legal structure of a business plan sample

How to write the structure and ownership section of your business plan?

Business planning is vital to the success of any entrepreneur because it helps them secure funding and find competent business partners. The document itself contains a variety of key sections, including the presentation of the legal structure and ownership of the business.

This section details the legal structure of your business and helps interested parties such as lenders and investors understand who they will be doing business with if they decide to go ahead and finance your company.

In this guide, we’ll look at the objective of the structure and ownership section, deepdive into the information you should include, and cover the ideal length. We’ll also assess the tools that can help you write your business plan.

Ready? Let’s get started!

In this guide:

What is the objective of the structure and ownership section of your business plan?

What information should i include when presenting the legal structure and ownership of my company in my business plan.

• How long should the structure and ownership section of your business plan be?
• Example of structure and ownership in a business plan

What tools should I use to write my business plan?

The objective of this section is to provide potential investors, lenders, and strategic partners with a clear and transparent view of your business's legal form, ownership distribution, and registration details. 

It aims to build credibility and trust by showcasing your commitment to openness and compliance with regulations. Let's take a look at some of the key objectives:

Communicate the legal form and registration details

• You should explicitly state your business's legal form. For example, your business might be corporation, sole proprietorship, or limited liability company (LLC). 
• Clearly explaining your chosen legal form helps stakeholders understand your entity's liability, taxation, and management implications.
• It is also essential to disclose where your company is registered. This information is vital as it provides clarity on the jurisdiction under which your business operates. 
• It also helps investors and lenders assess any legal and regulatory implications specific to the location of registration.

Identify shareholders

• Potential investors and lenders need to know who owns the company and the percentage of ownership each party holds. 
• By providing this information, you instill confidence in your business and help identify what needs to be verified as part of Know Your Customer (KYC) and Anti-Money Laundering (ALM) checks down the line.

Transparency is the cornerstone of credibility for businesses. By openly presenting the legal structure and ownership, you signal to potential investors that your business operates with integrity and adherence to regulations. 

Notably, anti-money laundering regulations require investors to verify the identity of all shareholders before committing funds. By providing a clear picture of the parties involved, you can facilitate this process and build trust with investors.

Venture capitalists (VC) firms and angel investors in particular, may have specific criteria such as location and ownership mandates governing the companies they can finance. Being transparent about your company's structure and ownership enables potential investors to assess whether your business aligns with their investment preferences and requirements.

Need a convincing business plan?

The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.

The structure and ownership subsection arrives quite early in your business plan as it is the first part of the company section which is the second section of the document (after the executive summary) if you are following a standard business plan outline .

At this stage, the reader is still in the process of getting familiar with your business, and this section serves as a crucial foundation for potential investors and partners and helps them understand the core aspects of your business’s structure.

Here's what you should include:

Company registration details and registered office address

Provide information about when and where your company was registered and its registration number. This enables readers to understand the jurisdiction under which your business is operating and helps verify its legal existence.

Also, mention the registration date to showcase the company's longevity or recent establishment.

Include the registered office address of your company. This is the official address where the company can be contacted, and legal notices can be served. Providing this address demonstrates your commitment to compliance and transparency.

The information above needs to repeated for each subsidiary or joint venture owned by your business in order to provide a clear map of the coporate structure.

Overview of ownership

Offer a concise overview of the ownership structure of the company. Identify the shareholders, and specify their ownership percentages or shares. 

If there are numerous shareholders, list individuals or entities owning 5% or more, and highlight those with a controlling interest in the company or on the board.

If the business is controlled by another business, such as a holding company for example, it is also useful to explain who controls that business as well.

Roles and responsibilities of shareholders

In case of multiple shareholders, explain their respective roles and responsibilities within the organization. 

Differentiate between passive investors, board members, and executive or non-executive directors. 

Shareholders' agreement (if applicable)

If the business plan is presented for investment purposes, it is useful to clarify if a shareholders' agreement is in place between the existing investors. 

This agreement outlines the rights and obligations of shareholders and adds an extra layer of legal protection for investors and shareholders.

Expertise of co-shareholders

Highlight any shareholders who contribute more than just financial capital to the company. 

If, for instance, a shareholder is an industry expert and brings valuable advice, contacts, and credibility, emphasize this aspect. 

Doing so demonstrates the added value these shareholders bring to the business.

Group or franchise structure

If your company operates as part of a group or franchise, provide this information for each individual company receiving funds. 

Clarify the relationship between the main company and the individual entities within the group and their respective legal structures.

Addressing geographical restrictions

If some investors have geographical restrictions on their investments, clearly indicate whether your company meets their eligibility criteria. 

This helps investors quickly assess whether your business aligns with their investment mandates or not.

How long should the structure and ownership section of your business plan be? 

The length of your business plan's structure and ownership section requires a delicate balance. 

While a general rule of thumb suggests that it should be about 2 to 3 paragraphs, the actual length depends on several factors, including the complexity of your corporate structure and the number of shareholders involved.

The complexity of your corporate structure 

• A concise presentation may be sufficient if your company's legal structure is relatively straightforward, with a single owner or a small number of co-founders. 
• In such cases, aim to provide the necessary information without overwhelming the reader with unnecessary details. A paragraph or two may convey the key points effectively, ensuring clarity and brevity. 
• However, if you have a complex business structure, aim to provide details about members who play a key role in business continuity and profitability. 

The number of shareholders involved

• If your business involves multiple shareholders, each with significant ownership percentages or unique roles, you may need to dedicate more space to this section. 
• Do this by providing a comprehensive breakdown of ownership distribution and outlining each shareholder's contributions. 
• This may take up more space as you need to add additional information. However, if you have a pretty straightforward ownership structure, a paragraph or two will be sufficient enough.

Regardless of the complexity, striking the right balance between providing sufficient detail and avoiding excessive technical jargon is crucial. The structure and ownership section should be reader-friendly, allowing potential investors and stakeholders to understand the core aspects of your company without feeling overwhelmed by intricate legalities.

Repetition can dilute the impact of your message and unnecessarily lengthen the section. Ensure that you don't reiterate information that has already been covered in other parts of the business plan. Instead, focus on providing unique insights and details that enhance the reader's understanding of your corporate structure and ownership.

When crafting this section, prioritize the most critical points that investors or partners need to know about your company's structure and ownership. 

Focus on aspects that directly impact decision-making, such as the majority shareholder's influence, board composition, different classes of shares in issue, or any unique arrangements that set your business apart.

Need inspiration for your business plan?

The Business Plan Shop has dozens of business plan templates that you can use to get a clear idea of what a complete business plan looks like.

Example of structure and ownership section in a business plan 

Below is an example of what the structure and ownership section of your business plan might look like. As you can see, it is part of the overall company section and precedes the location and management team subsections.

The structure and ownership section of a business plan provides a detailed overview of how your company is organized and who holds ownership stakes in the business.

This example was taken from one of  our business plan templates .

In this section, we will review three solutions for creating a business plan for your business: using Word and Excel, hiring a consultant to write the business plan, and utilizing an online business plan software.

Create your business plan using Word and Excel

This is the old-fashioned way of creating a business plan (1990s style) and using Word and Excel has both pros and cons.

On the one hand, using either of these two programs is cheap and they are widely available. 

However, creating an error-free financial forecast with Excel is only possible if you have expertise in accounting and financial modeling.

Because of that investors and lenders might not trust the accuracy of your forecast unless you have a degree in finance or accounting.

