State Guide

How to Start a Therapy Practice in New York

Headshot of Bryce Warnes
February 2, 2023
January 31, 2023
Bryce Warnes
Content Writer
Book a free consult
New York City skyline

To start a therapy practice in New York, follow these seven steps: 

  1. Check local zoning regulations
  2. Register a business name
  3. Choose a business structure
  4. Register your business
  5. Obtain relevant licenses
  6. Get insurance
  7. 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 Empire State. For advice on budgeting, marketing your practice, and billing your clients, check out our general guide, How to Start a Therapy Practice.

{{resource}}

Check local zoning regulations in New York

New York boasts 62 counties, 933 towns, and 61 cities. 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 New York

In New York, business names are managed at both the county and the state level. 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 NY county clerks’ offices, with contact info.

LLCs, corporations, and other business structures file their Certificates of Assumed Name with the Department 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 name for your therapy practice:

  1. Do a name search to make sure your name isn’t already taken.
  2. File a Certificate of Assumed Name 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, the Department of State has a detailed guide
  3. 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 a Certificate of Assumed Name, plus an additional $25 for each county your company will be operating in.
  4. Don’t worry about renewals. Unlike in some other states, DBAs registered in New York do not expire.

Choose a business structure recognized by the State of New York

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 New York, the business structures you can choose from are:

  • Sole proprietorship
  • Business corporation
  • Not-for-profit corporation
  • Professional service limited liability company (PLLC)*
  • Professional service corporation*
  • General partnership (GP)
  • Limited liability partnership (LLP)

*Mental health practitioners—as well as other professionals—who wish to form an LLC or incorporate are typically required to form a PLLC or a professional service corporation, respectively. 

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.

Business Corporation 

A business corporation is a typical corporation as we know it: It exists separately from its owners, who own shares in it. 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.)

Not-for-Profit Corporation

A not-for-profit corporation is, in many cases, formed for charitable purposes. But a corporation does not need a charitable mission in order to be not-for-profit.

New York’s not-for-profit corporations must comply with Not-for-Profit Corporation Law (NPCL). This is a complex area of law, and before you consider forming a not-for-profit corporation, be sure to consult with a lawyer well versed in NPCL.

Limited Liability Company (LLC)

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.

Professional Services Limited Liability Company (PLLC)

In New York, therapy practices wishing to become an LLC typically must form a PLLC. The PLLC provides added protection in case your therapy practice is sued for malpractice: Only the individual member of the PLLC being sued is liable; the liability doesn’t carry on to the company as a whole. For more about PLLCs, see the Department of State’s website, or take a deeper dive with this article from UpCounsel.

Professional Service Corporation

Those practicing professions recognized by the State of New York are typically required to form professional service corporations. A professional service corporation functions like a business corporation, with added protections in case a shareholder is sued for malpractice.

General Partnership (GP)

In a general partnership, all members are general partners—meaning, they all share legal and financial liability equally. Therapists wishing to form a partnership in New York must form a limited liability partnership (LLP.)

Limited Liability Partnership (LLP)

Unlike a limited partnership, none of the members of an LLP are limited partners. In this case, “limited” refers to the liability assumed by the partnership as a whole in case one of its members is sued for malpractice.

An LLP is the “partnership version” of a PLLC or professional service corporation.

Register your therapy practice in New York

To register your business in New York, you need to do two things:

  1. File the business registration with the state
  2. Pay the filing fee

Here’s a breakdown for each of the business structures covered in section 3 above.

Register a sole proprietorship in New York

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 sole proprietorship in New York. 

Incorporate in New York

Filing fees: $125 filing fee

  1. Choose a business name
  2. 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.
  3. Draft and file your Certificate of Incorporation

You can file most forms online using the Department of State’s online filing service.

Once you’ve incorporated in New York, you can elect S corporation status by filing IRS Form 2553.

