Starting a private practice in Texas involves more than choosing an office and setting fees. Counselors must consider their licensing status, business structure, ownership arrangement, tax obligations, and professional responsibilities before they begin seeing clients independently.
These decisions are connected. An LPC Associate cannot use a business entity to circumvent supervision, and a fully licensed counselor still needs a structure that complies with Texas ownership rules and reporting obligations.
This guide focuses on Texas Licensed Professional Counselors and LPC Associates. It explains how licensure, professional entities, franchise tax, S corporation treatment, telehealth, workers’ compensation, and bookkeeping affect the process.
Full LPC Licensure Comes Before Independent Practice
A fully licensed Texas LPC may practice independently within the scope of the credential. An LPC Associate may provide counseling only under the supervision of a Board-approved supervisor and cannot practice independently. Forming a PLLC, obtaining an NPI, renting an office, or creating a website does not expand the associate’s authority.
An applicant must receive the LPC Associate license before providing counseling services, including supervised services. The application includes education, examination records, fingerprinting, a supervisory agreement, and a National Practitioner Data Bank self-query. The Texas LPC Associate licensing requirements explain the process.
Full LPC licensure requires at least 3,000 supervised hours over at least 18 months. At least 1,500 hours must involve direct counseling, and the associate must receive four hours of direct supervision each month. A practice hiring associates should verify licensing, supervision, billing, and access to records before services begin.
Choose the Entity After Resolving Ownership
Texas permits professional limited liability companies and professional associations for qualifying licensed professionals. A counselor may need a professional entity rather than an ordinary business entity, depending on the profession, owners, and listed services.
A PLLC must identify the professional service it will provide. Its members and managers must be professional individuals or professional organizations authorized to provide the listed services. Its name must include “professional limited liability company” or an accepted abbreviation. The Texas PLLC formation instructions explain these requirements.
Texas also permits licensed professional counselors and certain other mental health professionals to form a professional association. A Texas healthcare attorney should compare the available structures before documents are filed.
Texas Permits Certain Shared Mental Health Ownership
Professionals in psychology, clinical social work, professional counseling, and marriage and family therapy may jointly own a professional entity that provides services within each practitioner’s licensed scope.
This rule does not permit unrestricted ownership. An unlicensed spouse, investor, office manager, or unrelated company generally cannot receive an ownership interest unless that person or organization qualifies as an authorized professional owner under Texas law.
Joint ownership does not merge clinical authority. Each clinician must work within their own scope of practice, and no professional may use contracts, incentives, bylaws, or management authority to control another’s treatment decisions.
A Professional Entity Does Not Remove Clinical Liability
Forming a PLLC or professional association does not change a clinician’s responsibility for their own professional conduct. Texas law preserves a client’s remedies against the person who commits an error, omission, negligent or incompetent act, or malfeasance in the course of professional services.
The entity may also be jointly and severally liable for wrongful professional conduct committed by an owner, official, employee, or agent acting on its behalf. Formation does not lower the standard of care.
Professional liability insurance, contracts, supervision documents, privacy procedures, and separate finances should be in place before services begin. A Texas attorney should review protection for leases, employment obligations, and other business debts.
A Professional Association Has an Extra Deadline
A Texas professional association must file an annual statement with the Secretary of State by June 30. It must list the names and addresses of all members, officers, directors, and executive committee members.
Failure to file can result in termination after the required notices are served. Reinstatement may require each delinquent statement, a reinstatement certificate, filing fees, and a Comptroller tax-clearance letter. The professional association annual statement instructions explain the filing rule.
A practice comparing a PA with a PLLC should consider governance, annual reporting, formation costs, and tax administration. Angelo & Associates explains why the choice of entity and an S corporation election are separate decisions.
Texas Uses Franchise Tax Instead of Conventional Income Tax
Texas does not impose a general state individual income tax or a conventional corporate net-income tax. It imposes franchise tax on many entities formed in Texas or doing business there, including LLCs, S corporations, professional corporations, and professional associations.
A sole proprietorship that is not legally organized to limit liability is generally outside the franchise-tax system. A single-member LLC remains a taxable entity even when the IRS disregards it for federal income-tax purposes.
A therapist should not form a PLLC or elect S corporation taxation solely because there is no Texas personal income tax. Franchise tax reporting, payroll, professional filings, and annual compliance costs should be included in the calculation.
