How to Start a Therapy Practice in Colorado: Licensed vs Registered Psychotherapists and LPC Requirements

If you want to start a therapy practice business in Colorado, the first decision is not your entity type. It is your credential. Colorado regulates these professions under C.R.S. Article 245 of Title 12, and whether you hold a license, are working toward one, or are listed as an unlicensed psychotherapist determines what you can call yourself, what you can do, and how the business should be set up. Settle that first, and the Secretary of State paperwork becomes the easy part.

This guide covers the order we recommend: credential path, entity choice, business name, registered agent, filing, tax accounts, local licensing, and the first-year checklist. This is informational content, not legal or tax advice. Mental health licensing and business formation both carry real consequences, so confirm your situation with a qualified attorney and a CPA before you sign a lease or accept your first client.

What You Need Before You Start

Gather these items before you file anything:

• Transcripts showing your master's or doctoral degree, plus practicum or internship records
• Supervision logs with hours, dates, and supervisor signatures if you are pursuing the LPC
• A physical Colorado street address for your registered agent, and confirmation of your city or county zoning rules if you will practice from home
• Two or three candidate business names, each checked against Secretary of State records
• Your government-issued identification, since the registered agent details must match your credential exactly
• A federal Employer Identification Number (EIN) from the IRS, which most practices need for a business bank account and payroll
• A budget line for the Secretary of State fees covered below, plus quotes for professional liability insurance
• Bookmarks for the Colorado Secretary of State business search at https://www.coloradosos.gov/biz/BusinessEntityCriteriaExt.do and the online filing system at https://www.coloradosos.gov/pubs/business/fileAForm.html

Step 1: Choose Your Credential Path

Colorado recognizes three practical paths for someone who wants to provide therapy:

• Licensed practitioner. Colorado licenses psychologists, clinical social workers, marriage and family therapists, professional counselors (LPCs), and addiction counselors under C.R.S. 12-245.
• LPC candidate. A degree holder may register as an LPC candidate while completing the supervised experience and exams. Candidate registration lasts four years unless it is extended. Check with DORA for current terms and what a candidate may do in practice.
• Listed unlicensed psychotherapist. Under 12-245-703, unlicensed psychotherapists must be listed in the board database. Check with DORA's mental health boards for the current listing terms and the scope of work the listing allows.

Choose the path that matches your training and your timeline. A candidate who wants to see clients independently in a few years will build a different business plan than someone who plans to stay in a listed role indefinitely. Do not form an entity or sign a lease until you know which path you are on, because your insurance, supervision arrangements, and marketing language all depend on it.

Step 2: Understand the LPC Requirements

If you plan to become a Licensed Professional Counselor, the requirements under 12-245-604 are the ones to plan around:

1. Be at least 21 years old.
2. Hold a master's or doctoral degree in professional counseling that includes a practicum or internship.
3. Complete two years of supervised post-master's practice, or one postdoctoral year.
4. Log at least 2,000 hours of counseling, including at least 1,500 hours of face-to-face counseling under supervision. Supervision may be in person or by telesupervision.
5. Pass a counseling examination and a jurisprudence examination.

Track your hours from day one. Many applicants lose time because their supervision logs are incomplete, unsigned, or do not separate face-to-face hours from other activity. Keep a running spreadsheet with the date, setting, hours, and supervisor for each entry, and get your supervisor's signature on each log period rather than reconstructing it at the end. Confirm the current exam names, application steps, and any fees directly with DORA, since these details can change.

Step 3: Decide How the Practice Will Be Structured

Your structure affects liability, taxes, and how you can operate with other clinicians. Colorado offers these options:

• Sole proprietorship. You operate the practice yourself without a separate entity. A sole proprietorship generally does not require a formation filing with the Secretary of State, but you give up the liability separation an entity provides. You still need the licenses and tax accounts described below.
• Limited Liability Company (LLC). You file Articles of Organization for a Limited Liability Company. The filing fee is $50.
• Corporation. You file Articles of Incorporation for a Profit Corporation. The filing fee is $50.
• Professional company or professional corporation. Under 12-245-213, licensees may, but do not have to, form a professional service entity. The name must include the words "professional company" or "professional corporation." Ownership conditions apply, so read the statute and confirm your structure with an attorney before filing.

