Starting a behavioral health practice in Texas can be rewarding, but it takes planning, paperwork, and compliance with state and local laws. Whether you’re a licensed therapist, counselor, psychologist, or psychiatrist, the process involves more than finding patients and opening your doors. You need to handle zoning laws, business formation, licensing, insurance, and taxes before your practice becomes official.

This guide breaks everything down step-by-step to help you start your practice the right way and avoid costly mistakes.

Local Zoning Laws and Regulations in Texas

Before signing a lease or setting up an office, check your local zoning rules. Texas has 254 counties and more than 1,200 municipalities, each with its own zoning codes. Some areas allow commercial use freely, while others restrict where healthcare or counseling offices can operate.

If you plan to work from home, local zoning laws may not allow businesses in residential zones. In that case, you can request a zoning variance, which is an exemption that allows you to run your practice legally.

To find out if your property qualifies, contact your city or county zoning department. They can confirm what’s allowed in your area and guide you through applying for a variance if needed. Getting this step right early prevents problems later with local regulators or landlords.

Business Name Registration in Texas

Your business name is how patients will know you, so it needs to be unique and compliant with Texas law. Depending on your business type, name registration can happen at the county or state level.

If you’re a sole proprietor or in a general partnership, file a Certificate of Assumed Name with your county clerk. You can find contact details for all Texas county clerks on the state’s website.

If you’re forming a professional entity like an LLC, PLLC, or corporation, file an Assumed Name Certificate with the Texas Secretary of State instead. You can reserve a name ahead of time using Form 501 and then officially register it using Form 503.

Keep in mind that assumed names in Texas expire after ten years. When filing online, you can use the Secretary of State’s SOSUpload system to pay fees and upload documents quickly.

You don’t need to register your personal name if you’re operating as “Jane Smith Therapy,” but if you use a name like “Smith Behavioral Health Center,” registration is required.

Choosing the Right Business Structure

Your business structure affects your taxes, legal protection, and ownership setup. In Texas, mental and behavioral health professionals can choose between several entity types:

• Professional Association (PA)
• Professional Limited Liability Company (PLLC)
• Limited Liability Partnership (LLP)

You can also work as a sole proprietor or in a general partnership, but those options do not protect your personal assets if your business is sued. For healthcare professionals, forming a PA, PLLC, or LLP is usually a smarter choice.

Professional Association (PA):
A PA operates like a corporation but is designed for licensed professionals. Members get limited liability protection, meaning if one is sued, others are not held responsible. Each professional is still liable for their own malpractice, but not for other members’ actions.

Limited Liability Partnership (LLP):
An LLP must have at least two partners. Each partner’s liability is limited to their investment in the partnership. This setup allows income to pass through to the owners, avoiding double taxation. It’s ideal for professionals who want to share responsibility without risking personal assets.

Professional Limited Liability Company (PLLC):
A PLLC works much like a standard LLC but is created specifically for licensed professionals such as therapists or psychologists. It offers flexible management and tax options while protecting members from liability for the company’s debts or actions.

Each of these options must comply with Texas regulations for professional entities. If you’re unsure which structure works best for your practice, consider speaking with a healthcare lawyer who can help you choose based on your goals, partners, and risk tolerance.

Registering Your Behavioral Health Practice in Texas

Once you’ve decided on a business structure, it’s time to register your practice with the Texas Secretary of State. Each type of entity has its own filing requirements and fees.

For a Professional Association (PA):

• File Form 204 (Certificate of Formation, Professional Association)
• Appoint a registered agent with a Texas address
• Pay a $750 filing fee
• Submit documents using the SOSUpload system

For a Limited Liability Partnership (LLP):

• File Form 701 (Registration of LLP)
• Appoint a registered agent
• Pay $200 per partner plus the franchise tax annually
• Draft a partnership agreement to outline roles and responsibilities

For a Professional Limited Liability Company (PLLC):

• File Form 206 (Certificate of Formation, PLLC)
• Appoint a registered agent
• Pay a $300 filing fee plus franchise tax
• Submit through SOSUpload for faster processing

After registration, your business becomes a legal entity in Texas. Keep copies of all filings for your records and confirm your registration through the Secretary of State’s online business search tool.

Business Licenses and Permits

Texas does not issue a statewide general business license for most healthcare professionals, but some local governments do. Before opening, check with your city or county clerk to see if you need a local business permit.

You don’t need federal permits to operate a therapy or behavioral health practice unless you bill federal insurance programs like Medicare. Also, Texas does not require additional operating licenses beyond your professional license.

If you provide specialized services such as dyslexia therapy or telehealth across state lines, other licenses or certifications may apply. It’s best to verify with your professional licensing board before offering new services.

Business Insurance for Mental and Behavioral Health Practices

Insurance protects your practice from lawsuits, property damage, and financial loss. In Texas, several policies are strongly recommended even if they’re not legally required.

General Liability Insurance: Covers injuries or property damage caused by your business operations.

Professional Liability Insurance: Also known as malpractice insurance, this protects you against claims of negligence, libel, or professional mistakes.

Commercial Property Insurance: Covers office space, computers, furniture, and other physical assets.

Business Income Insurance: Reimburses lost income if you must temporarily close because of fire, theft, or storm damage.

Worker’s Compensation Insurance: Not required by Texas law, but if you hire employees, it’s smart to have. Without it, you could be sued if an employee is injured while working.

Many insurers bundle these coverages into a Business Owner’s Policy (BOP), which can save money and simplify management.

Taxes for Behavioral Health Practices in Texas

Texas does not have a state income tax, but it does require businesses with over $1.18 million in annual revenue to pay a franchise tax. This tax applies to entities like PLLCs, LLPs, and PAs.

If your practice operates in multiple states or relocates from another state, you’ll need to determine how to meet tax obligations in each. The rules vary based on where you earn income and how long you conduct business in those locations.

For example, if you open a branch in another state, you might owe taxes in both states, even if your main office remains in Texas. Working with a tax professional who understands healthcare practices can help you stay compliant and avoid penalties.

Marketing and Growing Your Practice

Once your practice is legally set up, focus on attracting clients and building your reputation. Creating a business website, registering your Google Business Profile, and listing your practice in online therapist directories can help new patients find you.

Social media platforms and referral networks can also drive awareness. Networking with local physicians, schools, and hospitals is another effective way to grow your client base.

Offering telehealth services expands your reach, especially in rural Texas communities where in-person care options are limited. Just be sure your telehealth platform follows HIPAA privacy standards.

Relocating or Expanding to Another State

If you’re moving your behavioral health practice to Texas from another state, or expanding across state lines, you’ll need to review licensing, insurance, and tax obligations for both states.

Your professional license may need to be verified or transferred. Some states have reciprocity agreements that make the process faster, but it depends on your profession. Also, pay attention to each state’s telehealth rules, which may require you to hold a license in the state where your patient is located.

When handling taxes, track your income by state to make reporting easier. A tax advisor experienced in healthcare businesses can help you stay compliant and avoid double taxation.

Get Legal Help With Dike Law Group

Starting a behavioral health practice in Texas can feel like a big project, but you don’t have to go through it alone. A healthcare lawyer can guide you through zoning laws, business formation, and compliance issues so you can focus on helping patients.

If you’re ready to start your behavioral health practice, Dike Law Group can help you form your entity, handle filings, and ensure you meet all state and local requirements. Call (972) 290-1031 today to schedule a consultation and get your practice started on the right path.