Register a Professional Services Limited Liability Company (PLLC) in New York

Filing fees: $250 total

  1. Choose a business name
  2. 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.
  3. Obtain a Certificate of Authority (Form PLS709) from the New York State Department of Education.
  4. File your Articles of Organization
  5. Publish a copy of your Articles of Organization in two newspapers in the county where you operate. This must be done within 120 days of your Articles of Organization becoming effective. Each newspaper will provide you with an affidavit. If you’re unsure where to publish, consult with the County Clerk’s office or an attorney.
  6. Submit a Certificate of Publication to the New York Department of State and pay the $50 filing fee. 

You can file most forms online using the Department of State’s online filing service.

Form a Professional Service Corporation in New York

Filing fees: $125 filing fee

  1. Choose a business name
  2. 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.
  3. Complete and file an Application for Authority with the Department of State.
  4. Obtain a Certificate of Authority (Form PLS709) from the New York State Department of Education.
  5. Draft and file your Certificate of Incorporation

You can file most forms online using the Department of State’s online filing service.

Register a Limited Partnership (LP) in New York

Filing fees: $250 total

  1. Choose a business name
  2. 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.
  3. File a Certificate of Limited Partnership
  4. Draft a partnership agreement. This isn’t required by law in the State of New York, but it will help you stay organized and settle any disputes between partners.
  5. Publish either your Certificate of Registration or an announcement of your LP’s formation in two newspapers in the county where you operate. This must be done within 120 days of your Articles of Organization becoming effective. Each newspaper will provide you with an affidavit. If you’re unsure where to publish, consult with the County Clerk’s office or an attorney.
  6. Submit a Certificate of Publication to the New York Department of State and pay the $50 filing fee. 

You can file most forms online using the Department of State’s online filing service.

Register a General Partnership (GP) in New York

Filing fees: None, except the cost of registering an assumed name

You aren’t required to file any forms with the state to form a GP in New York. However, you should draft a General Partnership Agreement, which all partners sign. This may help to settle legal disputes in the future.

Register a Limited Liability Partnership (LLP) in New York

Filing fees: $250 total

  1. Choose a business name
  2. 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.
  3. File a Certificate of Registration
  4. Draft a partnership agreement. This isn’t required by law in the State of New York, but it will help you stay organized and settle any disputes between partners.
  5. Publish either your Certificate of Registration or an announcement of your LLP’s formation in two newspapers in the county where you operate. This must be done within 120 days of your Articles of Organization becoming effective. Each newspaper will provide you with an affidavit. If you’re unsure where to publish, consult with the County Clerk’s office or an attorney.
  6. Submit a Certificate of Publication to the New York Department of State and pay the $50 filing fee. 

{{resource}}

Get business licenses and permits for your therapy practice in New York

To operate in New York, 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 New York. 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 county and/or 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. For instance, in Buffalo, billiard parlors and sightseeing buses need licenses to operate; therapy practices do not. 

At the low end of the scale, a county or municipal business license costs $25, but the cost varies widely according to municipality.

Get business insurance for your therapy practice in New York

The following types of business insurance are highly recommended for therapy practices operating in New York:

  • General liability insurance
  • Commercial property insurance
  • Business income insurance
  • Professional liability insurance
  • New York 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 State of New York 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 New York 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 New York

Every business earning income in New York is required to pay state taxes. If you owe over $300 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 New York—or if you operate in New York, 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.

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.

{{cta}}

Subscribe to our newsletter
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Download Free Private Practice Startup Checklist for Therapists
Download now →

You might like

How to Start a Therapy Practice in Oregon

How to Start a Therapy Practice in Massachusetts

How to Start a Therapy Practice in Illinois

Heard

is

an

all-in-one

financial

solution

for

therapists

that

combines

software

and

human

support

to

handle

bookkeeping,

taxes,

payroll,

and

more.

Get our Tax Deduction Cheatsheet for Therapists

Use this cheatsheet to maximize your deductions and save money on taxes for your therapy practice.

X