Also, writing a business plan using Word means starting from scratch and formatting the document yourself once written - a process that can be quite tedious - especially when the numbers change and you need to manually update all the tables and text.

Ultimately, it's up to the business owner to decide which program is right for them and whether they have the expertise or resources needed to make Excel work. 

Hire a consultant to write your business plan

Outsourcing your business plan to a consultant can be a viable option, but it also presents certain drawbacks. 

On the plus side, consultants are experienced in writing business plans and adept at creating financial forecasts without errors. Furthermore, hiring a consultant can save you time and allow you to focus on the day-to-day operations of your business.

However, hiring consultants is expensive: budget at least £1.5k ($2.0k) for a complete business plan, more if you need to make changes after the initial version (which happens frequently after the first meetings with lenders).

For these reasons, outsourcing the plan to a consultant or accountant should be considered carefully, weighing both the advantages and disadvantages of hiring outside help.

Ultimately, it may be the right decision for some businesses, while others may find it beneficial to write their own business plan using an online software.

Use an online business plan software for your business plan

Another alternative is to use online business plan software .

There are several advantages to using specialized software:

• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can be inspired by already written business plan templates
• You can easily make your financial forecast by letting the software take care of the financial calculations for you without errors
• You get a professional document, formatted and ready to be sent to your bank
• The software will enable you to easily track your actual financial performance against your forecast and update your forecast as time goes by

If you're interested in using this type of solution, you can try our software for free by signing up here .

To sum it up, a well-written structure and ownership subsection is key to ensuring that the reader is clear on who controls the business, and whether or not it fits their investment criterias.

Also on The Business Plan Shop

• How to do a market analysis for a business plan
• How to present your management team in your business plan?
• Where to write the conclusion of your business plan?

Know someone who needs help writing-up their business plan? Share this article with them and help them out!

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

Create a convincing business plan

Assess the profitability of your business idea and create a persuasive business plan to pitch to investors

500,000+ entrepreneurs have already tried our solution - why not join them?

Not ready to try our on-line tool ? Learn more about our solution here

Need some inspiration for your business plan?

Subscribe to The Business Plan Shop and gain access to our business plan template library.

Need a professional business plan? Discover our solution

Write your business plan with ease!

It's easy to create a professional business plan with The Business Plan Shop

Want to find out more before you try? Learn more about our solution here

Our Recommendations

• Best Small Business Loans for 2024
• Businessloans.com Review
• Biz2Credit Review
• SBG Funding Review
• Rapid Finance Review
• 26 Great Business Ideas for Entrepreneurs
• Startup Costs: How Much Cash Will You Need?
• How to Get a Bank Loan for Your Small Business
• Articles of Incorporation: What New Business Owners Should Know

How to Choose the Best Legal Structure for Your Business

Small business resources.

• Business Ideas
• Business Plans
• Startup Basics
• Startup Funding
• Franchising
• Success Stories
• Entrepreneurs
• The Best Credit Card Processors of 2024
• Clover Credit Card Processing Review
• Merchant One Review
• ProMerchant Review
• Stax Review
• How to Conduct a Market Analysis for Your Business
• Local Marketing Strategies for Success
• Tips for Hiring a Marketing Company
• Benefits of CRM Systems
• 10 Employee Recruitment Strategies for Success
• Sales & Marketing
• Social Media
• Best Business Phone Systems of 2024
• The Best PEOs of 2024
• RingCentral Review
• Nextiva Review
• Ooma Review
• Guide to Developing a Training Program for New Employees
• How Does 401(k) Matching Work for Employers?
• Why You Need to Create a Fantastic Workplace Culture
• 16 Cool Job Perks That Keep Employees Happy
• 7 Project Management Styles
• Women in Business
• Personal Growth
• Best Accounting Software and Invoice Generators of 2024
• Best Payroll Services for 2024
• Best POS Systems for 2024
• Best CRM Software of 2024
• Best Call Centers and Answering Services for Busineses for 2024
• Salesforce vs. HubSpot: Which CRM Is Right for Your Business?
• Rippling vs Gusto: An In-Depth Comparison
• RingCentral vs. Ooma Comparison
• Choosing a Business Phone System: A Buyer’s Guide
• Equipment Leasing: A Guide for Business Owners
• HR Solutions
• Financial Solutions
• Marketing Solutions
• Security Solutions
• Retail Solutions
• SMB Solutions

Table of Contents

Your business’s legal structure has many ramifications. It can determine how much liability your company faces during lawsuits. It can put up a barrier between your personal and business taxes – or ensure this barrier doesn’t exist. It can also determine how often your board of directors must file paperwork – or if you even need a board. [Related article: What to Do if Your Business Gets Sued ]

We’ll explore business legal structures and how to choose the right structure for your organization. 

What is a business legal structure?

A business legal structure, also known as a business entity, is a government classification that regulates certain aspects of your business. On a federal level, your business legal structure determines your tax burden. On a state level, it can have liability ramifications.

Why is a business legal structure important?

Choosing the right business structure from the start is among the most crucial decisions you can make. Here are some factors to consider:

• Taxes: Sole proprietors, partnership owners and S corporation owners categorize their business income as personal income. C corporation income is business income separate from an owner’s personal income. Given the different tax rates for business and personal incomes, your structure choice can significantly impact your tax burden.
• Liability: Limited liability company (LLC) structures can protect your personal assets in the event of a lawsuit. That said, the federal government does not recognize LLC structures; they exist only on a state level. C corporations are a federal business structure that includes the liability protection of LLCs.
• Paperwork: Each business legal structure has unique tax forms. Additionally, if you structure your company as a corporation, you’ll need to submit articles of incorporation and regularly file certain government reports. If you start a business partnership and do business under a fictitious name, you’ll need to file special paperwork for that as well.
• Hierarchy: Corporations must have a board of directors. In certain states, this board must meet a certain number of times per year. Corporate hierarchies also prevent business closure if an owner transfers shares or exits the company, or when a founder dies . Other structures lack this closure protection.
• Registration: A business legal structure is also a prerequisite for registering your business in your state. You can’t apply for an employer identification number (EIN) or all your necessary licenses and permits without a business structure.
• Fundraising: Your structure can also block you from raising funds in certain ways. For example, sole proprietorships generally can’t offer stocks. That right is primarily reserved for corporations.
• Potential consequences for choosing the wrong structure: Your initial choice of business structure is crucial, although you can change your business structure in the future. However, changing your business structure can be a disorganized, confusing process that can lead to tax consequences and the unintended dissolution of your business. 

If you have to expand your business to another state , you won’t have to create a new company or structure, but you may have to register it as a “foreign entity.”

Types of business structures

The most common business entity types are sole proprietorships, partnerships, limited liability companies, corporations and cooperatives. Here’s more about each type of legal structure.

Sole proprietorship

A sole proprietorship is the simplest business entity. When you set up a sole proprietorship , one person is responsible for all a company’s profits and debts.

“If you want to be your own boss and run a business from home without a physical storefront, a sole proprietorship allows you to be in complete control,” said Deborah Sweeney, vice president and general manager of business acquisitions at Deluxe Corp. “This entity does not offer the separation or protection of personal and professional assets, which could prove to become an issue later on as your business grows and more aspects hold you liable.”

Proprietorship costs vary by market. Generally, early expenses will include state and federal fees, taxes, business equipment leases , office space, banking fees, and any professional services your business contracts. Some examples of these businesses are freelance writers, tutors, bookkeepers , cleaning service providers and babysitters.

