Three ways a med spa gets owned, and where the money legally lands in each

Does a physician have to own the med spa?

In some states, yes, and in others a nurse practitioner can hold the whole thing. The doctrine that decides it is the corporate practice of medicine, and it is state law, not federal. California states its version flatly: corporations and other artificial legal entities have no professional rights, privileges, or powers 1Ref 1California Legislature (1980).California Business and Professions Code Section 2400.The wording and existence of California's corporate practice of medicine bar: corporations and other artificial legal entities hold no professional rights, privileges or powers, with the narrow exception for salaried employment by licensed charitable clinics that charge patients nothing. Used as one state's frame for a state-variable ownership question, never as a national rule.. Other states write theirs more permissively, and no single current table lists which ones do.

The lookup is two documents, both free. Your state's medical practice act says whether anyone without a physician license may own a practice providing medical services. Your board of nursing's scope rules say whether a nurse practitioner there practices independently or under delegation. Read them in that order: the second question stops mattering once the first answers yes.

But nothing here travels.

A structure a colleague runs two states away may be unavailable in yours, and the template a med spa consultant sells is written for whichever state paid for it.

The three structures, side by side

Three shapes cover almost every med spa. A clinician owns the practice entity outright. Or a professional corporation holds the clinical side while a separate management company owns the equipment, the lease and the brand. Or somebody with no license owns the business and pays a physician to carry the title of medical director. The third one is where the trouble is.

The first two rows are structures. The third is an arrangement, and boards write rules about it.

What the corporate practice bar forbids

It forbids the entity, not the clinician. California's bar is one sentence: corporations and other artificial legal entities have no professional rights, privileges, or powers, with a narrow exception for salaried employment by licensed charitable clinics that charge patients nothing 1Ref 1California Legislature (1980).California Business and Professions Code Section 2400.The wording and existence of California's corporate practice of medicine bar: corporations and other artificial legal entities hold no professional rights, privileges or powers, with the narrow exception for salaried employment by licensed charitable clinics that charge patients nothing. Used as one state's frame for a state-variable ownership question, never as a national rule.. A business cannot hold a medical license, so a licensed person holds it and carries the clinical judgment with it.

The penalties are criminal. Practicing medicine in California without a valid license, or conspiring with, aiding or abetting someone who does, carries a fine of up to $10,000, up to a year in county jail or a felony term, or both 2Ref 2California Legislature (2011).California Business and Professions Code Section 2052.The California criminal penalty for practicing medicine without a valid license, or aiding someone who does, used to state the stakes of misclassifying who is practicing medicine inside a med spa..

The physician who signs on as medical director sits inside that same problem. Directly or indirectly employing, aiding or abetting an unlicensed person's practice of medicine is unprofessional conduct in California, which is what the board can discipline a license over 3Ref 3California Legislature (1980).California Business and Professions Code Section 2264.That directly or indirectly employing, aiding or abetting an unlicensed person's practice of medicine is unprofessional conduct in California, used for the exposure a medical director takes on in a business somebody without a license controls.. A monthly stipend paid for a signature, with no say over protocols, hiring, training or which patients get treated, is the arrangement that language describes.

Every word of that is California text. Your state writes its own, and that is the version that governs your spa.

Where the management company's money has to come from

From ownership or from fair value, and never from a slice of what the clinicians bill. California's fee-splitting statute permits a return on a proprietary interest when it is based on the amount of the capital investment or proportional ownership, which is the seam a management fee has to thread 4Ref 4California Legislature (2021).California Business and Professions Code Section 650.That California permits a return on a proprietary interest when it is based on the amount of the capital investment or proportional ownership, and the penalty the statute attaches, used to explain how a management fee has to be set rather than pegged to clinical revenue.. A percentage of clinical revenue looks like a share of the practice, because that is what it is.

The penalty runs higher than the unlicensed-practice one: a fine of up to $50,000, plus up to a year in county jail or a felony term, or both 4Ref 4California Legislature (2021).California Business and Professions Code Section 650.That California permits a return on a proprietary interest when it is based on the amount of the capital investment or proportional ownership, and the penalty the statute attaches, used to explain how a management fee has to be set rather than pegged to clinical revenue..

No lawful benchmark percentage exists to copy. What replaces it is a priced list of what the management company supplies: the lease, the devices, the software, the front desk, the marketing spend, each priced as an unrelated vendor would and documented before money moves. Keep the pricing memo with the agreement.

