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inforcement. However, the sometimes “unequal distribution” of power, joint and several liability, pro t sharing, and business disputes between part- ners can create di culties as well. In each of these partnerships, the part- ners will record any income on their personal tax returns.
Sole Proprietorship. If an attorney fails to set up an entity, a sole propri- etorship is unincorporated and re- quires little to no ling. As the name implies, a sole proprietorship can only have one member and all pro ts and losses are recorded on the owner’s personal tax return. e owner of a sole proprietorship maintains unlim- ited liability and can be held 100% li- able for the actions of the rm or an employee of the rm.
PICKING THE RIGHT ENTITY FOR YOUR LAW FIRM
e questions require more than a simple “o the cu ” response. ese are long term goals and not simply next week or next month’s plans.
(a) How many owners do you plan to have? Multiple owners now or in the future will require a strong op- erating agreement under a Limited Liability Company or a strong part- nership agreement as a Partnership or corporation, in order to protect your future liability from co-owners.
(b) How to maximize tax conse- quences to maximize a er-tax pro ts. If your law rm owns a building or provides other services, do these need to be under a di erent entity?
(c) Is your rm preparing and maintaining the proper entity docu- ments and holding the necessary meetings?
(d) If your rm is set up as a corpo- ration, were the necessary sharehold- ers’ meetings and board of directors’ meetings held? Were annual minutes required? Were shareholders apprised of the annual reports?
(e) Each Texas entity must le a franchise tax return and a public in- formation report; has your law rm complied with such requirement?
AFTER THE FORMATION OF THE ENTITY
e following is a checklist of items
your business, including your law rm, should have for all of its employees.
IS YOUR LAW FIRM’S HUMAN RESOURCES DEPARTMENT COMPLIANT?
• Do you comply with independent contractor/employee and over- time for each employee?
• Do you have I-9s and W-4s for each employee? Are the I-9s com- pleted properly?
• I-9 should be in a separate le from the rest of the employee’s personnel le and available for USCIS only if requested
• Emergency contact information
• Tracking hours, time-o requests,
payroll
• Any medical related employee in-
formation should be kept separate from the employee’s personnel le
DO YOU HAVE A CURRENT EM- PLOYEE HANDBOOK?
e handbook should include the fol- lowing:
• Family Medical Leave Policy if the law rm has over y, full-time employees;
• Equal Employment and Non-Dis- crimination Policies;
• Workers’ Compensation Policies; • Expectations for contact with cli-
ents and all communications;
• Security, protection of con den- tial information, and o ce tech-
nology system policies;
• and a signed acknowledgment
page
THE HANDBOOK SHOULD BE UP- DATED ANNUALLY
• Ensure compliance with all State and Federal laws
• Create changes to make enforce- ment easier for your rm/you
AN UPDATED, EMPLOYMENT POSTER SHOULD BE POSTED DISPLAYING:
• e minimum wage notice,
• e Equal Employment Opportu-
nity is the Law,
• Employee Polygraph Protection
Act
• I-9 Anti-Discrimination Notice,
and
• USERRA Notice of Rights and
Bene ts.
OTHER MANAGEMENT ISSUES
• Who at your rm has the author- ity to sign a contract? Who is liable for a law rm contract? Do you know? Are you personally guaran- teeing all contracts? Are you aware of all contracts being signed?
• Do you have a business plan? To run a law rm like a business re- quires starting to act like a CEO.
Firm Overview: is is the WHY for your law rm. e rm overview should include the rm’s purpose, ob- jectives, and goals for the future and be the core, guiding principle for the law rm’s growth. is section should include the Mission Statement, Phi- losophy/Values, and Vision Goals.
Market Analysis: e how your law rm is DIFFERENT. e market analysis will help you recognize your rm’s strengths and weaknesses and identify how to di erentiate your rm from the other law rms. is section describes your ideal client, takes a closer look at your competition, nds ways to stand out from the crowd, and understand your role in marketing.
Operations: Operations is the HOW you are your law rm will run on a daily basis. is section will in- clude a detailed intake process, the billing, and case management sys- tem, technology analysis and upgrade plans, and an organization chart in- cluding responsibilities.
Financials: Your business plan must include a clear plan of revenue and expenses with a goal based on a baseline number of clients required each month to maintain PROFIT- ABILITY. is section should include monthly overhead, projected revenue, pro tability, and key performance in- dicators (the numbers you will moni- tor each month to ensure you are reaching your goals).
Now instead of later is always the best time to make sure you are run- ning your business properly.
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