How do I set up and register a law firm

Setting up a law firm is not one decision; it is a sequence, and the steps gate each other. You cannot bind malpractice coverage without an entity, you cannot open an operating account without an EIN, and you cannot legally take a retainer without an IOLTA trust account. Do the steps out of order and you stall. Here is the working order used by solos who actually opened this year, with the law-specific traps a generic “how to form an LLC” article will never mention.

Choose a professional entity, not a plain LLC

Your first decision is the structure, and law is a special case. A regular LLC will not do in most states because law is a licensed profession; you form a Professional Limited Liability Company (PLLC) or a Professional Corporation (PC) instead. The rules that come with it are strict: every member or shareholder must be a licensed attorney in that state, and the entity cannot shield you from your own malpractice, only from the firm’s ordinary business debts and, in most states, from a co-owner’s malpractice.

For a solo, a single-member PLLC is the usual answer: liability separation for business obligations, pass-through taxation, and simple filing. A PC taxed as an S corp starts to make sense once net profit clears roughly $80k to $100k, because it can cut self-employment tax by splitting your take into salary plus distributions. File your articles of organization or incorporation with the secretary of state, then apply for a free EIN on irs.gov, which takes about ten minutes and unlocks every account downstream. The broader strategy of choosing your structure ties into the best way to start a firm.

Bind malpractice coverage before you open accounts

Professional liability insurance, malpractice coverage, is the real cost of setup and, in a handful of states like Oregon, is mandatory. Even where it is optional, practicing without it is reckless, and many referral sources and courts effectively expect it. Bind a policy before you open your bank accounts, because a claims-made policy’s retroactive date should line up with the day you start taking clients, and gaps in coverage are hard to fix after the fact.

Expect roughly $1,200 to $5,000 a year for a solo, driven by your practice area and limits. Low-risk work like estate planning or business formation sits at the bottom of that range; higher-risk areas like litigation, personal injury, or securities push toward the top, and some specialties (like patent or securities) cost more still. Carriers that write solo policies include The Bar Plan, ALPS, and many state-bar-endorsed programs. Buy claims-made with an eye on tail coverage, because when you eventually close or sell the practice, you will want the option to cover claims filed after you stop working.

Open two accounts: operating and IOLTA

Every law firm runs two bank accounts, and confusing them is how careers end. The operating account holds the firm’s own money, earned fees, and pays your rent, software, and salary. The IOLTA (Interest on Lawyers’ Trust Account) holds money that is not yours, client retainers, settlement funds, and advanced costs, until you have actually earned or spent it. The interest on the pooled trust account flows to a legal-aid foundation, not to you or the client.

Open the IOLTA at a bank on your state bar’s approved list, and connect it to your practice-management software so every deposit and disbursement is tracked against a specific client matter. The cardinal rules: never mix client funds with firm funds, never let any client’s ledger go negative, and reconcile the trust account monthly against both your books and the client sub-ledgers. This is not bookkeeping hygiene; it is the ethics rule regulators watch most closely, because it protects money that belongs to other people.

Register the name, then handle taxes and hiring

With the entity, insurance, and accounts in place, register your trade name. If your firm operates under anything other than the exact PLLC name, file a DBA or assumed-name registration with your county or state, and check your bar’s advertising rules, because some states restrict firm names (no misleading “and Associates” if you are solo, for example). Register for state and local business taxes and any local business license your city requires; law is a service, so sales tax rarely applies, but a local business tax or occupational license often does.

Hiring changes the paperwork again. The day you bring on a paralegal, legal assistant, or associate, you need workers’ compensation in most states, payroll tax registration, and unemployment insurance, plus the discipline to supervise non-lawyer staff so they never cross into unauthorized practice. The timing and cost of that first hire is covered in when and how to hire staff, and the full launch order lives in how to start a firm step by step.

Getting found is the part that decides everything

A perfectly registered firm still needs clients. Two moves are free and worth doing this week: claim and complete your Google Business Profile, and ask your first happy clients for reviews. For a new practice, referrals from CPAs, realtors, and adjacent-area lawyers do the heavy lifting, so tell them exactly what you take. The playbooks are in how to get clients for a law firm and how to advertise a law firm.

Then the high-stakes part. Your website is your intake funnel, and the gap between one that books consultations and one that just looks fine is invisible until you compare the numbers, while attorney advertising rules can turn a careless page into a grievance. That is our work. To have it handled, get a free video walkthrough. For SEO and paid ads run inside the ethics rules, see our services. If you need the business plan first, start at expntl.com.