To start a therapy practice in Texas, follow these seven steps:
- Check local zoning regulations
- Register a business name
- Choose a business structure
- Register your business
- Obtain relevant licenses
- Get insurance
- Start paying taxes
If you’re moving your practice from a different state, there’s an eighth step you’ll need to follow: Figuring out how to pay taxes in multiple states.
This article covers the bare essentials needed to get your therapy practice up and running in the Lone Star State. For advice on budgeting, marketing your practice, and billing your clients, check out our general guide, How to Start a Therapy Practice.
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Check local zoning regulations in Texas
Texas boasts 254 counties—more than any other state—as well as 1,221 municipalities. Before you settle on a location for your therapy practice—even if that location is your own home—you must make sure the local zoning allows you to operate there.
In cases where you aren’t typically allowed to operate a business in a certain area—for instance, a home business in a residential area—you can apply for a zoning variance. A variance is more or less an exception to zoning laws.
For information on whether you need to apply for a variance, what types of zoning your town or city recognizes, and what kind of business you can perform there, contact your local municipality.
Register a business name in Texas
In Texas, business names are managed at both the county and the state levels. It depends on your business structure.
A sole proprietorship or a general partnership files a Certificate of Assumed name with the county clerk’s office. (Here’s a complete list of Texas county clerks’ offices, with contact info.)
LLCs, corporations, and other business structures file Assumed Name Certificates with the Secretary of State.
Do you need to register a name at all? If your therapy practice is a sole proprietorship, and you’d like to operate under your own name—eg. “Jane Smith”—you may do so without registering a business name.
If you want a name different from your own—eg. “Jane Smith Counseling”—or if you switch to a different business structure (for instance, an LLC), you’ll need to register an assumed name..
To get an assumed for your therapy practice:
- Do a name search to make sure your name isn’t already taken.
- (Optional) If you’re filing with the Secretary of State (and not your County Clerk): You may reserve an assumed name by filing Form 501, Application for Reservation or Renewal of Reservation of an Entity Name.
- File an Assumed Name Certificate with the County Clerk (if your business will be a sole proprietorship or a general partnership) or with the Department of State (if your business will be a corporation, LLC, or other entity.) Contact your County Clerk’s office for instructions on registering an assumed name for your sole proprietorship. For all other business structures, file Form 503, Assumed Name Certificate, with the Secretary of State.
- Pay the fee. If you’re registering with the County Clerk’s office, your fee will vary according to which county you’re registering in. If you’re registering with the Department of State, the fee is $25 to file an Assumed Name Certificate.
- Renew your name. Assumed names automatically expire after 10 years.
To upload paperwork online and pay fees with your credit card, use the Texas Secretary of State’s SOSUpload system.
Choose a business structure recognized by the State of Texas
Each state recognizes—and registers—different business structures (aka “entity types.”) Your practice’s business structure affects how its income is taxed and who may own shares of the practice.
If you’re a mental health practitioner in Texas licensed by the State, you’re limited in which business structures you can choose for your therapy practice. Your options are:
- Professional association (PA)
- Professional limited liability company (PLLC)
- Limited liability partnership (LLP)
You may also choose to work as a sole proprietor or to form a general partnership (a partnership in which all members equally share financial and legal liability.) However, these business structures offer no legal protection in the event you’re sued for malpractice; the LLP, PLLC, and PA business structures, on the other hand, are explicitly designed to do so.
For a rundown of every entity type in Texas—including ones which offer no liability protection, or which licensed therapists are legally barred from forming—check out the Governor’s Small Business Handbook.
For more information, check out our article How to Choose a Business Entity for Your Therapy Practice.
Professional association
The Texas Medical Association believes the doctor-patient relationship shouldn’t occur through a “purely corporate entity.” That’s why professional associations were created.
Technically, professional associations are neither partnerships nor corporations. However, they are taxed and governed like corporations, and may elect S corporation status.
PAs provide limited protection for all members in case one member is sued—although each individual belonging to the association is personally liable for their own malpractice.
Limited Liability Partnership (LLP)
Unlike a PA, an LLP must consist of two or more individuals. Like a PA, however, it offers limited protection for its partners. In the event one partner is sued, they are only liable for the portion of their assets invested in the partnership; their personal assets are protected. Beyond that, an LLP is treated as a pass-through entity, like all partnerships.
