Setting up a California med spa business, step by step

One entity or two is the first decision to make

A physician who will own and run the med spa alone usually needs one entity, a professional medical corporation; a lay founder's involvement means a second company that provides management services.

The reason is that California does not let an LLC practise medicine. Corporations Code 17701.04(e) says nothing in the LLC act permits an LLC to render professional services in the state, and medicine is a professional service. That rules out the entity most small businesses default to, at least for the clinical side.

So the practice is a medical corporation, majority-owned by California-licensed physicians under the rules on who can own a med spa. If a non-physician is putting in capital, running operations or holding the lease, that person's stake belongs in a separate management company.

That second company is an ordinary LLC that sells administrative services to the practice under a written agreement. Its boundaries are strict and are set out on the MSO page. Decide the shape now, because the lease, the bank accounts and the name all need to sit with the right entity from the start.

Corp. Code 17701.04(e)California Corporations Code 17701.04(e) provides that nothing in the LLC act permits an LLC to render professional services in the state. — California Legislative Information, retrieved 2026-09-27

Clearing and reserving the corporation's name

Check that your chosen name is available with the Secretary of State before filing, and reserve it if the filing will be delayed; a reservation holds the name for 60 days.

The name on the Articles is the corporation's legal name. It is not necessarily the name patients see. A medical corporation that wants to trade as a spa brand will also need a fictitious name permit from the Medical Board, which has its own rules: the Board will not approve a name that is deceptive, misleading or confusing, or one too similar to a name it has already issued.

Form ARTS-PC itself tells applicants to contact the board that regulates their profession about any specific corporate name style rules. For a medical corporation that board is the Medical Board of California.

A practical approach is to choose a plain legal name for the corporation, often including the physician's surname, and put the brand on the fictitious name permit. That keeps the Articles simple and lets you rebrand later by amending the permit rather than the corporation.

60 daysThe California Secretary of State will reserve a business entity name for a period of 60 days. — California Secretary of State, retrieved 2026-09-27

The Medical Board will not issue a fictitious name that is deceptive, misleading or confusing, or similar to a name it has previously issued. — Medical Board of California, retrieved 2026-09-27

Filing Form ARTS-PC creates the medical corporation

The medical corporation exists once the Secretary of State files your Articles of Incorporation of a Professional Corporation, Form ARTS-PC, which costs $100.

The form asks for the corporate name, a street address for the corporation that cannot be a P.O. box, an agent for service of process with a California street address, the number of shares the corporation may issue, and the profession it will practise. It declares the corporation a professional corporation within the meaning of Corporations Code section 13400 and following, and every incorporator signs it.

File online through bizfile Online for the fastest service. The Secretary of State adds a $15 special handling fee for in-person paper submissions, and an optional certified copy is $5. Online filing avoids both unless you need the certified copy for a bank.

The agent for service of process can be the physician owner, provided they have a California street address and accept that it appears in the public record. Many owners use a commercial registered agent instead, to keep a home address off the filing.

$100Form ARTS-PC carries a $100 filing fee and an optional $5 certified copy fee. — California Secretary of State, retrieved 2026-09-27

$15The Secretary of State charges a $15 special handling fee for in-person paper submissions, which does not apply to documents sent by mail. — California Secretary of State, retrieved 2026-09-27

Bylaws, shares and a buy-sell agreement set who owns what

Issue shares only to people the statute allows, keep non-physician licensees at or below 49 percent combined, and put a buy-sell agreement in place at formation.

Corporations Code 13401.5 lists the licensees who may hold minority shares in a medical corporation, including registered nurses and physician assistants, and caps their combined holding at 49 percent. A lay investor cannot hold shares at all. If the ownership plan does not fit those limits, the corporation is the wrong vehicle for it.

The bylaws should record the share classes and the directors. The buy-sell agreement handles the event most small practices never plan for: a shareholder who loses their license or dies. Corporations Code 13407 gives 90 days after disqualification, and six months after death, for the shares to move to an eligible person.

A written agreement naming the buyer and the price turns that deadline from a crisis into a transfer. Draft it with a California health care attorney, since a formation service does not supply one fitted to a medical corporation.