But the fee is only half of the money question. If two owners of an LLC or partnership intend to split profits on anything other than their ownership percentages, the constraint has an address: the substantial economic effect rules at 26 CFR section 1.704-1(b)(2) 5Ref 5Internal Revenue Service / U.S. Department of the Treasury (2026).26 CFR §1.704-1 — Partner's distributive share (paragraph (b)(2), substantial economic effect).Named only as the regulatory home of the substantial economic effect limit on partnership and LLC special allocations. No part of the test is quoted or restated here.. Whether the entity should then be taxed as an S corporation is a separate question, and the s-corp math is worth running with a CPA before the shares are issued.

The 49 percent ceiling inside a professional corporation

A California medical corporation can put a licensed non-physician on the cap table, up to a ceiling. Licensed persons from certain other described healing arts professions may hold shares or serve as officers and directors, provided their combined holding does not exceed 49 percent of the corporation's total shares and their number does not exceed the number of persons licensed by the corporation's own regulating board 6Ref 6California State Legislature (2022).Corporations Code § 13401.5 — Professional corporations: permitted licensed shareholders, officers, directors and professional employees (amended by Stats. 2022, Ch. 290 (AB 2671)).The 49 percent ceiling on the combined shares that licensed persons from certain other described healing arts professions may hold in a California professional corporation, and the limit on their number..

That ceiling answers a different question from the corporate practice bar, and the two get conflated constantly. The bar keeps an unlicensed investor out of the practice of medicine altogether. The 49 percent rule governs licensed professionals who are not physicians, and whether a particular license appears on that list is the first thing to check in the section's own text.

Forty-nine percent is a minority, so a clinician who takes it has bought a return and a seat, and not the votes to outweigh a physician majority. Control tends to live in the management company instead, which is one reason the two-entity form exists at all.

The same person can sit on both cap tables.

The paperwork under a delegated injectable

In California, a delegated procedure runs on a written protocol, and that document is a standardized procedure. When a nurse practitioner performs a medical function under standardized procedures rather than full practice authority, the document has to be jointly developed and approved by the supervising physician, the nurse practitioner, and the facility administrator or the designee 7Ref 7California Legislature (2018).California Business and Professions Code Section 2836.1.That a California nurse practitioner performing a delegated function under standardized procedures works from a written standardized procedure jointly developed and approved by the supervising physician, the nurse practitioner and the facility administrator or the designee, stating the extent of supervision and the method of periodic competence review.. It also states the extent of physician supervision and the method of periodic review of the practitioner's competence 7Ref 7California Legislature (2018).California Business and Professions Code Section 2836.1.That a California nurse practitioner performing a delegated function under standardized procedures works from a written standardized procedure jointly developed and approved by the supervising physician, the nurse practitioner and the facility administrator or the designee, stating the extent of supervision and the method of periodic competence review..

Read the list of signatories again, because it is the tell. A protocol the supervising physician has never opened, signed once at onboarding and never revisited, does not match that description, and the description belongs to the statute.

Full practice authority changes the picture. A nurse practitioner practicing independently under a state's own authority is not working from a delegation at all, which is why ownership and supervision get answered separately, in that order.

Whether your state also requires an examination before an injectable may be delegated, and how recent it has to be, is a separate rule living in your medical board's regulations. It is commonly called a good faith examination, which makes it searchable. Look it up, then write the answer into the protocol.

What to settle before the doors open

Settle four things in writing, in this order, before a single syringe is ordered. Which entity may lawfully own the practice in your state. Who holds the shares and in what proportion. What the management company is paid for and how that price was set. Who signs the clinical protocol and who reviews it. The build order matters, because the entity is the thing every later document names.

Those answers come from four free lookups:

• Your state's medical practice act, on whether a non-physician may own a practice providing medical services
• Your board of nursing's scope rules, on independent practice versus delegation
• Your state's fee-splitting statute, before any management fee gets priced
• Your medical board's regulations, on examination requirements before a delegated procedure

Counsel earns its fee at four moments: when the structure crosses a state line, when someone with no license wants equity, when a management fee is priced against clinical revenue, and when a medical director agreement is drafted for a business somebody else owns. A template bought online has already answered all four, for a state that may not be yours.

Order the entity, the malpractice cover and the licenses before the devices arrive; getting the stack in order costs less than unwinding it afterwards.

And keep printed copies of the statutes you relied on, with the date you pulled them, in the folder that holds the operating agreement. Sections get amended, and the version that governed the day you signed is the one your lawyer will want.