Help I'm setting up a new law practice – Booth Ainsworth LLP

It can seem like a minefield when you consider setting up a new legal practice.  To help you navigate safely through to a long-term profitable business, Gary Cook – a partner at accountants Booth Ainsworth – has compiled this list of valuable pointers.

Planning

You should always set out your plans in writing, however roughly, because this forces you to define your ideas clearly.

Raising finance

It is generally wise to spread your commitment over a number of finance sources.  This will give you greater flexibility in the long term. It is important to do a comparative study of the costs of each possibility, and also consider any tax implications before making a final decision about who to approach.

Regulation

Don’t forget to advise the Solicitors Regulation Authority (SRA) in good time and cover the following bases:

• Professional indemnity insurance
• Practising certificate(s)
• Name compliance
• Data protection
• Money laundering regulations

Should you form a Limited Company?

Tax changes have made it even more important to consider carefully when running a business, whether it is best to practice as:

• Sole proprietor – an individual
• Partnership – two or more individuals
• Limited liability partnership
• Limited company

Each situation has to be judged individually. As well as the obvious issue of tax and national insurance contributions there are many other potentially relevant factors such as:

• the expected rate of growth
• the attitude to risk
• administrative obligations
• personal preferences
• pensions and retirement

In the early years of a business, the privacy of operating as a sole trader or partnership may be attractive.  Business funds can be used with fewer restrictions than in an incorporated environment.

Tax

If you start working for yourself, you must register with HM Revenue & Customs within the first three full months of self employment.  Otherwise you may be liable to a penalty of £100.

Other points to remember include:

• Tax returns
• National insurance contributions
• PAYE and VAT registration
• Accounting reference date
• Payment of tax and timing

Accounting procedures

You must set up accounting procedures to comply with the Solicitors' Accounts Rules.  Even if you employ a cashier to keep your books of accounts or outsource your requirement, you are personally responsible for compliance with the rules.

Assuming you hold or receive client money you will need a suitably qualified accountant to prepare and submit an accountant’s report.

Report on an annual basis to the SRA

I have only covered the basics here and you should take professional advice to ensure that your specific business goals and objectives are met.

You can contact Gary Cook at garyc@boothainsworth.co.uk.

Richard Salt, Quill Pinpoint, adds: “In the early days of a new practice, outsourcing practice management functions is the most cost effective way of conforming to best practice procedures.  Our statistics show that year on year the number of new practices choosing Quill Pinpoint is growing.  In the past year, 55% of our new clients were start-up practices compared with only 40% three years ago.”

http://www.boothainsworth.co.uk/

Quill Pinpoint's advanced Solicitors Accounting Software can be a benefit to all different types of solicitors, it can be tailored to suit your firms needs and requirements.