To start a private practice therapy business in Massachusetts, you have five business structures to choose from:

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• Sole proprietorship
• General partnership
• Professional corporation (PC)
• Professional limited liability company (PLLC)
• Professional limited liability partnership (PLLP)

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For many self-employed therapists, a PLLC is a strong fit. It offers more flexibility and fewer corporate formalities than a PC, and you can form one whether or not you have business partners. The trade-off is higher state filing fees, which we break down below.

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Here’s an overview of the different business structures available to therapists in Massachusetts, plus step-by-step instructions for forming a PLLC, including the cost and timeline for each step. If you’re moving your practice from a different state, there’s one more thing to figure out: how to pay taxes in multiple states.

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This article covers the essentials for getting 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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Can therapists form a PLLC in Massachusetts?

Yes, therapists can form PLLCs in Massachusetts. In fact, licensed professionals in the Commonwealth—including psychologists and allied mental health professionals—who wish to form LLCs or LLPs must form the “professional” versions of these structures. A PLLC is a popular choice for therapy practices because it combines limited liability protection with flexible tax options.

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A PLLC generally protects members from the business’s debts and from personal liability for another member’s malpractice. For example, if one member of the PLLC is sued for malpractice, the other members are generally not personally liable for that claim. Each professional remains liable for their own professional conduct, and forming a PLLC doesn’t change that.

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Under G.L. c.156C, s.6(c), an LLC that renders a professional service must include a certificate from the applicable regulating board confirming that its members and managers meet that board’s eligibility standards. In practice, that means the PLLC structure is available to licensed professionals, including:

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• Licensed Mental Health Counselors (LMHCs)
• Licensed Independent Clinical Social Workers (LICSWs) and other social work license tiers
• Licensed Marriage and Family Therapists (LMFTs)
• Licensed psychologists

Who can be a member of a PLLC in Massachusetts?

Members and managers who will provide professional services through the PLLC must meet the eligibility standards of their regulating board, which includes holding a license in good standing. Before you can register a PLLC in Massachusetts, you need a Certificate by Regulatory Board from your licensing board confirming that each of them is duly licensed.

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The relevant licensing board depends on your license type:

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• Board of Registration of Allied Mental Health and Human Services Professions: LMHCs, LMFTs
• Board of Registration of Social Workers: LICSWs and other social work license tiers
• Board of Registration of Psychologists: Psychologists

Can a Massachusetts PLLC elect S corporation status?

A Massachusetts PLLC can elect S corporation status by filing Form 2553 with the IRS.

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The ability to elect S corp status is one of the main benefits of forming a PLLC for your therapy practice. S corp status can reduce the amount of self-employment tax you pay, which can meaningfully lower your tax bill.

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One caveat: running an S corp comes with extra costs, like payroll services and more complex tax filing. That’s in addition to the cost of maintaining a Massachusetts PLLC (covered below). Because of these factors, S corp therapy practices typically start to see meaningful tax savings at around $100,000 or more in net profit.

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For a deeper dive, check out When Should My Therapy Practice Become an S Corp?

Can therapists form a professional corporation (PC) in Massachusetts?

Besides a PLLC, a PC is also a valid business structure for licensed therapists in Massachusetts.

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The PC structure offers similar benefits to the PLLC, including liability protection and the ability to elect S corp status, but comes with more corporate formalities. A PC is formed by filing Articles of Organization under Chapter 156A with a Certificate by Regulatory Board attached. (The Corporations Division publishes both the Articles of Organization and the PC Certificate by Regulatory Board.)

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All shareholders must be licensed to provide the same professional service, which is named in the Articles of Organization, and the PC must file an annual certification of all shareholders’ licensing status. A PC can elect S corporation status by filing IRS Form 2553.

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A PC does cost less in state fees than a PLLC. It’s $275 minimum to form a PC and $125 per year for the annual report, compared with $500 to form a PLLC and $500 per year. Many therapists still choose a PLLC because it has fewer corporate formalities and offers a similar level of protection, but the right choice depends on your practice, so talk to your accountant or attorney.

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PC vs. PLLC: Massachusetts state filing fees

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Fees are from the Secretary of the Commonwealth’s Corporations Division fee schedule (last updated March 2022). The PC fee is a minimum that rises with the number of authorized shares. Always confirm current fees before you file.

Can therapists practice as sole proprietors in Massachusetts?