A sole proprietorship business structure has several advantages.

• Easy setup: A sole proprietorship is the simplest legal structure to set up. If you – and only you – own your business, this might be the best structure. There is very little paperwork since you have no partners or executive boards.
• Low cost: Costs vary by state, but generally, license fees and business taxes are the only fees associated with a proprietorship.
• Tax deduction: Since you and your business are a single entity, you may be eligible for specific business sole proprietor tax deductions , such as a health insurance deduction.
• Easy exit: Forming a proprietorship is easy, and so is ending one. As a single owner, you can dissolve your business at any time with no formal paperwork required. For example, if you start a day care center and wish to fold the business, refrain from operating the day care and advertising your services.

The sole proprietorship is also one of the most common small business legal structures. Many famous companies started as sole proprietorships and eventually grew into multimillion-dollar businesses. These are a few examples:

• Marriott Hotels

Partnership 

A partnership is owned by two or more individuals. There are two types: a general partnership, where all is shared equally, and a limited partnership, where only one partner has control of operations and the other person (or persons) contributes to and receives part of the profits. Partnerships can operate as sole proprietorships, where there’s no separation between the partners and the business, or limited liability partnerships (LLPs), depending on the entity’s funding and liability structure.

“This entity is ideal for anyone who wants to go into business with a family member, friend or business partner – like running a restaurant or agency together,” Sweeney said. “A partnership allows the partners to share profits and losses and make decisions together within the business structure. Remember that you will be held liable for the decisions made as well as those actions made by your business partner.”

General partnership costs vary, but this structure is more expensive than a sole proprietorship because an attorney should review your partnership agreement. The attorney’s experience and location can affect the cost. 

A business partnership agreement must be a win-win for both sides to succeed. Google is an excellent example of this. In 1995, co-founders Larry Page and Sergey Brin created a small search engine and turned it into the leading global search engine. The co-founders met at Stanford University while pursuing their doctorates and later left to develop a beta version of their search engine. Soon after, they raised $1 million in funding from investors, and Google began receiving thousands of visitors a day. Having a combined ownership of 11.4% of Google provides them with a total net worth of nearly $226.4 billion.

Business partnerships have many advantages. 

• Easy formation: As with a sole proprietorship, there is little paperwork to file for a business partnership. If your state requires you to operate under a fictitious name ( “doing business as,” or DBA ), you’ll need to file a Certificate of Conducting Business as Partners and draft an Articles of Partnership agreement, both of which have additional fees. You’ll usually need a business license as well.
• Growth potential: You’re more likely to obtain a business loan with more than one owner. Bankers can consider two credit histories rather than one, which can be helpful if you have a less-than-stellar credit score.
• Special taxation: General partnerships must file federal tax Form 1065 and state returns, but they do not usually pay income tax. Both partners report their shared income or loss on their individual income tax returns. For example, if you opened a bakery with a friend and structured the business as a general partnership, you and your friend are co-owners. Each owner brings a certain level of experience and working capital to the business, affecting each partner’s business share and contribution. If you brought the most seed capital for the business, you and your partner may agree that you’ll retain a higher share percentage, making you the majority owner.

Partnerships are one of the most common business structures. These are some examples of successful partnerships:

• Warner Bros.
• Hewlett-Packard
• Ben & Jerry’s

Limited liability company 

A limited liability company (LLC) is a hybrid structure that allows owners, partners or shareholders to limit their personal liabilities while enjoying a partnership’s tax and flexibility benefits. Under an LLC, members are shielded from personal liability for the business’s debts if it can’t be proven that they acted in a negligent or wrongful manner that results in injury to another in carrying out the activities of the business.

“Limited liability companies were created to provide business owners with the liability protection that corporations enjoy while allowing earnings and losses to pass through to the owners as income on their personal tax returns,” said Brian Cairns, CEO of ProStrategix Consulting. “LLCs can have one or more members, and profits and losses do not have to be divided equally among members.”

According to Wolters Kluwer , the cost of forming an LLC comprises the state filing fee and can vary depending on your state. For example, if you file an LLC in New York, you must pay a $200 filing fee, a $9 biennial fee, and file a biennial statement with the New York Department of State .

Although small businesses can be LLCs, some large businesses choose this legal structure. The structure is typical among accounting, tax, and law firms, but other types of companies also file as LLCs. One example of an LLC is Anheuser-Busch, one of the leaders in the U.S. beer industry. Headquartered in St. Louis, Anheuser-Busch is a wholly owned subsidiary of Anheuser-Busch InBev, a multinational brewing company based in Leuven, Belgium.

Here some other well-known examples of LLCs:

• Hertz Rent-a-Car

To learn more about LLCs, read our LLC tax guide , our comprehensive overview of starting an LLC , and our guide to creating an LLC operating agreement.

Corporation 

The law regards a corporation as separate from its owners, with legal rights independent of its owners. It can sue, be sued, own and sell property, and sell the rights of ownership in the form of stocks. Corporation filing fees vary by state and fee category. 

There are several types of corporations, including C corporations , S corporations, B corporations, closed corporations, and nonprofit corporations.

• C corporations: C corporations, owned by shareholders, are taxed as separate entities. JPMorgan Chase & Co. is a multinational investment bank and financial services holding company listed as a C corporation. Since C corporations allow an unlimited number of investors, many larger companies – including Apple, Bank of America and Amazon – file for this tax status.
• B corporations: B corporations, otherwise known as benefit corporations, are for-profit entities committed to corporate social responsibility and structured to positively impact society. For example, skincare and cosmetics company The Body Shop has proven its long-term commitment to supporting environmental and social movements, resulting in an awarded B corporation status. The Body Shop uses its presence to advocate for permanent change on issues like human trafficking, domestic violence, climate change, deforestation and animal testing in the cosmetic industry.
• Closed corporations: Closed corporations, typically run by a few shareholders, are not publicly traded and benefit from limited liability protection. Closed corporations, sometimes referred to as privately held companies, have more flexibility than publicly traded companies. For example, Hobby Lobby is a closed corporation – a privately held, family-owned business. Stocks associated with Hobby Lobby are not publicly traded; instead, the stocks have been allocated to family members.
• Open corporations: Open corporations are available for trade on a public market. Many well-known companies, including Microsoft and Ford Motor Co., are open corporations. Each corporation has taken ownership of the company and allows anyone to invest.
• Nonprofit corporations: Nonprofit corporations exist to help others in some way and are rewarded by tax exemption. Some examples of nonprofits are the Salvation Army, American Heart Association and American Red Cross. These organizations all focus on something other than turning a profit.

Corporations enjoy several advantages. 

• Limited liability: Stockholders are not personally liable for claims against your corporation; they are liable only for their personal investments.
• Continuity: Corporations are not affected by death or the transferring of shares by their owners. Your business continues to operate indefinitely, which investors, creditors and consumers prefer.
• Capital: It’s much easier to raise large amounts of capital from multiple investors when your business is incorporated.

This structure is ideal for businesses that are further along in their growth, rather than a startup based in a living room. For example, if you’ve started a shoe company and have already named your business, appointed directors and raised capital through shareholders, the next step is to become incorporated. You’re essentially conducting business at a riskier, yet more lucrative, rate. Additionally, your business could file as an S corporation for the tax benefits. Once your business grows to a certain level, it’s likely in your best interest to incorporate it.

