Practice Management

Solo By Choice - What Business Entity Do You Choose

By chucknewton

I have covered Carolyn Elefant's book Solo by Choice a few times previously.  (You can read these review by clicking here, here, and here).  I call the book a road map really of the decision that must be made and the thought process that you must go through before taking the leap into the solo practice of law.  But, one of the areas of interest in Carolyn's book is what business entity do you need in starting out.

Sole proprietorship,  corporation, and then all of the different entities like LLCs.  For my money (or lack of money as the case maybe) I chose no structure at all.  This is to say that I am a solo practitioner.  This is what I find is best for me.  It does not cost anything and typically services are cheaper if you are purchasing them under your name instead of a business.  For example, bank accounts are more expensive for Chuck Newton, Inc. than they are for Chuck Newton the person.  The same is true for broadband, telephone services and many more items.

Many people chose business entities to try and avoid liabilities, such as debt and malpractice.  After all, who knows what is going to happen.  To me, however, I have found that the protections these entities provide are a myth for the solo lawyer.  Try to borrow money without you signing personally for it.  Your entity fails and you will still be responsible for the debt.  Touch a file and someone accuses you of screwing up, they will sue you and the entity.  Lawyers are personally liable regardless.

There use to be tax advantages in being incorporated, but not so much any more.

But, these are my positions.  This is what I have found works for me.  You cannot, however, avoid thinking about this if you are going into the solo practice of law.  It all really depends on where you practice, what you practice, how you practice, and what it is you want to achieve.  It is no a sexy subject and it is easy to avoid.  However, you have to understand and face the options if being a solo is your muse.

For this you are going to need Carolyn's valuable book.

Full post as published by Chuck Newton on February 07, 2008 (boomark / email).