Yes. When you go into business for yourself, you’re considered a sole proprietor by default, and there’s no state filing to form one. As a sole proprietor, your business is identical with your person: all revenue is your revenue, all losses are your losses.

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Sole proprietorships are the simplest form of business structure, but offer nothing in the way of legal or financial protection. If you do business under a name other than your own, you’ll generally need to file a business certificate with your city or town clerk (covered below).

Can therapists in Massachusetts form partnerships?

Therapists in Massachusetts can form two types of partnerships: a general partnership or a professional limited liability partnership (PLLP).

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A general partnership is the default structure when two or more therapists go into business together. Because all partners share liability equally—including for each other’s malpractice—most legal advisors recommend against choosing this structure.

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A PLLP is designed to protect each partner from the others’ malpractice. It’s a formal entity registered with the state. In fact, it’s very similar to a PLLC, the main difference being that a PLLP is required to have more than one member while a PLLC is not.

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Because the PLLC structure lacks this requirement—leaving members free to join or leave without compromising the structure of the business as a whole—it is the more popular choice with private practice therapists.

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.

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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. 

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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.

How to start your own PLLC mental health business in Massachusetts

This step-by-step guide assumes your therapy practice is brand new. If you’re already operating as a sole proprietor, you may have already completed some steps (like opening a business bank account).

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Many therapists hire legal help to form their PLLC. If you do, expect to pay a flat fee for fully customized formation and an operating agreement tailored to your practice. The cost is typically in the neighborhood of $1,500 to $3,000.

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If you complete all the steps yourself, without outside help, expect to pay about $1,100 to $1,300 in your first year: the $500 state filing fee plus $600 to $800 for malpractice insurance (add $30 if you reserve your business name). If you hire an attorney, expect about $2,600 to $4,300 in the first year. The $500 annual report is a recurring cost that first comes due on your one-year anniversary, so it isn’t part of your startup total. See the full cost breakdown below.

1. Register an EIN with the IRS

The IRS uses your employer identification number (EIN)—also known as a Federal Employer Identification Number or a Federal Tax Identification Number—to track your business for tax purposes.

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More importantly, you need one in order to open a business checking account.

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You can register an EIN for free directly through the IRS website.

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A note on ordering: the IRS advises forming an LLC with your state before you apply for an EIN, because applying earlier may delay your application. If your PLLC doesn’t exist yet, you can complete Steps 2 through 4 first and then get your EIN right after your Certificate of Organization is filed.

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For more about EINs, check out What Is an EIN and Do You Need One for Your Practice?

2. Choose (and optionally reserve) your business name

Search the Corporations Division’s business entity database to confirm your name is available. If you’re not ready to file yet, you can reserve a name for 60 days for a $30 fee by filing an Application of Reservation of Name in person or by mail.

3. Get a Certificate by Regulatory Board

Every member or manager of your PLLC who will provide clinical services must obtain a Certificate by Regulatory Board confirming they are licensed. The Corporations Division publishes the Certificate by Regulatory Board form, and your board certifies it, so contact your regulatory board directly to find out how to request one.

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Your regulatory board depends on your license type:

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• LMHCs, LMFTs: Board of Registration of Allied Mental Health and Human Services Professions. Main email contact: amh.board@mass.gov
• LICSWs and other social work license tiers: Board of Registration of Social Workers
• Psychologists: Board of Registration of Psychologists

4. Draft and file your Certificate of Organization

Your PLLC Certificate of Organization is Massachusetts’ version of the Articles of Organization most businesses file when they register LLCs.

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It includes:

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• Your PLLC’s name
• Your business address
• The professional service to be rendered
• The name and address of your registered (resident) agent, who receives official communications from the state and must be over 18 with an address in Massachusetts
• The names of members and managers providing professional services
• Attached Certificates by Regulatory Board for all practicing members

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You file this document with the Secretary of the Commonwealth, Corporations Division, using the PLLC Certificate of Organization form. By signing it, your PLLC also agrees to follow any conditions set by its regulating board, including liability insurance required under G.L. c.156C, s.65.

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While the Secretary of the Commonwealth allows regular LLCs to file online, PLLCs must file by mail, fax, or in person. Fax filings are generally faster than mail, but processing times vary, so check with the Corporations Division for current timing. If you go this route, be sure to follow the Corporations Division’s instructions for filing by fax.

