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Starting your own practice: exciting, scary, busy, crazy are all words that may come to mind when you are contemplating opening your own practice.
Following is a list of issues you should consider and some resources that may help you. Investing time to be prepared and well informed will be important to building a successful practice.
Are you ready to open your own practice? Who will your clients be? Do you have a niche/specialty? What will your ongoing costs be? Do you have capital resources and credit available? What will your marketing plan be? What management issues will you face? Answering these critical questions and having a plan is very important to your success. To help you address some of these issues consider the topical list and resources that follow.
Business Plan and Budget: A business plan is a comprehensive road map document that identifies critical information about what your business is and the steps you will need to take to successfully operate it. It is an important document to create because it clarifies what issues and steps you will need to execute to achieve success. It may include long term and short term planning (1 to 5 years and 10 years.) It is also often used to raise capital and obtain credit. Failure to have a budget and adequate capital resources is the most common reason new businesses fail. Most experts would agree that the four key elements of a plan are a clear and concise description of what your business does; calculation of financial information such as operational expenses, projected revenue, and how to repay creditors and investors; the specific steps that you will take to achieve a viable and financially successful business; and your unique qualifications that will help you achieve success. There are numerous templates and resources on line that can help you develop a business plan and budget. Depending on how comprehensive it is, a plan and budget can easily take from 30 to 100 hours of time to prepare, but it is an important benchmark for identifying your goals and how you will achieve them. Click here for additional Business Plan Resources.
Select your Legal Structure: Before starting your practice, you will need to choose an organizational structure and take steps to properly form and register with any appropriate state agencies. As a solo practitioner, you cannot protect yourself from individual liability for professional negligence by forming a business entity, but doing so may be wise for future growth plans and tax reasons. The most common organizational structures for law firms include: sole proprietorship, general partnership, professional service corporation, and professional limited liability company. A brief description of each type of company follows, and the decision you make should include an informed evaluation of the tax implications. Consider consulting with an accountant on issues related to organizational structure and taxes. You will also need to obtain the appropriate business licensees and a tax payer identification number for the entity. Consider the resource How to Start and Build a Law Practice by Jay Foonberg.
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