The Society publishes a Small Practice Kit (for
members). It includes material (and a number of useful checklists) on
establishing a practice; business planning, finance and insurance;
business development and marketing; human resources; information
technology; professional obligations and resources; and health,
wellbeing and practice management in the event of illness or death.
Registering for tax
One of your early decisions will be about how to structure your
practice. There are some financial and tax implications of a decision
of this nature so you will want to get the advice of your accountant.
But here are the basic options and some considerations.
For Society members , the Small Practice Kit also includes useful checklists and helpful advice on business structures .
Tip: Whatever structure you choose it is wise to contact the Society as early as possible, advise them of your intention to start a new practice. The earlier they know, the more they can help.
You will need to get your business properly registered for compliance with taxation laws. The Australian Government Business website
provides clear advice on
- the requirement for a TFN (Tax File number)
- registering for an ABN (Australian Business Number) or an ACN (Australian Company Number)
- registering for GST (Goods and Services Tax)
- registering for other taxes - for example PAYG (Pay As You Go)
tax, Payroll Tax (if your business intends to employ staff), Fringe
Benefits Tax, etc.
You will need to name your business.
If you intend to use a name that is not your natural or corporate name
you will need to register a business name with ASIC.
deciding on the name for your business - see what a Google Search
brings up. There are some hilarious stories of Australian businesses
choosing a name that means something VERY different in another
You may also want to register your domain name
at this early state – in order to secure it. Your domain name will be
your website address on the internet (eg: www.lawfirmname.com.au ) and
provide you with an email address
Registering a domain name is simple and inexpensive. There are a number
of retail domain name providers. Just google ‘domain name
registration’ and select one. You can then search to see if the name
you want is available and, if it is, and register it on line then and
there. You can also check on domain name availability at the domain
name wholesaler AusRegistry.
your domain name early – even before you have registered your business
name. (Sometimes domain names are grabbed by commercial operators as
soon as they know someone else is interested.) It’s a also a good idea
to know the domain name is free before you register your business name
– otherwise you may find you can’t use your business name as your
It is also worth having a look on the IP Australia website
- check your preferred name or logo is not already in use
- decide if you want to register your name or logo as a trademark.
One of your early decisions is whether you intend to run a trust account. Not all law firms do. The best place to go for this advice, and for all things Trust Account, is the Ethics and Practice Unit. Their experienced staff know this information inside out and they are keen to help. They also have a Trust Account Management Online Resource, including online on-demand training courses, and can supply your practice with a compliant Trust Receipts Book. Click here to access the Trust Account Management Online Resource.
Each practising lawyer in your firm will, of course, need a Practising Certificate
. An ‘incorporated legal practice’ is not itself required to hold a practising certificate.
Each lawyer (and each conveyancer) in your firm will need to be insured through the Legal Practitioners Professional Indemnity Scheme
. If your practice is an ‘incorporated legal practice’ it will also need to be insured through the Scheme.
PI insurance through the Scheme covers you for claims up to $2m
(inclusive of defence costs). So, in simple terms, if you are
successfully sued for more than $2m (inclusive of defence costs) you
will have to pay any amount above $2m yourself. If you think a claim if
that size is a possibility you may want to consider additional (or ‘top up’) insurance
In addition, once your firm is insured under the SA Professional Indemnity Insurance Scheme, you will have free access to the Risk Management Practice Packages. These document packages in the areas of Succession, Family, Commercial Leasing, Business Sale & Purchase and General Law (e.g. Capacity, Verification of Identity, litigation settlement) include checklists and template letters designed to ensure the smooth running of matters and reduce the incidence of errors and oversights that lead to insurance claims.
Tip: If you are starting out, and are not confident about your earnings, you can apply
to be treated initially as a ‘low fee earner’ (a lawyer who expects a
gross income of less than or up to $30,000 per financial year) for the
purposes of PI insurance. You then pay a lower premium. This of course
does not restrict you to a low income. But as soon as you render bills
for legal work for more than $30,000 you will need to alert the Society
and pay the full premium (plus interest).
Professional Standards Scheme
Another option is to participate in the Professional Standards Scheme (PSS). This is not insurance. It is an optional statutory
scheme that allows practitioners who are members of the Society to limit
their liability. You will need to consider whether this is suitable
- for your firm (bearing in mind there are some exclusions to the scheme) and
- for your clients (bearing in mind that some larger clients, for
example banks, will not instruct a lawyer with limited liability).
The Society can give you detailed advice on the PSS.
Remember that if you are participating in the PSS and your practice is
an ‘incorporated legal practice’, your practice will also have to
participate in the scheme. And if you have participated in, or been
exempted from, the PSS through a previous employer you may need to
change this for your new firm.
Now is also a good time to consider the issue of insurance more
generally. If you are going to be self-employed you may like to
consider income protection insurance. You may want insure your premises
and contents, your vehicle, your equipment. If you are taking on
employees you will need Workers Compensation insurance. You can even
take out fidelity insurance to cover employee dishonesty. An insurance
broker can give you the details of all of these insurances, and more,
and provide a quote.
For Society members , the Small Practice Kit
provides useful information on insurance and includes an insurance checklist.
You know the old saying: if you fail to plan, you plan to fail
. Every good business needs a good business plan. There is no magic to planning. It is really a matter of
- considering where you are now - usually done by reviewing the
current environment (political and economic conditions, market
conditions, competitors, etc) and doing an analysis of your strengths,
weaknesses, opportunities and threats (a SWOT analysis)
- deciding where you want to be – usually done by developing your mission, vision, values and objectives
- identifying the strategies and actions that will get you there and
- identifying how you will measure success.
Here’s a simple Law Firm Strategic Planning template
you might find useful.
The Australian Government Business website
also has some useful information including
And for Society members, the Small Practice Kit
also has lots of information on business planning .
The options are many: buy, rent, share, work from home or used serviced
offices. If you opt to work from home, or if you are a country lawyer,
remember the Society has conference rooms that members can book for
Society members might also like to look at what the Small Practice Kit
says about premises. It includes a Premises Checklist.
The Australian Solicitor’s Conduct Rules
a provision on shared premises (rule 39). You need to be sure that your
clients are very clear with whom they are dealing. Clear signage is
a business from home can be an appealing option (low cost, easy to
establish, some possible tax deductions) but it’s not all plain sailing.
You will have to think about how you will manage your clients, maintain
your privacy and safety, manage WH&S issues, etc. The Australian Government Business website publishes some tips for home based businesses.
You will need to consider your one off start-up costs. Here’s a list
of things you might include in your considerations.
For Society members, also have a look at the Start Up Expenses Checklist in the Small Practice Kit
You will also need to prepare a budget. Here’s
- a template for calculating income
- an Excel cash flow template
- an Excel annual Practice Budget
- an Excel Practice Budget – month by month
For Society Members, see also the Small Practice Kit
Your budget may reveal that at times
you outgoings will exceed your income (particularly during your start
up years). You may therefore need a loan, or a line of credit. CPA
Australia has produced a guide Access to Finance – Tips to Guide SMEs
that gives some useful advice on how to approach this. The Small Practice Kit
also includes information on finance (for Society members).