Since you're in California, two of your options are totally eliminated.
You cannot form an LLC or an LLP.
In California, as a licensed psychologist, you would be required to
form an LLP (limited liability partnership) to associate yourself with
other professionals. However, since the others aren't also licensed,
they may not own shares of your LLP. But I doubt that you can form an
LLC, since your license requires you to form an LLP. Do you see the
Pity - the LLC would be your best option if it were permitted.
You might want to check with a tax attorney to see if that would
work in a mixed-license group of owners. Why? Because an LLC lets
you have different types of owners, with different profit or
loss sharing. The owners, or members, can be on payroll and
receive benefits. And of course, you have liability protection -
of a sort.
Remember - anytime you have a business providing personal
services, if you provided the services, someone can sue you
personally, even if you're incorporated.
So, what are your options?
1) A limited liability partnership - it requires someone or
something to be a general partner and accept liability, but
this provides the most versatility and flexibility for what
you have in mind. You could form a corporation or S-corp that
you own alone, to be the general partner.
2) An S-corporation. You may have up to 125 shareholders.
They may own varying shares. Each owner could be on a
payroll based on their hours or services. But they would get
a proportionate share of the profits, based on their investment
or contribution. There are a number of drawbacks to the S-corp,
because employees who own 5% or more of the company may not get
a variety of deductible benefits available to regular employees.
3) So...that leaves your basic corporation. This type of business
format lets you have a variety of classes of stock - even stock
that's non-voting. (S-Corps only have one class of stock.) So, it
lets you provide an assortment of dividend plans, depending on the
type or classification of stock. Owner-employees are entitled to
the same kind of benefits as other employees, including medical,
insurance, pension, child care, etc.
The trick is to make sure that you drain the company of profits
each year so you avoid double taxation, or the higher personal
service corporation tax rates.
This is just a brief overview of the situation. You really want
to sit down with a good tax professional and an attorney, with
all your partners and work out what's best for all of you
together. It won't make any sense until you're all in the same
room and can express what each of you need in terms of compensation
and benefits - and what each of you can contribute to the total
annual income to make the wages and benefits possible.
Here are some books you might want to look at before you
make the decision - Fred Daily's Tax Savvy for Small Businesses
And Jan Zobel's Minding Her Own Business: The Self-Employed Woman?s
Essential Guide to Taxes and Financial Records
Profits, Taxes, & LLCs by Holmes F. Crouch
I hope this helps a little?
This is a big area. There is no 'one perfect business form'.
It will depend on all your partners' needs and goals -
and especially what they can contribute.
Oh, and be sure to include a way out for each of you, so if
you want to leave, or buy them out, you can.