These are some popular examples of corporations:

• General Motors
• Exxon Mobil Corp.
• Domino’s Pizza
• JPMorgan Chase

Learn more about how to become a corporation .

Cooperative 

A cooperative (co-op) is owned by the same people it serves. Its offerings benefit the company’s members, also called user-owners, who vote on the organization’s mission and direction and share profits.

Cooperatives offer a couple main advantages.

• Increased funding: Cooperatives may be eligible for federal grants to help them get started.
• Discounts and better service: Cooperatives can leverage their business size, thus obtaining discounts on products and services for their members.

Forming a cooperative is complex and requires you to choose a business name that indicates whether the co-op is a corporation (e.g., Inc. or Ltd.). The filing fee associated with a co-op agreement varies by state. 

An example of a co-op is CHS Inc., a Fortune 100 business owned by U.S. agricultural cooperatives. As the nation’s leading agribusiness cooperative, CHS reported a net income of $422.4 million for fiscal year 2020. These are some other notable examples of co-ops:

• Land O’Lakes
• Navy Federal Credit Union
• Ace Hardware

The five types of business structures are sole proprietorship, partnership, limited liability company, corporation and cooperative. The right structure depends mainly on your business type.

Factors to consider before choosing a business structure

For new businesses that could fall into two or more of these categories, it’s not always easy to decide which structure to choose. Consider your startup’s financial needs, risk and ability to grow. It can be challenging to switch your legal structure after registering your business, so give it careful analysis in the early stages of forming your business. 

Here are some crucial factors to consider as you choose your business’s legal structure. You should also consult a CPA for advice.

Flexibility 

Where is your company headed, and which type of legal structure allows for the growth you envision? Turn to your business plan to review your goals and see which structure best aligns with those objectives. Your entity should support the possibility for growth and change, not hold it back from its potential. [Learn how to write a business plan with this template .]

When it comes to startup and operational complexity, nothing is more straightforward than a sole proprietorship. Register your name, start doing business, report the profits and pay taxes on it as personal income. However, it can be difficult to procure outside funding. Partnerships, on the other hand, require a signed agreement to define the roles and percentages of profits. Corporations and LLCs have various reporting requirements with state governments and the federal government.

A corporation carries the least amount of personal liability since the law holds that it is its own entity. This means creditors and customers can sue the corporation, but they can’t gain access to any personal assets of the officers or shareholders. An LLC offers the same protection but with the tax benefits of a sole proprietorship. Partnerships share the liability between the partners as defined by their partnership agreement.

An owner of an LLC pays taxes just as a sole proprietor does: All profit is considered personal income and taxed accordingly at the end of the year.

“As a small business owner, you want to avoid double taxation in the early stages,” said Jennifer Friedman, principal at Rivetr. “The LLC structure prevents that and makes sure you’re not taxed as a company, but as an individual.”

Individuals in a partnership also claim their share of the profits as personal income. Your accountant may suggest quarterly or biannual advance payments to minimize the effect on your return. 

A corporation files its own tax returns each year, paying taxes on profits after expenses, including payroll. If you pay yourself from the corporation, you will pay personal taxes, such as those for Social Security and Medicare, on your personal return. 

To simplify payroll complexities and taxation issues, consider using a payroll service. Check out our reviews of the best payroll services to find a partner that fits your needs and budget.

If you want sole or primary control of the business and its activities, a sole proprietorship or an LLC might be the best choice. You can negotiate such control in a partnership agreement as well.

A corporation is constructed to have a board of directors that makes the major decisions that guide the company. A single person can control a corporation, especially at its inception, but as it grows, so does the need to operate it as a board-directed entity. Even for a small corporation, the rules intended for larger organizations – such as keeping notes of every major decision that affects the company – still apply.

Capital investment

If you need to obtain outside funding from an investor, venture capitalist or bank, you may be better off establishing a corporation. Corporations have an easier time obtaining outside funding than sole proprietorships.

Corporations can sell shares of stock and secure additional funding for growth, while sole proprietors can obtain funds only through their personal accounts, using their personal credit or taking on partners. An LLC can face similar struggles, although, as its own entity, it’s not always necessary for the owner to use their personal credit or assets.

Licenses, permits and regulations

In addition to legally registering your business entity, you may need specific licenses and permits to operate. Depending on the type of business and its activities, it may need to be licensed at the local, state and federal levels.

“States have different requirements for different business structures,” Friedman said. “Depending on where you set up, there could be different requirements at the municipal level as well. As you choose your structure, understand the state and industry you’re in. It’s not ‘one size fits all,’ and businesses may not be aware of what’s applicable to them.”

The structures discussed here apply only to for-profit businesses. If you’ve done your research and you’re still unsure which business structure is right for you, Friedman advises speaking with a specialist in business law.

Max Freedman and Matt D’Angelo contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

• Best CRM Software for Nonprofits

Building Better Businesses

Insights on business strategy and culture, right to your inbox. Part of the business.com network.

• Find a Lawyer
• Ask a Lawyer
• Research the Law
• Law Schools
• Laws & Regs
• Newsletters
• Justia Connect
• Pro Membership
• Basic Membership
• Justia Lawyer Directory
• Platinum Placements
• Gold Placements
• Justia Elevate
• Justia Amplify
• PPC Management
• Google Business Profile
• Social Media
• Justia Onward Blog
• How to Draft an Effective Business Plan Considering the Legal Implications

The road to the creation of a new business is a long one that is often filled with unexpected challenges and accomplishments. While the unpredictable nature of starting a business can be appealing to some, for many there is value in developing a plan to help guide new owners through the first months and years of operation. For this reason, one of the most important steps that entrepreneurs can take when starting out is to carefully and thoughtfully develop a comprehensive business plan.

What Is a Business Plan?

A business plan is both a map and a marketing tool for your business. A business plan helps you carefully set forth the purpose, goals, and priorities of your new business, along with guideposts to help ensure that you stay on the right path. For instance, a business plan may require you to consider what the primary purpose of your business is, or the good or service you intend to provide, who your potential customers are, and how you intend to reach them in an effective and efficient manner. A business plan also allows you to make an honest evaluation of the current status of your business and what you will need to do to get to where you would like to be. This includes taking the time to compile your business balance sheet, analyze existing income and expenses, and determine anticipated financial needs.

Creating a detailed business plan can help business owners acquire outside funding .

In addition, a business plan serves as a marketing tool for new business owners who are attempting to gain financial backing, operational support, or mentoring for their new business. The financial aspects of a business plan lets potential funders or lenders analyze your current income streams and the likelihood of repayment, while the detailed explanation of your business objectives and operational plans helps to convince interested parties that you have taken the time to carefully plan your business endeavors and are invested in the success of your company.

How to Write a Business Plan

There is no one specific way to write a business plan. However, there are key components that most business plans should include, and these are good starting points when working on your own plan. It may also be worth reaching out to an experienced corporate attorney to help you review and revise your business plan before presenting it to others in the business community.

Business plans typically start with a summary of the business and its objectives, and then they describe the operations of the business, the good or service it will be providing, and potential income streams in more detail. Business plans should also include a detailed description of the proposed management structure of the business, including officers or directors and possibly the envisioned composition of the board. Additionally, business plans typically include extensive financial documentation, such as balance sheets, income projections or growth model projections, any pending loan applications, tax returns of the entity, and copies of any relevant legal agreements. If the business has already been in operation for some time, the business plan may also include financial records for the months of operation.