Colorado does not have a PLLC entity type. If a template or online article offers one for Colorado, do not use it. Most solo therapists choose between a sole proprietorship and an LLC, and a professional company is worth discussing with counsel if you plan to practice with partners or own a group.

Step 4: Check and Reserve Your Business Name

Search the Secretary of State database before you choose a name. Colorado requires an LLC name to include a term identifying it as an LLC, such as "Limited Liability Company," "LLC," or "Ltd. Liability Company," under section 7-90-601 C.R.S. The name must also be distinguishable on Secretary of State records from existing names. Punctuation and capitalization do not make a name distinguishable, so ABC Inc and abc inc are treated as the same name.

If you need time to finish your paperwork, you can reserve a name for 120 days for a $25 fee. Details are at https://www.coloradosos.gov/pubs/business/FAQs/entityNames.html. Reserve only when you are close to filing, since the clock starts when you reserve.

Step 5: Appoint a Registered Agent

Every entity must name one registered agent, either an individual or an entity, and that agent must consent to the appointment. Under rules effective July 1, 2025, an individual agent must be at least 18, hold a current valid Colorado driver's license or state ID card, and either live in Colorado or have a usual place of business there. Enter the agent's name and ID number exactly as they appear on that credential.

The registered agent address must be a physical Colorado street address where documents can be received during normal business hours. A P.O. box will not work. If you do not have Colorado identification, you can request an agent passcode from the Secretary of State, which expires 45 days after it is issued. An entity serving as agent must be in good standing with the Secretary of State and have a usual place of business in Colorado.

Step 6: File Your Formation Document Online

File your Articles of Organization (LLC) or Articles of Incorporation for a Profit Corporation through the Secretary of State online filing system. Online filings are processed in real time, and the record updates immediately after successful payment, unless the document states a delayed effective date. Filing fees are $50 for either formation document.

Before you submit, verify the spelling of the business name, the principal office address, the registered agent details, and the organizer information. Errors are the most common reason people end up filing corrections. A new LLC or corporation owes no periodic report in its first year, so the first report comes due in the second year.

Step 7: File a Trade Name If You Will Use a DBA

If you plan to operate under a name other than your legal name or your entity's registered name, such as a practice name like "Front Range Counseling," you need a Statement of Trade Name. Trade names are filed statewide with the Colorado Secretary of State, not the county. The fee is $20 to file online and $5 to renew. Details are at https://www.coloradosos.gov/pubs/business/FAQs/tradeNames.html.

Do not assume a trade name protects you from confusion with other practices. It only lets the public connect your name to your entity. Run a search on the Secretary of State database before filing, and consider a broader search for websites and social media handles.

Step 8: Set Up Your Tax Accounts

Colorado has no franchise tax. The Colorado Department of Revenue, Taxation Division, administers sales and use, business income, withholding, excise, fuel, and severance taxes. Your obligations depend on what you do:

• Withholding account. If you hire employees, open a Department of Revenue account to handle withholding.
• Income tax. Colorado's income tax is a flat 4.40 percent. An LLC's income generally passes through to its owners, so you pay personal income tax on the business profit, with the state rate applied at the flat rate.
• Sales tax. The state sales tax is 2.9 percent, plus special district taxes. Services are generally not subject to state sales tax, so a therapy practice that sells only counseling usually does not need a sales tax license. If you sell tangible goods, such as workbooks, journals, or products, you likely do. Confirm with the Department of Revenue at https://tax.colorado.gov/how-to-apply-for-a-colorado-sales-tax-license.

The state sales tax license does not cover home-rule cities, including Denver, Aurora, Colorado Springs, Boulder, and Fort Collins. Those cities collect and license their own city sales tax, so you must apply directly with the city if you sell taxable goods there.

