The Complete Solo Attorney Practice Startup Checklist

Starting a solo law practice is exciting, but the business side can be overwhelming, especially taxes. This checklist walks you through the essential steps, from entity formation to tax compliance, with realistic figures for 2026. Follow it in order, and you’ll have a solid foundation before you take your first client.

1. Choose Your Business Entity

Your entity affects your taxes and liability. Most solo attorneys choose either a sole proprietorship or a limited liability company (LLC) or professional corporation (PC).

• Sole Proprietorship: No formal filing, but you are personally liable for business debts and malpractice claims. Not recommended for attorneys.
• LLC: Offers liability protection and pass-through taxation. Costs $50-$500 to file, depending on your state, plus annual fees of $0-$800 (e.g., California charges $800 minimum franchise tax).
• Professional Corporation (PC) or Professional LLC (PLLC): Required in some states for law practices. Similar costs to an LLC, but may have additional requirements.

Action step: File your entity paperwork with your Secretary of State. If you’re unsure, consult a business attorney or CPA.

2. Obtain an EIN and Set Up Tax Accounts

An Employer Identification Number (EIN) is your federal tax ID. You need it to open a business bank account and file taxes.

• Apply for an EIN for free at IRS.gov (takes 10 minutes).
• Register with your state’s Department of Revenue for state taxes (income, sales, or use tax, if applicable).
• If you plan to hire employees, you’ll need to register for unemployment insurance and workers’ comp.

Action step: Apply for your EIN this week. It’s free and immediate.

3. Open a Business Bank Account and Credit Card

Separating personal and business finances is non-negotiable. It simplifies tax preparation and protects your personal assets.

• Open a business checking account (many banks offer free accounts for solo attorneys; some have minimum balance requirements of $1,000-$5,000).
• Get a business credit card for expenses. Look for cards with cash back or points (e.g., 1.5%-2% back).
• Use accounting software like QuickBooks or Xero ($30-$80/month) to track income and expenses.

Action step: Open your business account and credit card within the first month.

4. Set Up a Bookkeeping System

Accurate books are the backbone of tax season. You need to track every dollar in and out.

• Choose a simple system: spreadsheet (free) or software (QuickBooks, Xero, FreshBooks).
• Categorize expenses: office rent, software, marketing, professional dues, continuing legal education (CLE), insurance, etc.
• Reconcile your accounts monthly.

Action step: Set up your chart of accounts and a monthly routine to update it.

5. Understand Your Tax Obligations

As a solo attorney, you’re both employee and employer. You’ll pay income tax and self-employment tax (Social Security and Medicare).

• Self-employment tax: 15.3% of net earnings (12.4% for Social Security, 2.9% for Medicare).
• Income tax: Federal rates range from 10% to 37%, depending on your bracket. State rates vary.
• Estimated quarterly taxes: You must pay estimated taxes if you expect to owe more than $1,000. Deadlines are April 15, June 15, Sept 15, and Jan 15. Penalties apply for underpayment.

Action step: Calculate your projected income and set aside 25%-35% of each payment for taxes. Open a separate savings account for this.

6. Get Professional Liability Insurance

Malpractice insurance is essential. It covers claims of negligence or errors.

• Cost: $1,500-$5,000 per year for solo attorneys, depending on practice area and state. High-risk areas (e.g., personal injury) cost more.
• Check if your state bar offers group plans (often cheaper).
• Also consider general liability and cyber insurance (for client data).

Action step: Get quotes from at least three insurers. Compare coverage limits (e.g., $100,000/$300,000 vs. $1 million/$3 million).

7. Create a Retirement Plan

Retirement plans reduce your taxable income. As a solo, you have several options:

• Solo 401(k): Contribution limit of $23,000 (2026) plus employer profit-sharing up to 25% of compensation, total limit $69,000.
• SEP IRA: Contribution limit of 25% of net earnings, up to $69,000 (2026).
• SIMPLE IRA: Lower limits, but easier to administer.

Action step: Open a solo 401(k) or SEP IRA with a low-cost provider (e.g., Vanguard, Fidelity). Aim to contribute at least 10%-15% of your income.

8. Set Up a Trust Account (IOLTA)

If you handle client funds, you need an Interest on Lawyers’ Trust Account (IOLTA). This is a separate bank account for client money, required by state bar rules.

• Open a non-interest-bearing account (or interest-bearing for IOLTA).
• Keep client funds separate from your operating account.
• Record all transactions meticulously.

Action step: Open your IOLTA account and establish a system for tracking client funds.

9. Plan for Quarterly Tax Payments

Quarterly estimated taxes are due even if you haven’t made a profit yet. Use Form 1040-ES to calculate.

• Pay online via IRS Direct Pay or EFTPS.
• If you’re new, you can base payments on your expected income. Adjust as you go.
• Missing a deadline can result in penalties (currently around 0.5% per month).

Action step: Mark the four deadlines on your calendar. Set reminders two weeks before each.

10. Track Deductible Expenses

You can deduct ordinary and necessary business expenses. Common ones for solo attorneys:

• Office rent or home office deduction (if you qualify)
• Software subscriptions (legal research, billing, accounting)
• Marketing and website costs
• CLE courses and bar dues
• Professional liability insurance
• Equipment (laptop, printer) and furniture
• Meals and entertainment (50% deductible)
• Travel for client meetings or court

Action step: Keep all receipts. Use a receipt scanner app (e.g., Expensify, Shoeboxed) to digitize them.

11. Consider Hiring a Tax Professional

Tax law is complex. A CPA or enrolled agent who works with attorneys can save you money and stress.

• Cost: $300-$800 for a simple return, $1,000-$2,500 if you have complex situations.
• They can help with quarterly planning, entity choice, and audit defense.

Action step: Interview two CPAs this month. Ask about their experience with solo law practices.

12. Review and Adjust Quarterly

Your first year is a learning curve. Review your finances quarterly.

• Compare actual income/expenses to projections.
• Adjust your estimated tax payments if needed.
• Revisit your entity choice if your income grows.

Action step: Schedule a quarterly financial review with yourself or your CPA.

FAQ

Q: Do I need to charge sales tax on legal services? A: Generally no, legal services are exempt from sales tax in most states, but you may need to pay other taxes like gross receipts tax. Check your state’s rules.

Q: What if I can’t pay my quarterly taxes on time? A: Pay as much as you can to reduce penalties. The IRS offers installment agreements if you owe more than $10,000. Interest and penalties will accrue, so it’s best to pay on time.

Q: Can I deduct my home office? A: Yes, if you use a space exclusively and regularly for business. Use the simplified method ($5 per square foot, up to 300 sq ft) or the actual expense method.

Q: Should I incorporate or stay a sole proprietor? A: For most solo attorneys, an LLC or PC is advisable for liability protection. The cost is minimal compared to the risk. Consult a professional.

The Bottom Line

Launching a solo practice requires careful planning, especially around taxes. Follow this checklist step by step, and you’ll avoid common pitfalls. Set aside money for taxes, keep meticulous records, and seek professional help when needed. Your focus should be on serving clients, not worrying about IRS penalties. Start with the first three steps this week, and you’ll be on your way to a successful practice.

Related guides

• The Annual Solo Attorney Practice Review Checklist
• 7 Mistakes Solo Attorney Practices Make in Their First Year
• 7 Questions to Ask Before Buying a Solo Attorney Practice