• Summarize the business and its objectives
• Outline how the business is organized and managed
• Describe what the business sells
• Identify potential income streams
• Include financial information, such as balance sheets and projections

Using Your Business Plan

Once you have completed a business plan that you are happy with, you will find that you will often continue to refer to your plan even months or years after it was initially completed. In the initial stages, you can use your business plan to attract investors, partners, board members, or other advisors who are interested in the model you have proposed and would like to contribute to its success. As your business develops, you can continue to refer to the plan to guide you in business decisions, as well as to track timelines or certain goals that you hoped to meet. Even after your business is well-developed, returning to your business plan can help guide your yearly planning for your company, allowing you to modify your goals as they are achieved.

Last reviewed October 2023

Small Business Legal Center Contents   

• Small Business Legal Center
• Starting a Business & Choosing a Legal Ownership Structure
• Hiring and Managing Employees & Relevant Legal Considerations
• Financing a Business & Relevant Legal Considerations
• Tax Law Compliance for Business Owners
• Contract Law & Business Transactions
• Business Law Compliance
• Business Assets and Equipment — Legal & Practical Considerations
• Collections and Credit Laws for Businesses
• E-Commerce Laws in Business Operations
• Emergency Planning for Businesses — Legal & Practical Considerations
• Selling or Closing a Business & Potential Legal Issues
• Growing Your Small Business — Legal & Financial Concerns
• Business Disputes & Related Lawsuits
• Social Media Influencer Marketing & Related Legal Issues
• Making a Business Contract
• Commercial Real Estate & the Law
• Small Business Law FAQs
• Find a Business Law Lawyer

Related Areas   

• Employment Law Center
• Intellectual Property Law Center
• Banking and Finance Law Center
• Tax Law Center
• Immigration Law Center
• Insurance Law Center
• Workers’ Compensation Law Center
• Bankruptcy Law Center
• Administrative Law Center
• Agricultural Law Center
• Cannabis Law Center
• Related Areas
• Bankruptcy Lawyers
• Business Lawyers
• Criminal Lawyers
• Employment Lawyers
• Estate Planning Lawyers
• Family Lawyers
• Personal Injury Lawyers
• Estate Planning
• Personal Injury
• Business Formation
• Business Operations
• Intellectual Property
• International Trade
• Real Estate
• Financial Aid
• Course Outlines
• Law Journals
• US Constitution
• Regulations
• Supreme Court
• Circuit Courts
• District Courts
• Dockets & Filings
• State Constitutions
• State Codes
• State Case Law
• Legal Blogs
• Business Forms
• Product Recalls
• Justia Connect Membership
• Justia Premium Placements
• Justia Elevate (SEO, Websites)
• Justia Amplify (PPC, GBP)
• Testimonials

Client Management

Case management, billing & payments, accounting & report, e-signature.

• Help Center

Starting a law firm can be a rewarding and lucrative venture, but it requires careful planning and strategy. A well-crafted business plan is a crucial tool for any law firm looking to establish itself, secure funding, or grow its practice. The business plan will serve as a roadmap, outlining the law firm’s objectives, strategies, and unique selling proposition

Why Every Law Firm Needs a Business Plan

A well-structured business plan is imperative for every law firm, regardless of its size or specialization. While legal expertise is undoubtedly crucial, having a clear vision and strategic direction is equally essential. A business plan serves as a guiding light, defining the firm’s mission, values, and long-term goals. This clarity is vital for aligning the entire firm towards a common purpose, ensuring that everyone understands the objectives and the path to achieving them. Without a business plan, a law firm may find itself navigating uncertain waters, reacting to circumstances rather than proactively pursuing its ambitions.

The Key Components of a Law Firm Business Plan

A well-structured law firm business plan consists of several key components, each playing a crucial role in guiding the firm’s operations and ensuring its long-term success. Here are the essential elements of a comprehensive law firm business plan:

• Executive summary
• Law firm description
• Market analysis
• Organization and management
• Services 
• Marketing Strategy
• Financial plan
• Start-up budget

Section One: Executive Summary

The executive summary is arguably the most critical section of your law firm’s business plan. While it appears at the beginning, it is often written last, as it serves as a concise yet comprehensive overview of your entire plan. This section should capture the reader’s attention, providing them with a clear understanding of your law firm’s essence, mission, and what to expect from the rest of the document. In your executive summary:

• Introduce your law firm: Briefly describe your law firm’s name, location, and legal specialization.
• Mission and vision: State your firm’s mission and vision, highlighting your commitment to serving clients’ legal needs effectively.
• Your unique selling proposition: Clearly state your USP, and present what is unique about your firm that will ensure success.

The executive summary sets the stage for your entire business plan. It should be a concise yet compelling introduction to your firm’s mission, values, and potential. If crafted well, it can grab the reader’s attention and encourage them to explore other sections in detail. If you feel overwhelmed by this, you can write this section last. 

Section Two: Law Firm Description

This section of your business plan provides a deeper dive into your firm’s background, history, legal specializations, and legal structure and ownership. This section should provide a concise yet informative overview of your firm’s identity and history. Here’s what this section should cover:

• Mission Statement: Briefly reiterate your law firm’s mission statement. This statement should encapsulate your firm’s overarching purpose and guiding principles.
• Geographic Location: State out the physical location of your law firm’s office(s). This should include the city or region where your primary office is situated.
• Legal Structure and Ownership: State the legal structure of your law firm, whether it’s an LLC, S-Corp, or another legal entity. This choice is a fundamental aspect of your business model, influencing ownership, liability, and taxation. If your firm’s ownership is not that of a sole proprietorship, provide details on the ownership structure. Explain how the chosen structure aligns with your firm’s business model, decision-making processes, and long-term goals.
• Firm History: Provide the history of your law firm. Highlight key milestones, achievements, and notable moments in your firm’s journey. If your firm is well-established, briefly summarize its history, showcasing your accomplishments and contributions to the legal field.

Remember that brevity is key in this section. Don’t spend too much time, just touch on important points and achievements. 

Section Three: Market Analysis

A well-conducted market analysis will not only demonstrate your understanding of the legal industry but also inform your law firm’s strategies and decision-making. It goes beyond understanding your competition; it delves deep into your potential clients’ needs and expectations. 

Through market analysis, you can segment your target market based on demographics, industry, legal needs, and preferences. This segmentation allows you to tailor your services to meet the specific needs of different client groups. It also helps you identify the pain points and challenges that potential clients face. By understanding their concerns, you can offer solutions that directly address these pain points.

Your market analysis should also reveal the pricing strategies of your competitors. By benchmarking your pricing against theirs, you can position your services competitively. You can choose to price higher if you offer unique value or lower if you aim to attract price-sensitive clients. Your market analysis should reveal areas where your competitors may be falling short. Use this information to frame your services as the solution to these weaknesses. For example, if competitors have slow response times, emphasize your firm’s commitment to timely communication. 

Showcase your firm’s USPs that directly address client needs and preferences. If you excel in a particular practice area, have a reputation for excellent client service, or offer innovative fee structures, use these strengths to attract your preferred clientele. Ultimately, a well-documented market analysis not only informs your law firm’s business model but also guides your approach to client acquisition, pricing, and service delivery. It ensures that your legal services align with client expectations and positions your firm for success in a competitive legal industry

Section Four: Organization and Management

Image Source – Creately

This section provides a clear picture of your firm’s internal structure and leadership. Name the key stakeholders in your law firm and what they bring to the table. Highlight any unique experiences or expertise that each partner brings to the firm. This could include prior work at prestigious law firms, involvement in landmark cases, or specialized knowledge in a specific area of law. Explain how these experiences set your firm apart and enhance its capabilities. You can also include an organizational chart that visually represents your law firm’s structure. This chart should showcase the hierarchy, roles, and reporting lines within the firm. By including the names, educational backgrounds, unique experiences, and organizational chart, you paint a comprehensive picture of your law firm’s leadership and structure. This not only builds confidence in your team’s capabilities but also showcases the depth and expertise of your staff to potential clients, partners, or investors.

