How to Choose a Legal Structure for a Solo Attorney Practice
Learn how to choose the right legal structure for your solo law practice, comparing sole proprietorship, LLC, PLLC, and S-Corp with costs and steps.
Choosing a legal structure for your solo attorney practice is one of the first and most important business decisions you’ll make. It affects your personal liability, taxes, and how much paperwork you handle. For most solo attorneys, the best options are a sole proprietorship, a limited liability company (LLC), a professional limited liability company (PLLC), or an S-corporation. This guide compares each structure with realistic 2026 costs and gives you practical steps to decide and implement your choice.
Why Your Legal Structure Matters
Your legal structure determines two things: whether you are personally liable for business debts and malpractice claims, and how you pay taxes. As an attorney, you already carry professional liability insurance, but that does not protect you from all business liabilities, such as unpaid rent or vendor contracts. A structure like an LLC or PLLC creates a legal separation between you and the business, so your personal assets are not at risk. Additionally, your structure affects how you pay self-employment taxes and whether you can save on those taxes.
Comparison of Legal Structures for Solo Attorneys
The table below compares the main options for a solo attorney in 2026. Costs are annual ranges based on typical state filing fees and ongoing compliance.
| Structure | Liability Protection | Tax Treatment | Setup Cost (first year) | Ongoing Costs | Complexity |
|---|---|---|---|---|---|
| Sole Proprietorship | None | Pass-through (Schedule C) | $0 (no filing) | $0 (except licenses) | Very low |
| LLC (non-professional) | Yes, but may not be allowed for attorneys in some states | Pass-through (default) or S-Corp election | $50-$500 | $50-$300/year | Low to moderate |
| PLLC (professional LLC) | Yes | Pass-through (default) or S-Corp election | $50-$500 | $50-$300/year | Low to moderate |
| S-Corporation (elected on LLC or PLLC) | Yes (if LLC/PLLC) | S-Corp: salary + distributions | $100-$500 (additional filing) | $100-$500/year (payroll) | Moderate |
| Professional Corporation (PC) | Yes | C-Corp or S-Corp | $100-$500 | $100-$500/year | Higher |
Note: Some states require attorneys to form a PLLC or PC, not a general LLC. Check your state bar rules.
Sole Proprietorship: The Simplest but Riskiest
A sole proprietorship is the default if you start practicing without filing any formation documents. You report income on Schedule C of your personal tax return. There is no separate business entity, so you are personally liable for all business debts and any malpractice claims beyond your insurance limits. This structure is only advisable if you have zero business assets and minimal risk, which is rare for attorneys. Even with insurance, a lawsuit could exceed your policy limits, putting your home and savings at risk.
LLC and PLLC: The Most Common Choice for Solo Attorneys
An LLC (or PLLC where required) offers limited liability protection, meaning your personal assets are generally shielded from business debts and claims. You still need malpractice insurance, but the LLC protects against other liabilities like lease obligations or vendor disputes. Most states allow attorneys to form a PLLC, which is specifically for licensed professionals. The setup cost is typically $50 to $500 for filing fees, and annual reports or franchise taxes range from $50 to $300. The tax treatment is pass-through by default, so you pay self-employment taxes on all net income. You can also elect S-Corp status to potentially reduce self-employment taxes, but that adds payroll complexity.
S-Corporation Election: Tax Savings with More Paperwork
If you elect S-Corp status for your LLC or PLLC, you can pay yourself a reasonable salary and take the rest as distributions. Distributions are not subject to self-employment tax, which can save you thousands of dollars. For example, if your net income is $150,000, a sole proprietor pays 15.3% self-employment tax on the full amount, about $22,950. With an S-Corp, you might pay a $100,000 salary, incurring $15,300 in payroll taxes, and take $50,000 as distributions with no self-employment tax, saving $7,650. However, you must run payroll, file quarterly payroll taxes, and pay for payroll services, which cost $500 to $2,000 per year. The IRS requires that your salary be reasonable, so you cannot avoid all self-employment tax.
How to Choose the Right Structure for Your Practice
Follow these steps to make your decision this week:
- Check your state bar rules. Visit your state bar website and search for “business structure” or “professional corporation.” Some states mandate a PLLC or PC for attorneys. If so, your choice is narrowed.
- Assess your risk tolerance. If you have significant personal assets, you need liability protection. If you have few assets, a sole proprietorship might be tempting, but the risk is not worth it. Most attorneys choose an LLC or PLLC.
- Estimate your net income. If your projected net income is above $80,000, consider S-Corp election. Below that, the payroll costs may outweigh the tax savings.
- Compare setup costs. Get quotes from a formation service like LegalZoom or a local attorney. Costs range from $100 to $500 plus state fees.
- Consult a CPA or tax professional. They can run the numbers for your specific situation and help you set up payroll if needed.
Practical Steps to Form Your Structure
Once you decide, take these actions:
- For LLC/PLLC: File Articles of Organization with your state’s Secretary of State. Pay the filing fee, which ranges from $50 to $500. Draft an operating agreement (even if you are the only member) to define how the business is run.
- For S-Corp election: After forming your LLC/PLLC, file Form 2553 with the IRS within 75 days of formation or by March 15 of the tax year. Then set up payroll with a service like Gusto or ADP.
- Obtain an EIN from the IRS for your business, even if you are a sole proprietor with no employees. It helps separate business and personal finances.
- Open a business bank account and credit card in the business name. This is essential for liability protection and tax tracking.
- Get professional liability insurance if you have not already. Costs range from $1,500 to $5,000 per year for solo attorneys, depending on your practice area.
FAQ
Can I change my legal structure later? Yes, you can convert from a sole proprietorship to an LLC or elect S-Corp status later. However, converting may have tax implications, so consult a CPA before doing so.
Is a PLLC required for attorneys in all states? No, not all states require a PLLC. Some allow general LLCs, while others require a PC. Check your state bar rules.
What is the difference between an LLC and a PLLC? A PLLC is specifically for licensed professionals like attorneys. It has the same liability protection but may have additional requirements, such as all members being licensed. The cost and tax treatment are similar.
How much does it cost to maintain an LLC or PLLC? Annual costs include state filing fees ($50-$300), registered agent fees (if you use one, $50-$200), and possibly franchise taxes. Budget $100-$500 per year.
The Bottom Line
For most solo attorneys, forming a PLLC (or LLC where allowed) is the best choice because it provides liability protection at a reasonable cost. If your income is high, consider electing S-Corp status to save on self-employment taxes, but only after crunching the numbers with a tax professional. Start by checking your state bar rules and consulting a CPA. Then file your formation documents and set up your business accounts. This week, take the first step: research your state’s requirements and schedule a consultation with a CPA. Your future self will thank you.