the clinical counseling practice provided by a California Licensed Professional Clinical Counselor Corporation means that, unlike a sole proprietorship, the California Licensed Professional Clinical Counselor Corporation separates the personal assets of the licensed professional clinical counselor from professional business assets of the clinical counseling practice. Therefore, claims by creditors and legal claimants against the California Licensed Professional Clinical Counselor Corporation are generally limited to the professional business assets of the California Licensed Professional Clinical Counselor Corporation and are not satisfied against the personal assets (such as homes, bank accounts, investments, and other property) of the licensed professional clinical counselor.

Conclusions About Personal Liability and Asset Protection When Practicing Clinical Counseling with a California Licensed Professional Clinical Counselor Corporation

The limitation of personal liability for debts, liabilities, obligations, and legal judgments against the California Licensed Professional Clinical Counselor Corporation coupled with the ability to separate personal assets from professional business assets makes the use of a California Licensed Professional Clinical Counselor Corporation the choice for licensed professional clinical counselors who wish to limit their personal liability and protect their personal wealth and future earnings from most claims arising out of their clinical counseling practice.

For a more detailed understanding of the liability protection and asset protection of California Licensed Professional Clinical Counselor Corporations, see “What Liability Protection Does a California Licensed Professional Clinical Counselor Corporation Provide?” for more information.

Conclusions About Practicing Clinical Counseling with a California Licensed Professional Clinical Counselor Corporation

When deciding if practicing clinical counseling as a California Licensed Professional Clinical Counselor Corporation is worth the additional cost and administrative requirements, it is essential to weigh the benefits and drawbacks of this business structure. While California Licensed Professional Clinical Counselor Corporations are more complex, California Licensed Professional Clinical Counselor Corporations resolve many of the significant risks and limitations inherent to practicing clinical counseling as a sole proprietorship. The advantages and disadvantages of operating with a California Licensed Professional Clinical Counselor Corporation are compared below together with a recommendation for when a California Licensed Professional Clinical Counselor Corporation is the best legal structure for practicing clinical counseling.

Advantages of California Licensed Professional Clinical Counselor Corporations

While practicing clinical counseling as a sole proprietorship is simple to establish, doing so carries significant risks and is not tax efficient for most clinical counseling. California Licensed Professional Clinical Counselor Corporations significantly reduce liability risks and are more tax efficient for most clinical counseling.

A California Licensed Professional Clinical Counselor Corporation is a separate legal entity, which means the licensed professional clinical counselor is generally shielded from personally liable for debts, liabilities, obligations, and legal judgments (other than the insurable risk of malpractice liability). For licensed professional clinical counselors in high-liability clinical counseling practices, this reduction in risk can be substantial.

The separate legal entity status also means there is a distinction between personal and professional business assets for licensed professional clinical counselors, meaning the debts, liabilities, and legal judgments against their clinical counseling practice are not generally satisfied from the personal assets of the licensed professional clinical counselor.

Disadvantages of California Licensed Professional Clinical Counselor Corporations

The primary benefit of a sole proprietorship is its simplicity, and in turn the primary disadvantage of a California Licensed Professional Clinical Counselor Corporation is the relative complexity of formation and operation. However, licensed professional clinical counselors may rely upon the experienced corporate attorneys at San Diego Corporate Law to draft and file all the required legal documents for establishing and maintaining the California Licensed Professional Clinical Counselor Corporation, leaving these licensed professional clinical counselors with essentially the same tasks they would undertake to establish and maintain a sole proprietorship.

When is a California Licensed Professional Clinical Counselor Corporation the Right Business Structure for Practicing Clinical Counseling?

A California Licensed Professional Clinical Counselor Corporation can be an ideal option for licensed professional clinical counselors starting clinical counseling practices based upon the tax efficiency, limited liability protection, and separation of personal assets from professional business assets that California Licensed Professional Clinical Counselor Corporations provide. Small-scale clinical counseling practices with the expectation of revenue growth can benefit from starting as a California Licensed Professional Clinical Counselor Corporation to avoid the future need to reestablish the clinical counseling practice as revenue grows. Similarly, small-scale clinical counseling practices in high-risk practice areas may benefit from the limited liability protection and separation of personal assets from professional business assets provided by a California Licensed Professional Clinical Counselor Corporation regardless of revenue or profitability.

For a more detailed understanding of the differences between licensed professional clinical counselor sole proprietorships and California Licensed Professional Clinical Counselor Corporations, and when a California Professional Corporation is the best choice of business structure for a professional practice, see “When to Use a California Licensed Professional Clinical Counselor Corporation” and “Sole Proprietorship vs Licensed Professional Clinical Counselor Corporation in California” for more information.

Licensed Professional Clinical Counselors in California May Not Practice Clinical Counseling as a Limited Liability Company (LLC) or Professional Limited Liability Company (PLLC)

A The experienced corporate attorneys at San Diego Corporate Law are frequently asked about limited liability companies and professional limited liability companies, so this topic will be briefly discussed here.

California law explicitly prohibits licensed professional clinical counselors from operating their practices as Limited Liability Companies (LLCs) or Professional Limited Liability Companies (PLLCs). This prohibition may be found in California Corporations Code Section 17701.04(e), which reads:

“Nothing in this title shall be construed to permit a domestic or foreign limited liability company to render professional services, as defined in subdivision (a) of Section 13401 and in Section 13401.3, in this state.”

Instead, California requires licensed professional clinical counselors who wish to operate in corporate form to utilize other types of business entities, such as California Licensed Professional Clinical Counselor Corporations.

For a more detailed understanding of the prohibition on the use of LLCs for clinical counseling practices in California, see “Can a Licensed Professional Clinical Counselor Practice Using a California LLC?” and “Can I Use a PLLC to Practice as a Licensed Professional Clinical Counselor in California?” and for more information.

If an LLC or PLLC is currently being used for a clinical counseling practice in California, see “10 Steps to Convert LLC to Licensed Professional Clinical Counselor Corporation in California” and “Four Reasons Not to Convert LLC to Licensed Professional Clinical Counselor Corporation in California” or “12 Steps to Convert a PLLC to a California Licensed Professional Clinical Counselor Corporation” and “Four Reasons Not to Convert Foreign LLC or PLLC to a California Licensed Professional Clinical Counselor Corporation” for more information about bringing the professional practice into compliance with California law.