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The filing fee is $500 if you file by mail or in person and $520 if you file by fax (the extra $20 is an expedite fee).

5. Draft an operating agreement

A written operating agreement generally isn’t required to form a PLLC in Massachusetts, but it’s an essential document for managing and protecting your PLLC.

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An operating agreement lays out the ownership and management of your PLLC. It also includes buy-sell and buyout provisions—what happens if a member’s license lapses or if they leave the practice.

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While you may be able to find an operating agreement template online, none of them are tailored to the needs of a therapy practice. An attorney can help you draft a comprehensive operating agreement from scratch.

6. (Optional) Hold an organizational meeting

If you’re the only member of your PLLC, you don’t need to hold an organizational meeting.

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If your PLLC has multiple members, however, you should hold an organizational meeting in order to formally adopt the operating agreement, assign management roles, and authorize opening a bank account.

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Assign a note-taker for this meeting, and keep the meeting minutes on file for future reference.

7. Open a business checking account

Opening a business checking account now makes it easier to track your tax deductible expenses. It’s also essential for maintaining the liability protection offered by the PLLC business structure.

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If you use your personal checking account to pay business expenses, you not only make it harder to track them and take advantage of tax deductions—you could pierce the corporate veil and compromise some of the liability protection a PLLC grants you.

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Heard Banking* is included with every Heard plan at no extra cost. Open a business checking account directly inside the Heard platform in about 10 minutes—no extra setup required. You'll get a Visa debit card (physical and virtual), and every transaction is automatically categorized based on a chart of accounts designed for private practices, with no manual imports required. No account fees.*** Deposits are FDIC insured up to $3M, and both checking and savings accounts earn up to 2.5% APY.** Learn more about opening a Heard bank account.

8. Obtain NPIs

By this point, you’ve officially registered your PLLC, and you’re ready to begin operating your therapy business in Massachusetts.

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Now it’s time to get National Provider Identifiers (NPIs). You need these in order to identify your practice to insurance companies.

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Even if you don’t plan on accepting insurance, you’ll typically need an NPI to prepare superbills for clients who file out-of-network claims.

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There are two types of NPI:

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• A Type 1 NPI identifies an individual practitioner
• A Type 2 NPI identifies an organization (your practice)

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You may not need a Type 2 NPI if you’re the only clinician at your practice. But getting one now sets you up to hire employees or supervise associates later on.

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You can register both types of NPI online, for free, via the NPI application page.

9. Purchase Massachusetts malpractice insurance

Malpractice (professional liability) insurance is strongly recommended for every clinician, and your licensing board or insurance payers may require it. A PLLC also commits to any liability-insurance conditions set by its regulating board (G.L. c.156C, s.65, as referenced in the PLLC Certificate of Organization).

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If you’re transitioning your practice from a sole proprietorship to a PLLC, you may already have malpractice insurance. But it’s important to carefully review your policy to make sure you’re fully covered while operating as a PLLC.

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If you’re forming a group practice or hiring employees, each clinician typically needs their own malpractice coverage, and the PLLC itself may need a policy too. Ask your insurer how to set this up.

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For more, see Do Therapists Need Professional Liability Insurance?

10. Create a DataSpring (CAQH) profile

If you’re planning to join insurance panels, DataSpring (formerly CAQH) is essential.

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Your DataSpring profile is a central source for all your professional information. Rather than completing multiple applications for multiple insurance panels, you can simply authorize different insurers to access your DataSpring profile. DataSpring has become the standard credentialing service used by most insurers.

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You can create your profile for free. Before you do, make sure you have the necessary information on hand:

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• Your basic personal information
• A history of your education and training, including graduate school and internships
• Your license type and board certification
• Your practice name, address, and contact information
• Your practice’s services and hours of operation
• A list of colleagues
• Malpractice insurance information
• Work history with references
• Disclosure and malpractice history

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Each clinician at your practice needs to create their own individual profile in order to be credentialed.

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It takes some time to set up, but once your DataSpring profile is live, you’re ready to apply to insurance panels.

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Heads up: Every 120 days, you’ll need to confirm that your DataSpring profile info is accurate. Mark the dates in your calendar so you won’t forget.

11. (Optional) Enroll in MassHealth and PECOS

In order to bill Medicaid and Medicare, you first need to enroll in MassHealth (state level) and the Provider Enrollment, Chain, and Ownership System (PECOS) (federal), respectively.