Section Five: Services

This section is the core of your law firm business plan. Here, you will go into detail about all aspects of your services. Present in simple words:

• The problem(s) your law firm is addressing and your approach to how to alleviate those pain points? Answer these questions, and provide in detail how your firm is in the best position to tackle this problem. 
• The solution(s) you are providing. This should describe how your law firm resolves your prospective market’s needs. This should include the work you do, and the benefits that each client will receive if they work with your firm. 
• Your law firm competition.  This should describe what advantages your law firm has over your competitors? What you do differently when providing your solutions and how your clients will gain additional benefits when they work with your law firm.

Section Six: Marketing Strategy

As you craft your business plan, keep these four essential questions in mind:

• What Is Your Firm’s Value Proposition? Clearly define what sets your law firm apart from others. This should guide your marketing and sales strategies, emphasizing the unique value you offer to clients.
• Who Is Your Target Audience? Identify your ideal client profile. Understanding your target audience helps tailor your marketing efforts to reach those most likely to benefit from your services.
• What Are Your Growth Goals? Set specific, measurable growth goals for your firm. These goals should inform your sales and marketing strategies, outlining how you plan to achieve them.
• How Will You Measure Success? Determine key performance indicators (KPIs) to measure the success of your marketing and sales efforts. Whether it’s tracking client acquisition rates, website traffic, or revenue growth, having measurable metrics will help you gauge your progress and make informed adjustments.

It is also valuable to perform a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to assess your law firm’s internal and external factors. Describe your online marketing efforts, including your website, social media presence, and email marketing campaigns. Explain how you plan to leverage marketing  to reach and engage potential clients effectively. You should also define your pricing structure and fee arrangements. This may include hourly rates for specific legal services, retainer agreements for ongoing representation, or flat fees for standardized services. 

Section Seven: Financial Plan

If you want to expand your law firm and ensure a steady income, it’s essential to create a financial strategy for your practice. While you might not have all the answers regarding your firm’s finances, provide comprehensive details. Your goal should be to establish a financial plan, particularly for the initial year of your firm’s operation.

Provide comprehensive financial projections that cover the anticipated income, expenses, and cash flow for your law firm. These forecasts should offer a clear picture of how your firm expects to perform financially. You should also Incorporate income statements, which show your firm’s revenue and expenses, balance sheets that detail your assets and liabilities, and cash flow projections, which illustrate how money moves in and out of your business. These financial statements offer a holistic view of your firm’s financial health.

Explain the assumptions underlying your financial projections. This may include factors like growth rates, market trends, client acquisition strategies, and pricing models. Describe your strategies for achieving growth and how they translate into financial outcomes. This section is critical for demonstrating your law firm’s financial preparedness and sustainability. Investors, lenders, or partners will scrutinize these sections to assess the viability of your firm, making it essential to provide detailed and well-supported financial information.

Section Eight: Start-up Budget

When developing a business plan for your law firm, it is essential to create a realistic startup budget. This involves carefully considering various initial and ongoing expenses and factoring them into your revenue objectives. Here are some instances of expenses to incorporate into your budget:

• Hardware costs, such as laptops, printers, scanners, and office furniture.
• Office space expenses, whether you plan to rent space or work from home.
• Malpractice insurance fees.
• Staff salaries, including potential hires like administrative assistants or paralegals.
• Utility expenses, covering phone and internet services, among others.
• Expenses on practice management software or other tech tools

After itemizing these costs, review them thoroughly. Clearly state the total amount of funding you require to start and sustain your law firm. Explain how this funding will be allocated, including how much goes into covering startup costs and how much is reserved for ongoing operations. Be specific about the purpose of each funding component. 

Additionally, explore tools and solutions that can streamline non-billable tasks, freeing up more time for your legal practice. This not only enhances your overall productivity but also allows you to allocate more time to your legal practice. One exceptional solution that can significantly benefit your law firm operations is a legal practice management software. 

DigitsLaw: The Legal Practice Management Software for Law Firms

DigitsLaw is an all-in-one practice management software that streamlines and simplifies the day-to-day operations of a law firm. Whether you are a small firm or you have law firms in major cities, DigitsLaw can meet the unique needs of your legal practice. Our simple and intuitive tool offers a wealth of features that can make a substantial difference in the success and efficiency of your firm.

Here’s how DigitsLaw can help your new law firm scale:

• Effortless Case Management: DigitsLaw simplifies case management by centralizing all your client information, documents, and communications in one secure location. This ensures that you have easy access to everything you need, right at your fingertips.
• Time Tracking and Billing: With DigitsLaw, tracking billable hours and generating invoices is seamless. You can accurately record your time, expenses, and activities, allowing for transparent and error-free billing processes.
• Conflict Check: DigitsLaw provides a robust conflict check system that assists law firms in maintaining ethical standards and preventing conflicts of interest. By incorporating DigitsLaw conflict check capabilities into your law firm’s workflow, you can enhance your due diligence processes, reduce the risk of conflicts of interest, and uphold the highest ethical standards in your legal practice. 
• Client Collaboration: Foster better client relationships through DigitsLaw’s client portal . Clients can securely access case information, share documents, and communicate with your firm, enhancing transparency and trust.
• Legal Document Management: Say goodbye to the hassle of paper documents and disorganized files. DigitsLaw enables efficient document storage, organization, and collaboration, saving you time and reducing the risk of errors.
• Secure and Compliant: DigitsLaw prioritizes security and compliance, ensuring that your client data and sensitive information are protected at the highest standards.

By leveraging DigitsLaw’s capabilities, you can significantly reduce administrative overhead, minimize errors, and provide a more streamlined and responsive experience for your clients. It’s a strategic investment that will pay dividends as your firm grows and prospers.

Sample Business Plan and Fillable Template

If you’re in the early stages of creating your business plan, we’ve prepared an example that can serve as a reference. You can also download a blank version of our template here. Remember to tailor your plan to your specific requirements and objectives. 

Download your copy of our law firm business plan template HERE

Final thoughts.

In conclusion, crafting a law firm business plan is not just a formality; it’s a roadmap that guides your firm toward success. Whether you’re launching a new law firm or seeking to revitalize an existing one, a well-thought-out plan helps you.  From defining your firm’s mission and values to conducting a thorough market analysis every section of your plan plays a crucial role in shaping your law firm’s journey. It’s not just about impressing potential investors; it’s about setting clear goals, making informed decisions, and ensuring that your firm is well-prepared for the challenges and opportunities that lie ahead.

As you start planning, remember that your business plan is a living document. It should evolve and adapt as your firm grows and the legal industry changes. Regularly revisit and update your plan to stay aligned with your mission, serve your clients better, and achieve your long-term vision.

Share this post

Latest Writings

The latest news and resources from our team

Our Integrations​

It is the easiest and most organized way to manage your law firm, clients, cases, billing, accounting and more.

Get the app

© 2023 Digitslaw. All rights reserved.

