Why you should (or shouldn’t) start an LLC for your counseling center

Wondering whether or not you should (or shouldn’t) start an LLC for your counseling center? According to the American Psychological Association, the LLC structure may increase access to capital. Moreover, an LLC protects against malpractice lawsuits and licensing pitfalls. However, an LLC structure could also be overkill for smaller businesses.

11.1% of Americans with a mental illness don’t have an insurance policy. Thus, there’s a chance that a number of your patients aren’t insured. In addition, they may sue you if things go wrong for them. If your counseling center doesn’t have a solid insurance policy, starting an LLC could be the way to go.

This article will go over the pros and cons of starting an LLC for your counseling center. Should you take the LLC route or do something different? Using the advice in this article, you’ll be able to make that decision for yourself.

Why You Should Start an LLC for Your Counseling Center

You should get an LLC to cover your grounds and build a solid backbone for counseling centers if you don’t have insurance. Furthermore, it’ll help you separate your business and personal assets. Thus, clients can’t pursue legal action against you as an individual but as a business. We’ll cover more details about why you should start an LLC for counseling centers.

Credibility Boost

An LLC gives your counseling center an aura of authority. If you operate legally within your state, your clients may feel safer in your hands. Without a legal structure, you gain a competitive advantage over therapists who work independently.

Some clients may not care whether you’re an LLC, and they might not understand it. When you explain how your counseling center is a legal entity, it may entice them to trust you.

Starting an LLC Is Easier Than Ever

Nowadays, finding helpful resources is easy and makes the process easier. You can do all the research you need before signing any paperwork, as it takes only a few hours to absorb and understand the LLC business structure. Thus, you can understand every step of the process before you’ve even begun. Many of these resources are available for free here.

However, you may need to ensure you don’t choose an LLC because it is the fastest option. Have a look at your business reports and decide if you need legal protection. If possible, survey your core clients and see if they’d stand behind your decision.

Room for Growth

An LLC for counseling centers may provide legal protection on a federal level. If your headquarter office is in Illinois, but you have branches in Las Vegas and Denver, an LLC can help connect your centers. You operate as a unified legal entity.

Your managers will also enjoy legal protection against business debts and other liabilities. Furthermore, you won’t be paying taxes for each branch but as a whole organization. If it doesn’t cut your operation costs, it’ll simplify your accounting.

Why You Shouldn’t Start an LLC for Your Counseling Center

Now that you know why you should start an LLC let’s talk more about why you shouldn’t. The single most reason you shouldn’t start an LLC for your counseling center is your growth potential. An LLC might be overkill if you’re not planning to invest and grow your counseling center. Some therapists may start a counseling practice and work part-time, and in this case, they don’t necessarily need an LLC. However, if you plan to do counseling full-time, an LLC might be the way to go. Next, we’ll cover the crucial factors of when you should consider an LLC for your counseling center.

When to Consider an LLC for Your Counseling Center

It’s Only You

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You shouldn’t start an LLC when you’re a single-member counseling center. Otherwise, you may cut your losses by avoiding the business structure. On the other hand, an LLC is a must if you have partners, managers, or other team members. An LLC could protect everyone from the get-go by defining each role and its responsibilities.

If it’s only you, it’s best to wait and see if your counseling center will resonate with clients. If it doesn’t, you won’t have to go through the legal trouble of closing your LLC.

You’re in the Wrong State

Not all counseling centers can start an LLC. Some industries, like insurance, can’t establish an LLC. Moreover, some state-licensed practitioners can’t form an LLC. However, they can choose to start a limited liability partnership.

Whether your counseling center’s licensed therapists fall into these categories depends on your state laws. Thus, you shouldn’t start an LLC if not legally permitted to.

Conclusion

Starting an LLC is easier than ever with many available resources and online services. You should start an LLC if you plan to expand beyond your state and open branches in other locations. You may also want to choose the LLC business structure for your counseling center to increase trust. In addition, it may help limit how clients might sue you and your organization.

An LLC is a great option for small businesses, but it may be overwhelming. Furthermore, your state might impose limitations on starting an LLC. If you have doubts, you may want to do more research before committing yourself.

Author: Mandy Kloppers

Mandy is a qualified therapist who treats depression, anxiety, OCD, PTSD, trauma, and many other types of mental health issues. She provides online therapy around the world for those needing support and also provides relationship counselling.