49 percentCorporations Code 13401.5 caps the combined shareholding of non-physician licensees in a medical corporation at 49 percent of the total shares. — California Legislative Information, retrieved 2026-09-27

90 daysCorporations Code 13407 requires a disqualified shareholder's shares to be transferred within 90 days, and a deceased shareholder's within six months. — California Legislative Information, retrieved 2026-09-27

The Statement of Information follows within 90 days

Every new California stock corporation files a Statement of Information within 90 days of registering, and again every year before the end of its registration month; the fee is $25.

The statement lists the officers, directors, addresses and agent for service of process. The Secretary of State's welcome letter to new corporations states the 90-day window and the annual cycle. File it through bizfile Online, where the Secretary of State says it typically processes within minutes.

Be wary of mail that looks like a state notice. The Secretary of State has published an alert about private companies soliciting Statement of Information filings for a service fee nearly ten times the state fee, and says those forms are not sent on its behalf. Failure to file can bring penalties from the Franchise Tax Board and, in time, suspension.

90 daysCalifornia stock corporations must file a Statement of Information within the first 90 days of registering and every year thereafter before the end of the registration month. — California Secretary of State, retrieved 2026-09-27

The Secretary of State warns that some private solicitations charge a service fee nearly ten times the fee to file a Statement of Information directly. — California Secretary of State, retrieved 2026-09-27

The Secretary of State states that failure to file a required Statement of Information may result in Franchise Tax Board penalties and suspension or forfeiture. — California Secretary of State, retrieved 2026-09-27

The EIN and the practice's own bank account

Apply for the corporation's federal employer identification number directly with the IRS, which issues it free online, and open a bank account in the corporation's legal name.

The IRS says plainly that you never have to pay a fee for an EIN and warns against websites that charge for one. Apply once the Articles are filed, using the corporation's exact legal name, because the bank will match the name on the EIN notice against the filed Articles.

Keep the practice's money in the practice's account. Patient payments come in there, clinical staff are paid from there, and any management fee to an MSO goes out from there under the services agreement. Mixing the two entities' funds weakens both the liability separation and the argument that the MSO is only a vendor.

The IRS states that you never have to pay a fee for an EIN and issues one online directly for free. — Internal Revenue Service, retrieved 2026-09-27

The Medical Board fictitious name permit for the spa brand

If patients will see a name other than the physician's own, the corporation applies to the Medical Board for a fictitious name permit, at $70, with a copy of the Articles attached.

The Board processes applications in roughly four to six weeks. The permit must be renewed every two years for $50, with a $20 delinquent fee if the renewal payment arrives more than 30 days late. Business and Professions Code 2415 ties the permit to the Board's license renewal rules.

Because the Articles have to accompany the application, this step cannot start until the corporation is filed. It is usually the longest wait in the setup sequence, so file the Articles early. The application itself is covered in the fictitious name permit guide.

$70The Medical Board's fictitious name permit costs $70 to apply for and $50 to renew every two years, with a $20 delinquent fee for late renewal. — Medical Board of California, retrieved 2026-09-27

Forming the management LLC, if the business has one

The management company is a standard California LLC, created by filing Form LLC-1 with the Secretary of State for $70, and it should be formed only after its role is clearly non-clinical.

This is the one entity in a med spa structure that behaves like any other small business. Platforms that form and maintain ordinary LLCs, including Tailor Brands, can handle this filing and its recurring reports, because nothing about a management LLC requires a professional corporation. What they cannot do is make the services agreement lawful; that depends on its terms.

The LLC files its own Statement of Information for $20 within 90 days and then every two years. It gets its own EIN and its own bank account. If it trades under a brand name, it files a county fictitious business name statement within 40 days of starting business, under Business and Professions Code 17910.

The published prices of formation services, and which ones will also file the professional corporation, are on the formation-services page.