The No-Tax-Due Threshold Does Not End Reporting
For Texas franchise tax reports due in 2026 and 2027, the no-tax-due threshold is $2.65 million in annualized total revenue. Many solo and small group practices will fall below that amount and owe no franchise tax.
An entity at or below the threshold no longer files a No Tax Due Report. A Texas PLLC or professional association must still file an annual Public Information Report unless a specific exception applies. Missing that report can affect the entity’s standing and right to transact business.
The usual annual deadline is May 15, with the deadline moving to the next business day when necessary. The Texas franchise tax requirements should be checked each year.
Franchise Tax Changes the S Corporation Calculation
A federal S corporation election does not remove the entity from the Texas franchise tax system. Texas includes S corporations among taxable entities, and federal pass-through treatment does not override state filing rules.
For reports due in 2026 and 2027, the standard rate for businesses other than qualifying retailers and wholesalers is 0.75%. An eligible entity with annualized total revenue of $20 million or less may use the EZ Computation method at a rate of 0.331%.
Under the standard method, taxable margin may be based on 70% of revenue, revenue minus cost of goods sold, revenue minus compensation, or revenue minus $1 million. Counseling practices usually have limited cost-of-goods-sold deductions because they mainly sell services. The best method depends on the facts.
S Corporation Savings Must Be Measured After Payroll
A working S corporation shareholder must receive reasonable W-2 wages before the company makes non-wage shareholder distributions. The IRS may reclassify distributions as wages when salary does not reasonably reflect the services performed. The IRS S corporation compensation guidance explains this rule.
Texas adds franchise tax and reporting to that calculation. The owner should compare federal employment tax savings with payroll, bookkeeping, tax preparation, entity costs, and future franchise tax exposure.
A practice below the threshold may owe no current franchise tax, but it still needs to maintain accurate books and file a timely Public Information Report. Angelo & Associates can assess whether S corporation taxation fits a therapy practice.
Texas Has No General Statewide Business License
Texas does not issue one general business license covering every company. A therapy practice still needs the correct professional license, entity filing, tax registration, assumed-name documents, and any applicable local approvals.
A Texas filing entity using a different operating name generally must file an assumed-name certificate with the Secretary of State. Each name requires a separate filing. The Texas assumed-name instructions explain the process.
Cities and counties may impose zoning, occupancy, home-business, signage, or local registration requirements. The absence of one statewide license does not remove local obligations.
Telehealth Authority Follows the Client’s Location
A provider serving a client physically located in Texas generally needs valid Texas authority to practice, including when the provider is in another state. A Texas license does not automatically authorize services elsewhere.
The counselor must follow the rules in the client's jurisdiction. The practice should verify location, professional authority, payer rules, privacy safeguards, emergency contacts, and documentation procedures.
The Texas Behavioral Health Executive Council provides virtual practice and professional mobility guidance for behavioral health professionals.
Workers’ Compensation Is Optional, but Opting Out Has Consequences
Most Texas private employers may choose whether to purchase workers’ compensation insurance. An employer without coverage becomes a nonsubscriber and must comply with employee-notice and state-reporting duties.
A nonsubscriber must post workplace notices and notify new employees in writing. With at least five employees, it must report qualifying work-related injuries, illnesses, and deaths that result in more than one day of lost time. The Texas nonsubscriber guidance explains these duties.
Nonsubscription increases legal exposure. In an employee injury lawsuit, the employer generally cannot rely on contributory negligence, assumption of risk, or a fellow employee’s negligence as defenses.
Build the Accounting System Around Thresholds and Deadlines
The books should track private-pay revenue, insurance receipts, refunds, wages, contractor payments, owner compensation, shareholder distributions, benefits, franchise tax calculations, and filing fees.
A sole proprietor generally takes owner draws. An S corporation pays a working shareholder through payroll and records qualifying distributions separately. A PLLC or professional association below the threshold still needs records that support annualized revenue and its Public Information Report.
Angelo & Associates provides accounting, tax, bookkeeping, and financial management services for therapy practices. Before opening or restructuring a Texas practice, contact Angelo & Associates to model owner compensation, franchise tax, payroll, and cash flow. A Texas healthcare attorney should review licensure, entity choice, ownership, supervision, contracts, assumed names, and professional liability separately.