First and foremost among these is the calculation and payment of estimated individual income taxes. The LLC member/owner is not an employee and therefore derives no compensation from wages. Members of a partnership, or an LLC taxed as a partnership, should not set themselves up on payroll as employees. Compensation is determined by an allocation of the firm’s net income, either specially allocated in the form of guaranteed payments or through a percentage allocation of net income. As a self-employed individual, tax obligations are paid quarterly based on income for that quarter within two weeks of the close of the reporting period. Therefore, the firm must have their books closed and accurately adjusted in a timely manner to allow the members to estimate their income and calculate the appropriate taxes due.
The firm, once it hires its first employee, will also need to withhold and pay payroll tax. Part of the payroll set-up process includes registering and paying unemployment tax for employees. In general, state taxes are withheld from the employees based on their state of residence. However, depending on the jurisdictions and where the services are provided, additional state and local taxes may be required. On the other hand, unemployment insurance is typically paid in the jurisdiction where the services are performed.
Many jurisdictions also charge a tax on personal property used in the practice, and some localities charge a tax based on gross receipts. In addition, depending on your location, you may be subject to arena fees, ballpark fees and other miscellaneous state and local taxes.
Aronson LLC has the experts that can guide you through any tax challenge you might encounter. Contact Larry Rubin, CPA at 301.231.6200 or LRubin@aronsonllc.com for more information on how our experts might help you.
Unlike some enterprises, the business plan for a start-up law firm need not be an elaborate document. Nevertheless, understanding the purpose of a business plan and the elements that go in to developing a sound strategy will serve any new enterprise well. Whether you are just out of law school and looking to start your practice as a solo venture, or if you’ve practiced for years in an existing firm but now feel that you and your clients would be better served by a fresh start, the discipline of formulating a business plan will eliminate many issues down the road.
What does a business plan for a law firm look like? Simply stated, a business plan describes how your company will conduct the business of practicing law. It considers such matters as the practice areas to be handled by the firm, what structure it will use, where it will be located, how it will market its services, and how it will be funded. The following is a non-exhaustive list of the points to consider when developing a business plan for a law firm:
The next post in our blog series for entrepreneurial lawyers will delve deeper into entity selection, so stay tuned!
Aronson’s Professional Services Industry Group offers expert assistance with business plans and other important services for entrepreneurial attorneys. If you have any questions relating to the topics discussed above, contact Sal Ambrosino at 301.231.6272 or firstname.lastname@example.org.
Starting a law practice involves much more than your expertise and knowledge of law and the courts. Whether you are considering practicing as a solo, or with partners, starting a law practice requires certain entrepreneurial skills and at least a basic understanding of how a small business operates. We will assume that you are far enough along in your career to have either developed a client base, or identified a specialty area, and have a general idea of the geographic location for your practice. This blog series will examine the basic steps you should consider before making the plunge.
Overview of issues to consider:
Stay tuned for more detailed information about these topics that will help you as you work to build your new firm. Contact Sal Ambrosino of Aronson’s Professional Services Industry Group at 301.231.6200 for assistance.