This is the barebones checklist I wrote and followed when I started my own solo practice in California. It’s not conclusive. For example, I don’t discuss anything about employees. This will, however, help you get started.
Choose your business organization form and check for permits
You have 2 choices: sole proprietorship or a corporation. With a corporation you get limited liability. But you are still liable for malpractice. And taxes are more complicated. Most solos go with sole proprietorship. I did.
A sole proprietorship is an unincorporated business owned and run by one individual. There’s no distinction between you and the business. You are entitled to the profits and are responsible for the liabilities.
There are no filing requirements to start sole proprietorship, so long as you use your name for the business (i.e. The Law Office of Evan W. Walker). If you use a fictitious name (e.g. d/b/a), you have some filing requirements.
You can check what permits are required here. Select your city and business type (put in lawyer or attorney). For San Diego, you need a business tax certificate. You can get that here. Complete the form and pay the fee online.
Oh, and get an EIN number here. It’s free. The EIN is like a social security number for a business. You’ll need it.
You probably like this subject as much as I do. Which is to say, hardly. But taking the time to understand taxes is essential to running your own business. No one else is going to do it for you. Disclaimer: I’m not a tax attorney, just an attorney paying taxes.
A sole proprietorship is not responsible for taxes; you are taxed individually. You are responsible for paying your federal income tax and self-employment tax (‘SE’ tax). You’re also responsible for paying state income tax.
Drink an expresso and do 50 jumping jacks. Awake? Good. Then go read this and this. Loving it? Then check out this or that. For California taxes, look here.
Basically, you pay taxes quarterly.
Be aware of tax savings. For example, you can deduct your start-up expense. There’s also the much-lauded business expense deduction. You can find your local branch of the SBA here, and they offer free seminars on taxes and related matters.
Create a business plan
Hey, I didn’t enjoy doing this but I did it. It helps you focus and brings clarity to an otherwise abstract brainstorming experience. You can find templates online. It should include an Executive Summary, Company Description, Market Analysis, and Financial Analysis.
Rent office space
Office space will likely be your largest expense. Hopefully you can get it furnished. Shop around for a good deal. You should come across several different choices. Some people recommend working for home; I don’t. If you have to work from home, then do it.
Read the applicable ethics rules
You can find this info here on the State of California Bar website. You need to understand things like IOLTA, fee agreements, and advertising. You need to understand the applicable rules so you don’t misstep.
Get malpractice insurance
Again, lots of choices online. Find a policy that covers both malpractice claims and disciplinary hearings.
Open a business account and an IOLTA account
Open a business account, preferably at a bank you already use. Get business checks and a business credit card you’ll use only for business. That can help you track your business expenses.
Open an IOLTA account at the same bank. But make sure the State Bar approves of the bank. And bring this document with you to the bank. Then report your IOLTA status to the State Bar on their website.
Get a website
Speaking of websites, get one. You can either hire someone to do it or do it yourself. If you do it yourself, you can go with either WordPress or Squarespace. WordPress is free but requires more expertise (think coding). Squarespace is relatively inexpensive and is great for people who don’t have a lot of expertise or time.
Get letterhead and business cards
Design a letterhead yourself. Then either print tons of copies or have a business do it for you. Order some business cards. You have lots of choices online.
This was probably the most fun part. I recommend a laptop, scanner (go paperless), printer, and a router/back up drive. For office supplies, get pens, paper, and envelopes. Candy too.
Set up an intake process
What are you going to do when a client walks in? How will you check for conflicts? Will the client have to sign something? How did the client find you? You should be able to answer these questions. An intake process should answer all of these questions.
That’s the list I wrote to myself and followed when I started my own solo practice in San Diego. Contact me if you have any questions. Comment below if you have any…well, comments. Thanks-and good luck!