Physical therapists can own a practice in California, but they must follow licensing rules. If you are looking to start a physical therapy private practice in California, you must comply with strict legal and regulatory requirements. While many physical therapists choose to become business owners, state law limits how they can structure their practice.
Unlike in other states where LLCs may be allowed, physical therapists in California must operate through a professional corporation, as required by the California Corporations Code, the Business and Professions Code, and regulations enforced by the Physical Therapy Board of California.
Understanding these rules, especially entity requirements, ownership restrictions, and compliance obligations, is essential to successfully forming and operating a physical therapy practice.
What is the Definition of a Physical Therapy Professional Corporation?
A physical therapy corporation is a type of corporation that is authorized to render professional services, as defined in Section 13401 of the Corporations Code. The shareholders, officers, directors, and employees of this private practice who are physical therapists must comply with the Moscone-Knox Professional Corporation Act.
Is there a Specific Government Agency that Regulates Physical Therapy Clinics?
Yes, the Physical Therapy Board of California is the specific government agency that regulates physical therapy clinics.
Do I need a Certificate of Registration as a Physical Therapy Corporation?
No. Any professional corporation or foreign professional corporation rendering professional services by persons duly licensed by the Board of Registered Physical Therapy shall not be required to obtain a certificate of registration in order to render those professional services.
California Code of Regulations § 1399.38. Certificates of Registration: Continuing Validity and Reports. [Repealed]
Client Question: We are a team of physical therapists that have recently moved to the San Francisco bay area. We’ve been planning to put up our own clinic here. We were wondering what business entity is best for our team. Should we form an LLC or a corporation?
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Most Common Questions Asked When Forming a Physical Therapy Professional Corporation in California
In the many years of helping physical therapists start their own clinics in California, we’ve gathered the most common questions that we’ve been asked. Here are a few of them:
Are Physical Therapy Corporations Required to Abide by Specific California State Laws and Codes Specific to Their Profession?
Yes! Physical therapy clinics must abide by the following State laws and codes:
- California Corporations Code
- Business and Professions Code – The Physical Therapy Practice Act is found in the California Business and Professions Code starting with Section 2690.
- California Code of Regulations Sections 1399.30 through Section 1399.41
Read more about these laws and codes by jumping to the last section of this page!
Ownership Rules and Key Legal Considerations
California law places strict limits on who can own and control a physical therapy professional corporation. Each shareholder, director, and officer must generally hold a valid physical therapist license, reinforcing that professional services remain under licensed control.
This means ownership is not open to the general public or outside investors. These rules are designed to protect patients and ensure that clinical decision-making remains in the hands of licensed professionals.
Are There Name-style Formalities that Physical Therapy Corporations Must Adhere to?
The name chosen for a physical therapy corporation must comply with the California Business and Professions Code 2693. The name of the clinic and any name or names under which it will render professional services must contain the words “physical therapy” or “physical therapist.” The business name must also include wording or abbreviations denoting corporate existence.
Can a Physical Therapy Private Practice Use a Fictitious Name in California?
Yes. Physical therapy clinics are allowed to use a fictitious name or a Doing-Business-As (DBA) by the Physical Therapy Board of California. But the DBA must still comply with professional naming rules and accurately reflect the nature of the services provided.
When Should Bylaws be Created in a Physical Therapy Professional Corporation in California?
Bylaws are created so that a company can have corporate and operational guidelines. A physical therapy corporation in California must have its bylaws established as early as its formation.
Incorporation Attorney has a team of corporate lawyers that specialize in forming physical therapy professional corporations in California. Click here to consult with our experts!
Who can be Sold Shares in a Physical Therapy Corporation in California?
The bulleted list of licensed individuals below may be shareholders of a physical therapy professional corporation.
- Licensed physicians and surgeons.
- Licensed doctors of podiatric medicine.
- Licensed acupuncturists.
- Naturopathic doctors.
- Licensed occupational therapists.
- Licensed speech-language therapists.
- Licensed audiologists.
- Registered nurses.
- Licensed psychologists.
- Licensed physician assistants.
- Licensed midwives.
The sum of all shares owned by these persons must not exceed 49 percent of the total number of shares of the company. Also, the number of stockholders in the corporation must not exceed the number of persons licensed by the Physical Therapy Board of California. It’s important to note that this rule does not limit employment by the clinic to only these licensed professionals listed. A physical therapist can be a shareholder in more than one professional corporation.
Who Can Serve as an Officer or Director of a Physical Therapy Clinic?
The same licensed individuals allowed to own shares in a physical therapy corporation can also serve as an officer or director in the company. The following are exceptions to the rule:
- If a physical therapy corporation only has one stockholder, that same stockholder can also serve as the director, president, and treasurer of the company. In cases like this, the other officers of the corporation are not required to be licensed persons.
- If a physical therapy private practice in California only has two shareholders, then that company only needs two directors. The two shareholders, between themselves, can fill the offices of the president, vice president, secretary, and treasurer.
Frequently Asked Questions About California Physical Therapy Corporation Ownership Rules
Can physical therapists own 100% of their practice in California?
Yes. Licensed physical therapists can own 100% of a professional corporation, as long as all ownership, management, and clinical roles comply with California’s licensing and professional corporation laws. In fact, ownership is generally restricted to licensed physical therapists to ensure professional control of the practice.
Can non-licensed individuals own a physical therapy practice in California?
No. Non-licensed individuals are generally not allowed to own shares in a physical therapy professional corporation. California law requires that shareholders, directors, and officers involved in providing services be licensed physical therapists, preventing outside ownership of clinical practices.
Can a physical therapist open their own private practice in California?
Yes. Physical therapists can open their own private practice, but they must do so through a professional corporation and comply with all applicable state laws, licensing requirements, and regulations enforced by the Physical Therapy Board of California.
Can a physical therapy clinic operate as an LLC in California?
No. California does not allow licensed physical therapists to provide professional services through an LLC. Instead, they must form a professional corporation under the Moscone-Knox Professional Corporation Act.
What laws govern physical therapy corporations in California?
Physical therapy corporations are governed by the California Corporations Code, the Business and Professions Code (Physical Therapy Practice Act), and the California Code of Regulations, under the oversight of the Physical Therapy Board of California.
Want to Open a Physical Therapy Clinic in California? Consult an Expert Attorney on How to Form a Professional Corporation!
Forming a physical therapy professional corporation involves more than just filing paperwork. It requires careful attention to legal requirements, ownership rules, and compliance standards. Even small mistakes can delay your business or create long-term legal issues.
Our team of corporate attorneys specializes in helping physical therapists establish compliant and successful professional corporations in California. We guide you through every step, from choosing the right structure to ensuring your business meets all regulatory requirements.
Whether you are starting a new private practice or restructuring an existing one, we are here to help you navigate the process efficiently and correctly.
Call our lawyers now at +1 (714) 634-4838 and let us help you build your physical therapy practice the right way.
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