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A Guide to Opening your Law Practice (Part 2 of 4)
This is a continuation of a previous article discussing best practices for opening your own law practice. This is Part 2 of a 4-part series...

Setting Up Your Office

When deciding on the layout of your new office, it helps to work from an established checklist. This can help you stay on task while making sure you don’t forget anything. This checklist should include office supplies, equipment, and furniture.

You may also have a number of additional considerations, such as potential for growth, efficiency, obligations under the Rules of Professional Conduct, and, of course, your desired budget. When it comes to the overall function of your office, make decisions that fit the specific needs of your staff and the precise mission of your practice.

Business Structure or Practice Arrangement

The Law Society Act states that individuals have the right to establish a law practice as a sole proprietorship, general partnership, limited liability partnership, or professional corporation. It is important to note that two additional arrangements involving non-licensees are also recognized: multi-discipline practices and affiliations.

There are a number of factors to consider when deciding the best structure for your legal practice. These factors include who will have ownership and control of the business and its assets, how the company will be responsible for liabilities and the potential for negligence claims, how the business will cover set-up and operational costs, issues of tax, transferability, and estate planning, and the appropriate level of professional liability insurance.

Business Registrations

Depending on business structure, your legal practice will need to complete a number of steps to ensure proper registration. Various laws and regulations govern the establishment of a new business, and there is always a cost associated with applications for new business registration.

On the federal level, you will need to determine whether your new company will require a business number (BN) and an income tax number. A BN is required to open a payroll account and to collect and remit the Harmonized Sales Tax (HST) to the Canada Revenue Agency (CRA). A BN is also required to apply for an income tax number, which is required of professional corporations but not mandatory for sole proprietors, general partnerships, or limited liability partnerships.

Each province also has specific requirements for business registration. Most provinces require that you register your business name in order to receive a Provincial Business Identification Number (BIN), which facilitates easy renewal of a business name. Some municipalities also require licenses in order to do business inside of their jurisdiction.

Bank Accounts, Accounting, and Other Financial Issues

If you wish to open a law practice, assistance from a financial institution is needed. The financial institution you choose will help your business navigate the ocean of commerce. Financial advisors can provide critical information, advice, and networking contacts. In all likelihood, you will be tied to the financial institution you choose for your long-term banking and financing needs, so it’s essential to make a wise, informed choice.

When choosing a financial institution for their law practice, one should consider desired numbers and types of general bank accounts as well as mixed trust accounts, the most efficient accounting system possible, and estimates of financing and credit needs. Choosing between chartered banks, provincial savings offices, credit unions, and registered trust corporations will require a great deal of research.

Insuring You and Your Practice

Insurance is essential to securing the long-term health of your law practice. Every practice is required to obtain the minimum level of professional liability insurance, but additional insurance considerations will depend on the specifics of your law practice. It is important to remember that your practice’s insurance needs can also adapt over time.

Some common insurance products available include business or commercial insurance, which protects against losses that will affect the financial health of your business, health or disability insurance, to provide funds in the event of loss of income due to disability or critical illness, extended healthcare insurance, to cover hospital, medical, and dental expenses, and life insurance, to provide funds in the unfortunate event of your death.

When researching what insurance coverage will be best for your business, it will be helpful to seek the advice of a qualified and independent insurance professional. This goes for anytime you are entertaining changing insurance plans or providers as well.

Thanks for reading! Check back next month for Part 3 of this 4-Part Series


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Posted by: DSR
Monday, May 1, 2017
Tag: Legal
Business Start Ups
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