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Massachusetts note: Enrolling to bill MassHealth is optional, but MassHealth enrollment itself may not be. Under G.L. c.112, s.131, LICSW applicants must apply to participate in MassHealth in a limited capacity (ordering and referring), and the social work board has told LICSWs to enroll with MassHealth, at minimum as non-billing providers, to obtain or renew their licenses. Psychologists have reportedly been given similar guidance. Check your board’s current MassHealth requirements before you apply for or renew your license.

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Here’s a quick step-by-step guide for each:

How to enroll in MassHealth (Medicaid)

1. Get your NPI. MassHealth requires you to have one before you apply.
2. Choose the right enrollment type. Select Fee-for-Service (FFS) if you’ll bill MassHealth directly or work at a group practice, or Ordering, Referring, and Prescribing (ORP) if you won’t bill directly.
3. Request and submit your application through MassHealth Provider Enrollment and Credentialing. Be prepared to wait; processing can take up to six months.

How to enroll in PECOS (Medicare)

1. Make sure you meet federal requirements. For marriage and family therapists and mental health counselors, Medicare requires at least two years or 3,000 hours of post-master’s clinical supervised experience before you can enroll (see the CMS enrollment FAQ). Requirements differ by license type, so confirm yours with CMS.
2. Set up your Identity & Access Management (I&A) account. It’s free to open an account, and approval typically takes one to three days. Have your NPIs on hand before starting.
3. File CMS-855I as an individual. To file online, log in to your PECOS account, select “New Enrollment,” and select your license type.
4. Upload necessary documents. To finish filing CMS-855I, you’ll need a copy of your state license, malpractice insurance certificate, W-9, your degree, and documentation of your supervision hours.
5. Enroll your PLLC as a group and reassign benefits. To enroll your practice, file CMS-855B online. You’ll need to list yourself as an individual on CMS-855B, then update Section 6 of your individual CMS-855I to include your group info.
6. Choose participating or non-participating status. If you choose to be a participating provider, you’ll accept Medicare’s full rate and be paid directly. If you’re non-participating, you can charge more, but this produces some friction with billing. In most cases, new providers choose participating status.
7. Wait for approval. Once both CMS-855I and CMS-855B have been submitted, plan on waiting 60 – 120 days for approval. You can use your application control number (ACN) to track the status of your submission. Do not attempt to bill Medicare until you have been approved.

12. Set up EHR, billing, accounting, and other back office systems

Your back office includes all the behind-the-scenes systems and procedures your practice needs to run effectively. Your exact back office needs will depend on your practice—its size, number of clinicians, and plans for the future. But, at minimum, plan on setting up:

Bookkeeping

This is the day-to-day practice of recording revenue and expenses. You may decide to do your own bookkeeping, or have it handled by the experts at Heard. Check out The Complete Guide to Bookkeeping for Therapists.

Accounting

Accounting is one level up from bookkeeping. You take your records of revenue and expenses and use them to prepare financial statements, track performance, and file taxes. You can hire a professional accountant to do this, or use an all-in-one bookkeeping service designed for therapists (Heard). For more, see What’s the Difference Between an Accountant and Bookkeeper?

Electronic Health Records (EHR) and billing

In order to remain HIPAA compliant, you need to securely store clients’ electronic health data. The easiest and most effective way to do so is with an EHR system, which typically also includes tools for billing. Learn more from HIPAA-Compliant Payment Methods for Private Practice.

Payroll

If you elect S corporation status and pay yourself a salary, or if you hire employees, you’ll need to handle tax withholding and remittance, benefits, paid time off, and other details. The simplest way to do so is with a payroll service like Gusto (Heard comes integrated with Gusto for handling payroll).

13. File your first Annual Report

Your first annual report is due on or before the anniversary of your PLLC’s formation. Subsequent reports are due every year after that.

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You must file your Annual Report with the Secretary of the Commonwealth. The filing fee is $500 (see the Corporations Division filing fees for current amounts), making it one of the larger recurring costs of running a PLLC.

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Get local business licenses and register a business certificate in Massachusetts

To operate in Massachusetts, your therapy practice may require licenses or permits. These are handled at the federal, state, and local levels.

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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.

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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.

Register a business certificate (DBA)

In Massachusetts, a “doing business as” (DBA) name is registered by filing a business certificate with the clerk of the city or town where your business has an office (G.L. c.110, s.5). You generally need one if you’re a sole proprietor or general partnership operating under a name other than your own legal name or names.