Log in to Lawyerist.com

Not a Subscriber yet? Register here. (It's free!)

Username or Email Address

Remember Me

Forgot your password? Reset it here.

Subscribe to Lawyerist

Back to login.

• Hidden Date MM slash DD slash YYYY
• Name * First Last
• Password * Enter Password Confirm Password
• United States
• Which state is your firm's primary location? * Pick one. Alabama Alaska American Samoa Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Guam Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Northern Mariana Islands Ohio Oklahoma Oregon Pennsylvania Puerto Rico Rhode Island South Carolina South Dakota Tennessee Texas Utah U.S. Virgin Islands Vermont Virginia Washington West Virginia Wisconsin Wyoming Armed Forces Americas Armed Forces Europe Armed Forces Pacific State
• Which province is your firm's primary location? * Pick one. Alberta British Columbia Manitoba New Brunswick Newfoundland and Labrador Northwest Territories Nova Scotia Nunavut Ontario Prince Edward Island Quebec Saskatchewan Yukon Province
• What is the size of your firm? * Pick one. Solo practice Small firm (2–15 lawyers) Medium or large firm (16+ lawyers) I do not work at a law firm
• What is your role at your firm? * Pick one. Owner/partner Lawyer Staff Vendor (web designer, consultant, etc.) I do not work at a law firm
• What is your primary practice area? * Pick one. Bankruptcy Civil litigation (non-PI) Class Action Collections Corporate Criminal Education Employment Estate planning, probate, or elder Family General practice Immigration International Landlord/Tenant Mediation/ADR Personal injury Real estate Small business Sports/Entertainment Tax Trademark/IP Other I do not work in law
• Legal Technology Products and Services
• Building a Healthy Firm
• Comments This field is for validation purposes and should be left unchanged.

You have read all five of your free articles this month. To read this article, log in or register.

• Email This field is for validation purposes and should be left unchanged.

Legal product reviews and business guidance from industry experts.

19 Mar 2020

How to Write Your Law Firm Business Plan

By Cari Twitchell

News Articles Healthy Strategy

Every new law practice needs a business plan . This is a guide to creating one.

Here is what should go in your business plan once you’ve decided about your law firm business model.

Section One: Executive Summary

This section provides a succinct overview of your full plan. It should also include the following:

• Mission statement.  This statement should be one or two sentences at most, so you can quickly state it off the top of your head at any given moment. It should clearly state your value and offer inspiration and guidance, while being plausible and specific enough to ensure relevancy. For further direction on how to write a mission statement, read this Entrepreneur article .
• Core values.  Your core values outline the strategy that underpins your business. When written well, they help potential employees and clients understand what drives you every day. When written incorrectly, they include meaningless platitudes that become yet another thing forgotten or ignored during practice. To pack the most punch into your core values, write them as actionable statements that you can follow. And keep them to a minimum: two to four should do just fine. You can read more about writing core values at  Kinesis .
• What sets you apart.  If you are like every other attorney out there, how will you stand out? This is known as your unique selling proposition (USP). What is it that will convince clients to turn to you instead of your competition? By clearly stating your USP, you identify what it is about your firm that will ensure your success.

Are you feeling slightly overwhelmed by all of this? Then write this section last, as you’ll find much of what you write here is a summary of everything you include in subsequent sections.

Section Two: Company Description

Write a succinct overview of your company. Here is what it should cover:

• Mission statement and values.  Reiterate your mission statement and core values here.
• Geographic location and areas served.  Identify where your offices are located and the geographic areas that you serve.
• Legal structure and ownership. State whether you are an LLC, S-Corp or other legal entity. If you are something other than a sole proprietor, identify the ownership structure of your firm. How does your law firm business model influence the ownership type?
• Firm history.  If you are writing or updating a plan for a law firm already in existence, write a brief history that summarizes firm highlights and achievements.

This section is often the shortest. Do not spend much time or space here. Touch on the major points and move on.

Section Three: Market Analysis

Done correctly, a well thought out market analysis will help you identify exactly what your potential clients are looking for and how much you should charge for your services. It also enables you to identify your competitors’ weaknesses, which in turn helps you best frame your services in a way that attracts your preferred clientele. You probably already considered some of these subjects when deciding on the small law firm business model, but you need to document them.

Elements of a market analysis include:

• Industry description.  Draft up a summary that encompasses where your particular legal niche is today, where it has been, and which trends will likely affect it in the future. Identify everything from actual market size to project market growth.
• Target audience.  Define your target audience by building your ideal client persona. Use demographics such as location, age, family status, occupation and more. Map out the motivations behind their seeking your services and then how it is you are best able to satisfy their requirements.
• Competitive analysis.  This is where you dive into details about your competitors. What do they do well? Where do they fall short? How are they currently underserving your target market? What challenges do you face by entering legal practice in your field of choice?
• Projections.  Provide specific data on how much your target audience has to spend. Then narrow that down to identify how much you can charge per service.

A proper market analysis includes actual data to support your analysis. If you are unsure of where to find data, Bplans  has a great list of resources for you to use. And if you would like to read further about conducting a market analysis, check out this article from the Small Business Administration.

Section Four: Organization & Management

This section goes into detail about you and any others who may have ownership interest in the firm. The small law firm business model section here should incorporated into the management documentation. Do not be afraid to brag a bit!

• What is your educational background?
• What experience do you currently have?
• Why are you the right person to run your firm?

If there are other individuals involved, it is a good idea to insert your organizational chart here. Visuals help quickly convey information and break up otherwise blocky text.

Section Five: Services

The Services section is the heart of your law firm business model plan. It is where you dive into all aspects of your services, including:

• The problem(s) you are addressing.  What pain points do your preferred clients experience? What can they do right now to alleviate those pain points? Answer these questions, and then take the extra step to explain how those current solutions fail to adequately address their problems.
• The solution(s) you are providing.  This describes how your solutions better resolve your prospective market’s needs. This not only includes the actual work you do, but the benefits that each client will receive based on your work.
• An overview of your competition.  Describe your competition here. For instance, which other solo attorneys and firms provide the same solutions as you? What are your advantages over these competitors? What do you differently when providing your solutions? How will clients gain additional benefits by seeking out your services instead of working with your competitors?

Section 6: Marketing Strategy

Your marketing strategy section needs to address the three P’s:

• Positioning.  How will you position your law firm and your services? What will you say to present your practice in the best light? What short statements can you use to entice a potential client to pursue your services?
• Pricing.  How much will you charge? How does that fit within the legal industry? Within your niche industry? What do clients receive for that price?
• Promotion.  Which sales channels and marketing activities will you pursue to promote your practice? Who is in charge of these activities? Even if you plan to build your law firm on the basis of word-of-mouth referrals, you must remember that most referrals will still look for information about you before contacting you. Know where they will look and ensure you are there.

Section Seven: Financials

Last comes the financials section. It is the key component to your plan if you are going to seek funding to get your practice off the ground. It is imperative that you complete this section even if you are not seeking funding, however, as you need to paint a clear financial picture before opening your doors.

Two main items make up this section: budgeting and forecasting (sales and cash flow). Answer these questions to help you address these items:

• How much starting capital do you need?
• How much money will it cost to keep your practice operating on a month-to-month basis?
• How many cases will you need to close each month to break even?
• How many cases would you need to close to make a profit?
• What is your projected profit and loss for the year?

This section often incorporates graphs and other images, including profit-and-loss and cash-flow tables. The more specific you get with your numbers, the more likely you are to succeed!