$70The California Secretary of State charges $70 to file Articles of Organization for an LLC on Form LLC-1. — California Secretary of State, retrieved 2026-09-27

40 daysA business using a fictitious business name must file a fictitious business name statement no later than 40 days after it starts to transact business. — California Legislative Information, retrieved 2026-09-27

The $800 minimum franchise tax, entity by entity

Each California corporation and LLC owes an annual minimum tax of $800, though a new corporation is exempt for its first taxable year and a new LLC today is not.

Revenue and Taxation Code 23153 sets the $800 minimum franchise tax for corporations and exempts a corporation from it for its first taxable year. The LLC annual tax works differently. Section 17941 set a first-year exemption only for LLCs organized from 2021 through 2023, and makes the tax due by the 15th day of the fourth month of the taxable year.

So a two-entity med spa formed this year should budget for the LLC's tax immediately and the corporation's from its second year. The full recurring calendar is on the taxes and annual filings page.

$800Revenue and Taxation Code 23153 sets an $800 minimum franchise tax for corporations and exempts a corporation from it for its first taxable year. — California Legislative Information, retrieved 2026-09-27

The California LLC annual tax is due on or before the 15th day of the fourth month of the taxable year. — California Legislative Information, retrieved 2026-09-27

A physician-owned office needs no separate state clinic license

A med spa owned and operated by licensed practitioners as their own office generally does not need a clinic license from the state, whatever name it uses publicly.

Health and Safety Code 1206(a) exempts from clinic licensure any place owned or leased and operated as a clinic or office by one or more licensed health care practitioners and used as an office for the practice of their profession, within the scope of their license, regardless of the name used to identify it. A physician-owned medical corporation operating its own treatment rooms fits that description.

The exemption depends on the ownership being right. A lay-owned business cannot rely on it, because it is not an office of licensed practitioners at all. B&P 2417.5 expressly preserves arrangements authorised under section 1206, which is the other side of the same line.

H&S 1206(a)Health and Safety Code 1206(a) exempts from clinic licensure an office owned or leased and operated by licensed health care practitioners for their own practice, regardless of its public name. — California Legislative Information, retrieved 2026-09-27

B&P 2417.5(c) states that the section does not alter arrangements authorised by law, including entities providing medical services under Health and Safety Code 1206. — California Legislative Information, retrieved 2026-09-27

Sign the management services agreement before either entity opens

If there are two entities, the written services agreement between them should be signed before the practice sees its first patient, and it should price each service at fair value.

Business and Professions Code 650 draws the line the agreement has to respect. Payments for referring patients are prohibited outright. Payments for other services, including a fee set as a percentage of gross revenue, are lawful only when the consideration is commensurate with the value of the services furnished or the fair rental value of premises or equipment.

The Medical Board's guidance adds the list of controls the management company may never hold: medical records, the hiring and firing of clinical staff, coding and billing decisions, and the selection of equipment or drugs. Draft the agreement so each of those sits expressly with the medical corporation.

Keep the signed agreement with the corporation's minute book, and review it whenever the services or the fee change. An agreement that no longer matches what the MSO actually does is the one that fails when someone looks at it closely.

B&P 650(b)B&P 650(b) permits a percentage-of-gross-revenue fee for non-referral services only when it is commensurate with the value of the services or the fair rental value. — California Legislative Information, retrieved 2026-09-27

The Medical Board's guidance names lay control of medical records, clinical hiring and firing, coding and billing, or equipment and drug selection as violations of the law. — Medical Board of California, retrieved 2026-09-27

The seller's permit and what to do before opening

If the practice or the MSO will sell take-home skincare or other retail products, register for a seller's permit with the CDTFA before the first sale.

The CDTFA requires a seller's permit for anyone doing business in California who sells tangible personal property that is subject to sales tax at retail. Decide which entity makes those sales and register that one. Treatment fees are a separate question from product sales, so keep the two on separate lines of every invoice.

With the entities, permits and accounts in place, the remaining work is clinical: the supervision paperwork, the workers' compensation cover and the exposure control plan in the opening sequence. Put those in place before booking the first patient.

The CDTFA requires a seller's permit for anyone doing business in California who intends to sell tangible personal property subject to sales tax at retail. — California Department of Tax and Fee Administration, retrieved 2026-09-27

Questions