3 Steps to Starting Your Psychological Corporation

Form Your Psychology Professional Corporation the Right Way

If you’re a psychologist in California, you are legally required to form a Psychology Professional Corporation (PPC) to operate your practice or provide psychological services.

Under the Moscone-Knox Professional Corporation Act (California Corporations Code §§13400–13410), psychologists are prohibited from forming LLCs or general stock corporations for their professional practice.

If filed incorrectly, your corporation can be rejected by the California Secretary of State, leaving you vulnerable to lawsuits, fines, and even disciplinary action from the California Board of Psychology.

At All-in-Juan Business Consultancy Services, we’ve helped thousands of licensed professionals, including psychologists, establish their Professional Corporations quickly, correctly, and in full legal compliance.

📩 Email: [email protected]

A Psychology Professional Corporation (PPC) is a legal business structure for licensed psychologists in California to provide mental health and psychological services.

It must be registered with the California Secretary of State and hold a Certificate of Registration with the California Board of Psychology before it can legally operate.

This structure allows psychologists to maintain full compliance with state regulations while enjoying the benefits of liability protection, tax savings, and professional credibility.

Why Elect S-Corporation Tax Status

By default, a Professional Corporation is taxed as a C-Corporation, which means income is taxed twice — at both corporate and personal levels.

Electing S-Corporation status by filing IRS Form 2553 allows psychologists to:
✅ Avoid double taxation
✅ Pass profits directly to shareholders’ personal tax returns
✅ Reduce self-employment taxes
✅ Optimize business income for tax efficiency

3 Steps to Form a Psychology Professional Corporation in California

Step 1: File the Articles of Incorporation

File your Articles of Incorporation for a Professional Corporation with the California Secretary of State, stating that your business is organized under the Moscone-Knox Professional Corporation Act for the purpose of providing psychology services.

Step 2: Complete State and Tax Compliance Requirements

Once incorporated, you must:

• Apply for your EIN from the IRS

• Appoint Directors

• Draft your corporate bylaws

• File your Statement of Information with the Secretary of State

• File Form 2553 to elect S-Corporation tax status

• Pay annual taxes to the California Franchise Tax Board (FTB)

• Register with the Employment Development Department (EDD) if you pay salaries

• Apply for local business licenses or permits

Step 3: Let All-in-Juan Handle It for You

At All-in-Juan Business Consultancy Services, we handle all filings, registrations, and documentation — ensuring your Psychology Corporation is formed correctly and fully compliant with California laws.

📩 Email: [email protected]

Benefits of a Psychology Professional Corporation

Forming a Psychology Professional Corporation offers multiple advantages:
✅ Liability Protection – Separate your personal assets from professional liabilities.
✅ Tax Efficiency – Save taxes with an S-Corporation structure.
✅ Regulatory Compliance – Stay aligned with the Moscone-Knox Act and Board of Psychology rules.
✅ Business Credibility – Strengthen your professional reputation.
✅ Growth Flexibility – Build corporate credit and scale responsibly.

Who Regulates Psychology Professional Corporations

All Psychology Corporations in California are governed by the Moscone-Knox Professional Corporation Act and regulated by the California Board of Psychology, which oversees licensing, certification, and compliance for all psychologists practicing under a corporate entity.

Your corporation must maintain an active Certificate of Registration from the Board to remain compliant.

Who Can Be a Shareholder in a Psychology Professional Corporation

Under California law:

• All directors, shareholders, and officers must be licensed professionals.

• In a Psychology Corporation, the majority of shares (at least 51%) must be owned by licensed psychologists.

• The remaining 49% may be owned by other licensed professionals, such as:

  • Physicians and surgeons

  • Doctors of podiatric medicine

  • Registered nurses

  • Optometrists

  • Marriage and family therapists

  • Clinical social workers

  • Chiropractors

  • Acupuncturists

  • Naturopathic doctors

  • Professional clinical counselors

  • Midwives

Any shares issued to unlicensed individuals or non-approved professions are void under California law.

If a shareholder becomes disqualified or loses their license, they must transfer or sell their shares to a qualified shareholder within 90 days of ineligibility.

Name Requirements for a Psychology Professional Corporation

Your corporation’s name must clearly represent your professional field and corporate status. It must include one or more of the following words:

“Psychology,” “Psychological,” “Psychologist,” “Psychology Consultant,” “Psychotherapy,” “Psychotherapist,” “Psychoanalysis,” “Psychoanalyst,” or any similar term relating to psychological practice.

It must also include a corporate suffix such as:

• “Professional Corporation”

• “A Professional Corporation”

• “Prof. Corp.”

• “P.C.”

• “Inc.”

• “Corporation”

• “A California Professional Corporation”

Examples:
✅ MindWell Psychology, A Professional Corporation
✅ Dr. Emily Cruz, Psychologist, Inc.

❌ “LLC” or “Limited Liability Company” are not permitted for psychology practices in California.

Using a Fictitious Business Name (DBA)

A Psychology Professional Corporation may operate under a fictitious business name (DBA) if it follows California’s legal requirements:

• File a Fictitious Business Name Statement within 40 days of starting operations.

• Register the DBA in each county where your practice operates.

• Ensure your DBA is not misleading, deceptive, or similar to another registered name.

Example:
🧠 Inner Balance Therapy Center (filed under MindWell Psychology, A Professional Corporation)

Can a Psychology Practice Operate as an LLC in California?

No.
Under the Moscone-Knox Professional Corporation Act, psychologists cannot form LLCs to provide professional services.

To practice legally and maintain compliance with the California Board of Psychology, you must form a Professional Corporation.

Start Your Psychology Corporation the Right Way

At All-in-Juan Business Consultancy Services, we simplify the process of forming your Psychology Professional Corporation — handling all legal, tax, and compliance steps for you.

We’ve already helped thousands of licensed professionals across California form their corporations under the Moscone-Knox Act, and we’re ready to help you next.

📞 Contact Number: +1 424 407-3686
📩 Email: [email protected]
🌐 Website: www.all-in-juanbusinessconsultancyservices.com

All-in-Juan Business Consultancy Services — Helping California Psychologists Form Their Professional Corporations the Right Way.