Starting a law firm? Do these 5 things first.
You’ve identified the dangers. You’ve deployed Revis Island level coverage to neutralize them. The dangers aren’t getting you.
It’s now time to put your plan into action. You’re faced with a problem that I call “everything has to happen simultaneously but can’t”.
Folks often ask, where do I start? The question invariably involves entity formation, bank accounts, and funding. The only way to tackle a problem like this is one step at a time.
Here’s a question, a budding solo asked me:
Do I file the paperwork for the LLC before anything else? If so, how do I pay for those charges without using my personal bank/funds?
If I start the business bank account first so I can capitalize in order to pay necessary start up costs, how do I open that account as an LLC business account without having filed the LLC forms and without a business address?
Do I sign the lease for my office space as a personal debt so I can get an address/PO Box and then get the bank account and then file the LLC paperwork ?
Not sure the proper timeline to proceed in. Any advice is much appreciated.
Been there. Here’s what you’re going to do:
1. File your incorpration paperwork.
2. Once you are incorporated get a FEIN from the IRS. This is easily done online. Takes about 10 minutes to do.
3. Once you have your certificate of existence and FEIN head to a bank and open an operating account and any IOLTA accounts that you need. Bring these documents with you. Fund the account and pay expenses from the account as soon as possible. Here’s a post on the nuances of opening law firm bank accounts.
4. Of course, you’ll have to advance costs to start the company from other funds (including personal funds). There is no problem doing this. Just account for them. This can be done via spreadsheet or in quickbooks. Save receipts. But the sooner you create and fund your business account the better simply for accounting purposes.
5. If your landlord will lease to your company then sign on behalf of your company. Many landlords will require you to sign a personal guarantee. When you’re starting up, you as a member are going to have to personally guarantee most if not all debt.
Follow these steps and you’ll be good. Anything else and “that dog won’t hunt”.