Attorneys are not immune to the current economic downturn and many are searching for ways to reduce overhead. One way an attorney can reduce overhead is to use the services of a freelance paralegal. Therefore, the demand contract paralegals is increasing. As the demand for paralegal services increase, the number of freelance paralegal businesses will rise.
If you have considered opening your own paralegal business, there are certain details you should consider before opening your door and hanging out a shingle. As with any small business, a freelance paralegal should begin with a strong foundation for a successful business.
Steps for starting a paralegal business
1. Formulate a business plan – Writing down your business plan helps you visualize how you will begin your paralegal business as well as the direction you want to take your business in the future. In your business plan, include the following sections:
- Company description – This should describe what paralegal services you will offer, the market you want to cover and what makes your business different from other paralegal service companies.
- Organization and management section – This should cover how you will organize and manage your business. If you intend to have employees, you must determine the management structure you will use and how you will delegate work.
- Marketing – In order to be successful, you must have a marketing plan. How will attorneys find out about your services and how will you communicate with the market area? You should also include a growth strategy to build your business.
- Funding and financial projections – If you need to borrow money to begin your business, this section should lay out a plan for obtaining funding. It must include your current funding requirements and how you intend to use the funds. Also, include a section with financial projections based on the amount of time you are committing to this business and the expected rate of pay for your paralegal services.
2. Determine your business location – If you intend to work out of your home, you must set up your home office and equip it with the necessary furniture and office equipment required to operate your paralegal business. You must consider how your family life might encroach on your business and how to keep both separate within your home. Operating a successful business from home requires discipline and organization. If you intend to lease an office, consider the cost involved in addition to rent payments such as taxes, insurance, renovation costs and IT system upgrades.
3. Finance your business – Until you can secure your first contract paralegal job, you will need to cover both business and personal costs. Unless you already have your foot in the door with a law firm or with several attorneys, it will take some time to establish loyal customers. A smart business owner will have startup capital to cover expenses until the business begins to generate a profit. As a contract paralegal offering paralegal services, you may experience ebbs and flows in your business. Have a plan in place in case you must finance your business during slow periods.
4. Meet with an attorney – Unless you are a paralegal that has extensive experience in corporate law, it would be wise to meet with an attorney to discuss the type of legal structure for your paralegal business. There are advantages and disadvantages to being a sole proprietorship, partnership, Limited Liability Company or a corporation. In order to determine the best ownership structure for your business, you should consult an experienced attorney.
In addition to helping you determine the legal structure of your business, an attorney can also assist you with registering your business name and obtaining the proper local and state licenses and permits, if required, for your business.
5. Consult with an accountant – Before making a final decision about the legal structure for your paralegal business, consult a CPA to determine the tax advantages and disadvantages for business owners. You may be required to obtain a tax identification number depending on the type of business structure you choose. Furthermore, you should know in advance what type of self-employment taxes you may be required to pay for owning your own business.
6. Write a list of services and costs – Depending on your experience, you may offer a wide variety of paralegal services or you may choose to limit your services to specific practice areas. Before you open your doors for business, you need a detailed list of the paralegal services offered with a price for each service. You need to consider whether you want to charge by the hour or charge a flat fee. You may wish to charge a flat fee for services that you know will take a finite period of time to complete and an hourly rate for services, such as research, where time may fluctuate based on the job.
7. Develop a website – With attorneys using technology more today than ever, it is important that your paralegal business has a website. In addition to an excellent marketing tool, your website is a means of communication with clients. It allows attorneys to request work quickly and without hassle. Your website can also serve as a means of payment for clients that wish to make online payments for paralegal services.
Starting a paralegal service business is a good investment for the paralegal who desires to own her own business and be her own boss. With hard work and dedication, you can build a successful freelance paralegal business that provides paralegal services to attorneys within your area or even nationwide.