Professional Limited Liability Company (PLLC)
A professional limited liability company (PLLC) is almost identical to a regular LLC, except it’s designed specifically for licensed professionals—including therapists. It can be formed by one or more individuals.
A PLLC offers limited protection for its individual members in case of legal or financial proceedings brought against the PLLC as a whole.
A PLLC may offer more flexibility in terms of governance and taxation than a professional association.
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Register your therapy practice in Texas
To register your business in Texas, you need to do two things:
- File the business registration with the state
- Pay the filing fee
In addition to filing fees, your new business entity may be on the line for franchise tax. Businesses with revenue in excess of $1.18 million are required to pay franchise tax in Texas. This article by Peisner Jonson explains Texas franchise tax in detail.
Here’s a breakdown for each of the business structures covered in section 3 above.
Register a professional association in Texas
Filing fees: $750
- Choose a business name
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- File Form 204 (Certificate of Formation, Professional Association) with the Secretary of State
- Pay filing fees
To upload paperwork online and pay fees with your credit card, use the Texas Secretary of State’s SOSUpload system.
Register an LLP in Texas
Filing fees: $200 per partner + $ franchise tax (annually)
- Choose a business name
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- File Form 701 (Registration of Limited Liability Partnership) with the Secretary of State
- Pay filing fees
- Draft a partnership agreement. This isn’t required by law, but it will help you stay organized and settle any disputes between partners.
To upload paperwork online and pay fees with your credit card, use the Texas Secretary of State’s SOSUpload system.
Register a PLLC in Texas
Filing fees: $300 + $ franchise tax (annually)
- Choose a business name
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- File Form 206 (Certificate of Formation, Professional LLC) with the Secretary of State
- Pay filing fees
To upload paperwork online and pay fees with your credit card, use the Texas Secretary of State’s SOSUpload system.
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Get business licenses and permits for your therapy practice in Texas
To operate in Texas, your therapy practice may require licenses or permits. These are handled at the federal, state, and local levels.
Luckily, therapy practices do not need any special federal permits or licenses to operate in Texas.
Texas does not issue or require general business licenses at the state level. And, except in the case of dyslexia therapy, mental health practitioners don’t require any additional operating licenses outside of standard licensure for mental health practitioners.
At the local level—meaning your municipality (town, city, etc.)—you may be required to purchase a business license to operate. Different municipalities require business licenses for different types of businesses. Contact your municipal government for details.
Get business insurance for your therapy practice in Texas
The following types of business insurance are highly recommended for therapy practices operating in Texas:
- General liability insurance
- Commercial property insurance
- Business income insurance
- Professional liability insurance
- Texas worker’s compensation insurance
While shopping for insurance, look for a business owner’s policy (BOP). A BOP typically includes the three core types of insurance coverage: general liability, commercial property, and business income.
Commercial general liability insurance protects you in case of any damages you cause to someone else’s property or person.
Commercial property insurance protects property your therapy practice owns, like computers, business phones, or office furniture. It also protects the building where you operate, whether owned or rented.
Business income insurance covers you for loss of income due to specific circumstances. These include natural disasters, such as fire or storm damage; and man-made disasters, like theft.
Professional liability insurance covers you in case you are sued for libel or slander, for mishandling patient records, for providing inaccurate advice, or for otherwise causing harm in the process of practicing your profession.
If you have employees, you are not legally required to have Texas worker’s compensation insurance. However, there are certain rules you will need to follow in order to notify new and existing employees of the fact. You also make yourself vulnerable to lawsuits in case an employee is injured on the job. Learn more from the Texas Department of Insurance’s worker’s compensation insurance guide.
Prepare to pay taxes in Texas
Texas does not collect individual income tax, but it does charge franchise tax. This article by Peisner Jonson explains Texas franchise tax in detail.
Learn how to pay taxes in multiple states
If you started your therapy practice in a different state, and you’re moving to Texas—or if you operate in Texas, and you’re planning to move to a different state—you’ll need to figure out how to pay taxes in multiple states.
The rules vary depending on which states you operate in over the course of the year, and how long you spend in each. Check out How Moving to a Different State Impacts your Taxes as a Therapist.
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Want to learn more? Check out our guide on how to start a therapy practice.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.
Bryce Warnes is a West Coast writer specializing in small business finances.
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