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Business certificates are typically valid for four years and must be renewed while you’re operating, and fees and procedures vary by city or town. If your PLLC will operate under a name other than its registered name, ask your city or town clerk whether you need a certificate. Note that a DBA doesn’t create a separate legal entity or any liability protection.

Get business insurance for your therapy practice in Massachusetts

Beyond malpractice insurance, the following types of business insurance are highly recommended for therapy practices operating in Massachusetts:

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• General liability insurance
• Commercial property insurance
• Business income insurance
• Professional liability insurance
• Massachusetts worker’s compensation insurance (when you have employees)

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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.

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General liability insurance protects you in case of any damages you cause to someone else’s property or person. Lawsuits can be expensive even when you’re not at fault, so it’s important to make sure you’re well covered. Aim for at least $1 million coverage.

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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.

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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.

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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.

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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

As a self-employed therapist, you’re generally responsible for paying your own income taxes throughout the year, to both the IRS and the Massachusetts Department of Revenue. In Massachusetts, you generally need to pay quarterly estimated installments if you expect to owe more than $400 in state tax on income that isn’t subject to withholding. Check the Department of Revenue’s current rules before each tax year.

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For a walkthrough of the federal side, see How to Pay Quarterly Estimated Taxes for Your Therapy Practice. Wondering how state income taxes work more broadly? 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.

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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.

How long does it take to start a therapy practice in Massachusetts?

Plan to spend four to eight weeks forming your PLLC and setting up your back office and admin processes before you start treating clients.

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If you need to become credentialed with insurance companies or enroll in Medicare/Medicaid before you start treating clients, add another three to six months to your startup timeline.

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Timeline for starting a PLLC therapy practice in Massachusetts

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The biggest variable, time-wise, will be obtaining a Certificate by Regulatory Board that allows you to file your Certificate of Organization. Different regulatory boards set different timeframes for providing a Certificate, and the wait may be longer or shorter depending on current demand. Budget a few weeks for completing this process.

How much does it cost to start a therapy practice in Massachusetts?

To start a PLLC therapy practice in Massachusetts, the bare minimum cost is the $500 state fee to file your Certificate of Organization.

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Realistically, once you add malpractice insurance, plan on about $1,100 to $1,300 in your first year if you do it yourself, or about $2,600 to $4,300 if you hire an attorney to help with formation and your operating agreement. The $500 annual report is a recurring cost that first comes due on your one-year anniversary, so it isn’t included in those startup totals.

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Cost of starting a PLLC therapy practice in Massachusetts

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The cost of forming a PLLC rises according to the complexity of your practice. For instance, a multi-member PLLC will cost more than a single-member PLLC because of the time required to prepare formation documents with the help of an attorney. An S corp PLLC will generally cost more than a PLLC taxed as a disregarded entity because of the need to set up payroll, plus more complex tax filing (resulting in higher accountants’ fees). State fees can change, so confirm current amounts with the Corporations Division before you file.

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Once you form a Massachusetts PLLC, you may be able to meaningfully reduce your tax burden by electing S corporation status. For details, check out The Complete S Corp Guide for Private Practice Therapists.

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Summary

• Massachusetts recognizes five business structures for therapists: sole proprietorship, general partnership, PC, PLLC, and PLLP.
• For many therapists in Massachusetts, a PLLC is a strong fit; it combines liability protection with pass-through taxation and has fewer corporate formalities than a PC, though its state filing fees are higher.
• Before filing, you must obtain a Certificate by Regulatory Board confirming each clinical member is licensed and meets your board’s eligibility standards.
• A PLLC generally protects members from the business’s debts and from personal liability for each other’s malpractice, but each professional remains liable for their own conduct and the PLLC commits to any liability insurance conditions set by its board.
• Electing S corp status for your PLLC can meaningfully lower your tax bill, typically once net profit reaches around $100,000 or more.
• If you form your PLLC yourself, plan on about $1,100 to $1,300 in your first year (the $500 state filing fee plus malpractice insurance), or about $2,600 to $4,300 with an attorney. The $500 annual report is a recurring cost that first comes due on your one-year anniversary.

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Want to learn more? Check out our guide on how to start a therapy practice, or see How to Choose a Business Entity for Your Therapy Practice.

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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.


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Bryce Warnes is a West Coast writer specializing in small business finances.