Step 9: Confirm Your Professional and Local Licenses

Colorado does not issue a single general statewide business license. After you file with the Secretary of State, you research the licenses and permits for your activity separately. Your professional credential comes from DORA, which is the Division of Professions and Occupations. Local requirements come from your city or county, and many jurisdictions require a general business license, a home occupation permit, or zoning approval for a counseling office in a residence.

Call or visit your city or county clerk and planning department before you sign a lease. Ask about home occupation rules, signage, parking, and any local business license. If you are opening an office in a building, confirm the zoning allows professional offices in that space.

Step 10: Build the Operating Basics

Before you accept clients, set up the items that affect whether the practice can run smoothly:

• Professional liability insurance. Get quotes from carriers that cover your credential and your planned telehealth work. Ask whether the policy covers supervision arrangements if you are an LPC candidate.
• Telehealth. Check with DORA on the rules that apply to practicing across state lines or to clients located in other states.
• Insurance panels. Each payer sets its own enrollment requirements, credentialing timelines, and rates. Contact each payer directly. Do not assume approval, and do not promise clients insurance coverage until you have confirmed it.
• Fees to DORA. Confirm the current application, renewal, and registration fees directly with DORA, since they are set by the regulator and not included in this guide.
• Records and privacy. Set up a secure system for clinical records, client intake forms, and billing. Confirm your recordkeeping duties under your credential and your insurance contracts.

Step 11: Calendar Your Ongoing Obligations

Once your entity is formed, the recurring Secretary of State obligation is the Periodic Report. It is $25 and due every year in the entity's periodic report month, which appears on its record summary and is based on the formation anniversary. You may file as early as two months before that month and as late as two months after it without penalty. An entity that does not file becomes Delinquent, so put the date on your calendar as soon as you receive your record summary.

Also calendar your credential renewal dates, supervision milestones for LPC candidates, and any deadlines tied to your payer contracts. Watch for legislative changes as well. Article 245 is scheduled to repeal on September 1, 2029, under the sunset review process, so confirm the status of the statute with DORA before you commit to long-term plans.

Common Mistakes to Avoid

• Forming an entity before choosing your credential path. Your structure, insurance, and advertising depend on whether you are licensed, a candidate, or listed.
• Using a PLLC. Colorado does not have one. Use an LLC or, if you qualify, a professional company or professional corporation under 12-245-213.
• Looking for a statewide general business license. Colorado does not issue one. Your licenses come from DORA, your city, or your county.
• Assuming a sales tax license covers your city. Home-rule cities collect their own sales tax.
• Using a P.O. box for the registered agent. The agent address must be a physical Colorado street address.
• Keeping loose supervision logs. The 1,500 face-to-face hours must be documented, signed, and tied to your supervisor.
• Assuming insurance approval. Each payer decides its own panel criteria.
• Missing the Periodic Report. A $25 filing that lapses can turn into a Delinquent status that you must fix.

What Results to Expect

Results vary widely by credential, location, payer mix, and how much time you can commit. The steps in this guide may help you move through formation and licensing in an orderly way, but no one can promise a specific timeline or outcome. Online filings with the Secretary of State are typically processed immediately after payment, which can make the formation step the fastest part of the process. Credentialing with DORA and insurance panels usually takes longer, and you should plan your cash flow and client intake around those timelines rather than around the filing date.

A practical way to set expectations is to write a timeline with three columns: what you can control this month, what depends on an agency or payer, and what depends on your supervisor or your hours. Review it each quarter and adjust it as you learn more.

Resources

• Colorado Secretary of State, Business Organizations Division: https://www.coloradosos.gov/pubs/business/businessHome.html
• Colorado Department of Revenue, Taxation Division: https://tax.colorado.gov/
• Colorado Small Business Development Center (SBDC) Network: https://sbdc.colorado.gov/
• U.S. Small Business Administration, Colorado district: https://www.sba.gov/district/colorado
• DORA, Division of Professions and Occupations, for credential, board, and fee questions

The steps above are a starting point, not a substitute for professional advice. Because mental health licensing, entity structure, and tax treatment depend on your specific facts, consult a qualified attorney for your formation and practice agreements and a CPA for your tax setup before you open your doors.