1.2 LLC Incorporation, Banking, Worker’s Comp, Liability Insurance

Last updated: July 23, 2026

Setting up the right legal and financial foundation will make running your ABA practice smoother and protect you from headaches later. Here’s how to get it done — in order — without unnecessary extras or confusion.

This tutorial is intended to help new Alpaca practice owners fill out the practice onboarding form.

Step 1: Pick an LLC Name

  • Keep it simple — you don’t need a fancy or “final” name right now.

  • The name must be unique in your state’s business registry. You can check availability on your Secretary of State’s website.

  • If you want to change your name later, you can file an amendment or create a “Doing Business As” (DBA) name.

  • Pro tip: Avoid names that are too narrow (e.g., “ABA Therapy Denver”) in case you expand your services or location.

Step 2: Incorporation and EIN

  • We recommend Bizee (formerly Incfile) — they offer free LLC incorporation, and you only pay your state’s filing fee.

  • Choose Single Member LLC unless you have co-owners/partners.

  • Skip all add-ons (e.g., registered agent services, compliance kits) — you only need Incorporation.

  • What’s an EIN? An Employer Identification Number is your business’s tax ID, issued for free by the IRS. Bizee can get it for you, or you can apply yourself online at IRS.gov.

Why this matters:

  • Your LLC limits your personal liability if the business is sued.

  • Your EIN is required to open a bank account, hire employees, and file taxes.

⚠See For Businesses Operating in Different States

https://alpaca-health-knowledge-base.help.usepylon.com/articles/2164330475-operating-in-multiple-states-foreign-qualification-state-payroll-tax

Step 3: General and Professional Liability Insurance

As a solo practitioner, you’ll need your own liability coverage — your previous employer’s policy no longer covers you.

  • We recommend Doxa Insurance, which offers affordable general and professional liability policies for BCBAs and ABA businesses.

  • The other common organization is CPH Insurance. We’ve heard that they sometimes deny applications for new businesses, but it’s worth trying out.

  • Get insurance for both you personally and your business entity.

    • One-Tier Model: If you don’t want to employ BTs, you can just get liability insurance for yourself.

    • Hiring: If you want to grow the practice beyond yourself (ie by hiring BTs or other BCBAs), you’ll need to get liability insurance for the company.

Why this matters:

Insurance protects your business and personal assets if a client or family files a claim.

Step 4: Business Banking

Once your LLC is formed and you have your EIN, open a business bank account to keep your personal and business finances separate.

  • Option 1: Open an account at your current personal bank (often easiest).

  • Option 2: Use an online business bank like Novo, Relay, or Bluevine.

  • Bring:

    • Your LLC formation documents

    • EIN confirmation letter from the IRS

    • Driver’s license or government-issued ID

Why this matters:

  • Keeps your finances clean for taxes.

  • Strengthens your liability protection — mixing personal and business funds can weaken your LLC’s legal shield.

Step 5: Worker’s Comp

You should check your state to see the requirements for worker's comp. Requirements vary — for example:

  • Colorado: Required once you have one or more employees. Note that Colorado law treats LLC members/officers as employees by default, so as a solo owner with no staff, you can file a "Rejection of Coverage" form to opt out for yourself specifically. Once you hire BTs or other staff, coverage becomes mandatory for them.

  • Texas: Optional/opt-in for most private employers.

Alpaca has no stake in what decision you make - we get no kick-backs or referral bonuses from any company below.

There are two ways to purchase worker’s comp:

  • Go through a traditional broker and pay a quote up front (or in payment plans). A few recommendations are:

    • AmTrust

    • Cerity

    • Hartford's Insurance

    • A local isurance broker in your community

  • Use NEXT and pay as you go through Alpaca Payroll

If you would like to use NEXT, fill out this form.

Under “Your Name”, please put:

Under “Customer Name”, please put in your information.

For “NEXT Partner Name”, put ALPACA

Step 6: Set Up Your Payroll Accounts and State-Specific Entities

In every state that you intend to have BCBA/RBTs in as W2 employees, you will need to set up various payroll accounts. The accounts depend on the state.

Here are resources for setting up payroll accounts in various states that Alpaca Health supports. If you don't see a state listed, please reach out to support@alpacahealth.io

It is worth proactively setting up these accounts sooner rather than later, so we don't run into issues with the first set of tax filings.

Additionally, depending on where your LLC is incorporated, you may need to do a foreign qualification in the state. This is especially true of practices operating across multiple states.

You cannot have multiple payroll providers for your LLC. As a payroll provider, we must submit quarterly filings that reflect the totality of your LLC's payrolls. If you use two payroll providers, that information will be split between two systems, leading to inaccurate filings.

So, if you use Alpaca Health for payroll, you must run all your LLC's payroll through Alpaca Health. If you have private pay clients, you can add the schedule of those private pay clients into Alpaca to run payroll for your staff.

Step 7 [Optional]: Elect S-Corp Status

You can choose to be taxed as an S-Corp instead of a default LLC. In some cases, this can lower your tax bill by allowing you to pay yourself a salary and take additional profit as a distribution (which isn’t subject to self-employment tax).

  • Our general recommendation: Stay as an LLC for your first year while you establish your business income, then talk to a tax advisor about electing S-Corp status in year two.

  • Election is made by filing IRS Form 2553 (deadline is generally within 75 days of the start of the tax year).

  • For more details, check out this blog article on S-Corps (link to your preferred resource).

💡If you need help thinking about LLCs vs S-Corps, try reaching out to Alpaca Health’s accounting advisor, Ajish Abcon (ajish@abconadvisors.com). Just say that you’re a practice owner with Alpaca Health.