To start a therapy practice in Massachusetts, 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 Bay 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 Massachusetts
Massachusetts boasts 14 counties and 351 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 Massachusetts
If your therapy practice is a sole proprietorship or general partnership, and you intend to do business other than your own (or yours and your partners’), you’re required by law to register an assumed name in Massachusetts.
Here’s a step-by-step guide:
- Search for existing company names, so you don’t try to reserve a name already in use
- Fill out an Application of Reservation of Name and file it in person or by mail with the Secretary of the Commonwealth.
- Pay the name reservation fee of $30.
Choose a business structure recognized by the Commonwealth of Massachusetts
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.
In Massachusetts, the business structures you can choose from are:
- Sole proprietorship
- General partnership
- Professional corporation*
- Professional limited liability company (PLLC)*
- Professional limited liability partnership (PLLP)*
*In the Commonwealth of Massachusetts, licensed professionals—including psychologists and allied mental health professionals— who wish to incorporate or register LLCs or LLPs must form the “professional” versions of these structures.
For a side-by-side comparison, see Massachusetts Secretary of the Commonwealth’s business structure comparison chart.
This list is just an introduction. Before settling on a business structure, talk to your accountant—and, if necessary, a lawyer—for help choosing the right one.
For more information, check out our article How to Choose a Business Entity for Your Therapy Practice.
Sole Proprietorship
When you go into business for yourself, you’re considered a sole proprietor by default. As a sole proprietorship, your business is identical with your person: all revenue is your revenue, all losses are your losses.
Sole proprietorships are the simplest form of business structure, but offer nothing in the way of legal or financial protection.
General Partnership (GP)
In a general partnership, all members are general partners—meaning, they all share legal and financial liability equally.
Professional Corporation
Those practicing professions in the Commonwealth of Massachusetts are typically required to form professional corporations. A professional corporation functions like a typical corporation, with added protections in case a shareholder is sued for malpractice. All shareholders in a professional service corporation must be licensed and practicing the same profession.
There are two types: C corporations and S corporations. C corporations may elect S corporation status by filing IRS Form 2553.
C corporations have their income taxed separately from the income of the shareholders. S corporations pass on the tax liability to each shareholder. (For a variety of reasons, Heard recommends its clients form S corporations at the federal level.)
Professional Limited Liability Company (PLLC)
The LLC business structure offers liability protection similar to a corporation, but with the option to be taxed in different ways. Your accountant may recommend you elect to be taxed as either an S corporation or a partnership.
The PLLC business structure is identical to the LLC, except for the fact that every member must be a professional licensed by the State, and provide proof of certification when the PLLC files its articles of formation with the Secretary of the Commonwealth. Therapists qualify as professionals licensed by the state.
The PLLC business structure provides extra liability protection for all members in case of legal proceedings brought against the organization (eg. a patient suing for malpractice.)
Professional Limited Liability Partnership (PLLP)
A limited liability partnership is similar to a general partnership, but with extra protections You can think of a PLLP as the “professional version” of a general partnership, with extra liability protection relevant to professionals.
The PLLP structure protects each partner against outcomes of the other partners’ professional negligence. For instance, if one partner in a PLLP is sued by a client, the other partners are not liable.
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Register your therapy practice in Massachusetts
To register your business in Massachusetts, you need to do two things:
- File the business registration with the Commonwealth
- Pay the filing fee
While Massachusetts allows you to register some business structures online, professional business structures—professional corporations, PLLCs, and PLLPs—must by registered by submitting paper documents.
Here’s a breakdown for each of the business structures covered in section 3 above.
Form a sole proprietorship in Massachusetts
Filing fees: No cost to form, fees apply to register an assumed name
Aside from the optional step of registering an assumed name, there are no extra steps you need to take in order to form a sole proprietorship in Massachusetts.
Form a general partnership in Massachusetts
Filing fees: No cost to form, fees apply to register an assumed name
Aside from registering an assumed name, there are no extra steps you need to take in order to form a general partnership in Massachusetts. Consider drafting a partnership agreement in order to easily resolve any future disputes between partners.
Incorporate in Massachusetts (professional corporation)
Filing fees: $275 to file Articles of Incorporation, plus $25 to appoint a registered agent, plus $125 each year to file an annual report
- 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.
- Fill out a Certificate by Regulatory Board. This lists all the officers of the corporation, and their profession.
- Submit your Certificate by Regulatory Board to the relevant board via the Bureau of Health Professions Licensure
- Complete your Articles of Organization, and attach your signed Certificate by Regulatory Board attached.
- File your Articles of Organization and all related documents with the Secretary of the Commonwealth.
- Pay the filing fee.
Once you’ve incorporated in Massachusetts, you can elect S corporation status by filing IRS Form 2553.
Register a Professional Limited Liability Company (PLLC) in Massachusetts
Filing fees: $500 to register, plus $500 each year to file an annual report
- 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.
- Fill out a Certificate by Regulatory Board. This lists all the officers of the corporation, and their profession.
- Submit your Certificate by Regulatory Board to the relevant board via the Bureau of Health Professions Licensure.
- Complete your Certificate of Organization, and attach your signed Certificate by Regulatory Board attached.
- File your Certificate of Organization and all related documents with the Secretary of the Commonwealth.
- Pay the filing fee.
Register a Professional Limited Liability Partnership (PLLP) in Massachusetts
Filing fees: $500 to register, plus $500 each year to file an annual report
- 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.
- Fill out a Certificate by Regulatory Board. This lists all the officers of the corporation, and their profession.
- Submit your Certificate by Regulatory Board to the relevant board via the Bureau of Health Professions Licensure.
- Complete your Certificate of Organization, and attach your signed Certificate by Regulatory Board attached.
- File your Certificate of Organization and all related documents with the Secretary of the Commonwealth.
- Pay the filing fee.
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Get business licenses and permits for your therapy practice in Massachusetts
To operate in Massachusetts, 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 Massachusetts. And, outside of standard licensure for mental health practitioners, they also do not require permitting or licensing at the state level.
At the local level—meaning your municipality (town, city, etc.), you may be required to purchase a business license to operate. Contact your local permitting office for details.
Get business insurance for your therapy practice in Massachusetts
The following types of business insurance are highly recommended for therapy practices operating in Massachusetts:
- General liability insurance
- Commercial property insurance
- Business income insurance
- Professional liability insurance
- Massachusetts 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.
General liability insurance protects you in case of any damages you cause to someone else’s property or person. Since the Commonwealth of Massachusetts puts no cap on liability lawsuit rewards, it’s important to make sure you’re well-covered. Aim for at least $1 million coverage.
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’re legally required to cover them with Massachusetts worker’s compensation insurance. This pays for medical expenses, lost wages, and ongoing care in the event one of your employees is injured on the job.
Prepare to pay taxes in Massachusetts
Every business earning income in Massachusetts is required to pay state taxes. If you owe over $400 in state taxes, you’re required to pay that amount in quarterly installments.
Wondering how to get started? Check out How to Pay Income Tax in Every State as a Therapist.
Learn how to pay taxes in multiple states
If you started your therapy practice in a different state, and you’re moving to Massachusetts—or if you operate in Massachusetts, 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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