One final note: If your goal is to submit your business plan to potential funders, you want to do everything you can to make sure your plan stands out. One good way to do this is to work with a designer to artfully format your plan. Great presentation can take you a long way.

Originally published 2017-09-23. Republished 2020-07-31.

Cari Twitchell

About the Author

@CariTwitchell

/in/caritwitchell/

Website: https://www.customcontentllc.com

Share Article

Last updated October 7th, 2022

Learn the Latest from Our Partners and Community

11 Jan 2023

On The Lawyerist Podcast: Top Episodes of 2022

By Kyle Harrington

Lawyerist News News Articles Healthy Clients Healthy Owner Healthy Strategy Healthy Team

Everett Hosts Interactive Strategic Planning Session at Alaska...

Lawyerist News News Articles Healthy Strategy

Lawyerist Media Launches Redesigned Website to Better Help...

By the Lawyerist editorial team

Lawyerist News News Articles Healthy Strategy Law Firm Finances Law Firm Websites Lawyerist News Starting a Law Firm

27 May 2022

Lawyerist Values: Grow as People

Lawyerist News News Articles Healthy Strategy Lawyerist Values

Lawyerist’s Seek Candor Value Is More Than...

Develop a healthy strategy, how to competently reinvent your practice.

By Megan Zavieh

31 Dec 2019

Year-End Law Practice Checklist

19 Dec 2019

How to Use Aged A/R Reports

By Mary Juetten

News Articles Healthy Strategy Law Firm Finances

26 Nov 2019

Small Firm Roadmap Stories: Vision and Values

News Articles Healthy Strategy Lawyerist Lab Roadmap Starting a Law Firm

18 Oct 2019

Design Thinking for Lawyers

By Marshall Lichty

News Articles Healthy Strategy Healthy Systems

19 Aug 2019

Strategic Planning for Law-Firm Success and Growth

25 Oct 2018

How to Promote a Unique Value Proposition to...

By Karin Conroy

News Articles Healthy Strategy Law Firm Clients

23 Jan 2018

Rethinking Law-Firm Productivity Measurement for the Post Billable...

By Jordan Furlong

23 Mar 2017

How to Calculate Client Acquisition Cost

• Product Reviews

The original content within this website is © 2024. Lawyerist, Lawyerist Lab, TBD Law, Small Firm Dashboard, and

The Small Firm Scorecard are trademarks registered by Lawyerist Media, LLC.

Privacy policy // XML sitemap // Page ID: 83157

Upmetrics AI Assistant: Simplifying Business Planning through AI-Powered Insights. Learn How

Entrepreneurs & Small Business

Accelerators & Incubators

Business Consultants & Advisors

Educators & Business Schools

Students & Scholars

AI Business Plan Generator

Financial Forecasting

AI Assistance

Ai pitch deck generator

Strategic Planning

See How Upmetrics Works  →

• Sample Plans
• WHY UPMETRICS?

Customers Success Stories

Business Plan Course

Small Business Tools

Strategic Canvas Templates

E-books, Guides & More

• Sample Business Plans

Law Firm Business Plan

Free Law Firm Business Plan Template

Download our free business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!

• Fill in the blanks – Outline
• Financial Tables

Industry Overview

The global legal services market was valued at a whopping sum of 849.28 billion dollars in 2020 and is expected to rise at a high rate going forward too.

The main changes in the legal industry have been brought about by the introduction of AI which does proofreading and data research jobs with higher efficiency. This lets the lawyers focus on what really matters.

Also, the security and access systems have become loads better due to cloud computing.

What is Law Firm Business Plan?

A law firm business plan is a document that outlines your business goals and strategies to achieve those goals. It includes your law firm overview, your reason to start your firm, the services you will offer, a budget or funding requirements, and strategies to get and manage your clients.

Why Law Firm Business Plan is Important?

A business plan would help you understand what sets you apart from your competitors, and how you can market your USP to your clients.

It also helps you design strategies to reach out to your clients and manage them. It comes in extremely handy for analyzing the loopholes in your business structure.

Moreover, it helps you identify your strengths and work on your weaknesses.

All in all, It can make managing your business a hassle-free and less chaotic process.

Things to Consider Before Writing a Law Firm Business Plan

Focus on your expertise.

Between juggling business and practice, it is natural that practice gets neglected more often than not. But always keep in mind that though focusing on your business is important it shouldn’t come at the cost of skills you need to develop and upgrade to do well as a lawyer.

Also, it is important to decide on a niche so you can dig deeper and become an expert at handling cases of that kind.

Create a proper website

In today’s world being present and active on the internet is as important for your business as being good at what you do.

A strong web presence helps you reach out to your customers as well as builds your reliability for them.

Build your network

Networking is an important aspect of being a lawyer. From getting new customers, getting updates on the legal world, and even collecting evidence if you are a criminal lawyer, a good network can work wonders for your legal business.

The kind of circle you belong to also has an impact on your reputation and image as a lawyer.

Develop soft skills

We all know that confidence and intellect are a lawyer’s best friends. And although it is an ongoing process to develop these skills, it is good to get a head start before you start your business.

Intellect helps you upgrade and pay attention to detail, and confidence helps you sound more convincing and reliable. Both of which are foundational to a legal business.

How to Write a Law Firm Business Plan?

A law firm business plan would be a combination of segments common to all business plans and segments specific to a law firm.

Before you start writing your business plan for your new law firm, spend as much time as you can reading through some examples of  consulting-related business plans .

Reading some sample business plans will give you a good idea of what you’re aiming for. It will also show you the different sections that different entrepreneurs include and the language they use to write about themselves and their business plans.

We have created this sample law firm business plan for you to get a good idea about how a perfect law firm business plan should look like and what details you will need to include in your stunning business plan.

Chalking out Your Business Plan

Starting your own law firm is an exciting prospect for any lawyer. Having your firm gives you more independence, lets you implement ideas you want to, and most importantly, you get to deal with clients firsthand.

And if you plan on starting your own, do so with a proper business plan.

But you might wonder, why do I need a business plan as a lawyer, isn’t my legal knowledge and years of work enough?

The answer is no.

To run a law firm you need a law degree, but to run a successful business you need a business plan alongside your degree.

Law Firm Business Plan Outline

This is the standard law firm business plan outline which will cover all important sections that you should include in your business plan.

• Mission Statement
• Vision Statement
• Financial Summary
• 3 Year profit forecast
• Business Structure
• Startup cost
• Market Analysis
• Market Trends
• Target Market
• Market Segmentation
• Sales Strategy
• Marketing Strategy
• Pricing Strategy
• Personnel Plan
• Financial Plan
• Important Assumptions
• Brake-even Analysis
• Profit Yearly
• Gross Margin Yearly
• Projected Cash Flow
• Projected Balance Sheet
• Business Ratios

Say goodbye to boring templates

Build your business plan faster and easier with AI

Plans starting from $7/month

Now, let’s understand how you can complete each section of your business plan.

1. Executive Summary

The executive summary forms the first page of your business plan. It acts as a pitch for your business to potential investors and should consist of the following sections.

• Objective: This gives an overview of what you wish to accomplish with your business. The objective should be clear and solve an existing problem in the market.
• Vision Statement: This should state what vision you have for your business. How do you want it to function and how far do you expect to reach with it. You can also include how your vision sits with the current market situation.
• Financial Summary: This section should ideally consist of the history of your finances and their current state. A proper financial summary helps you gain an investor’s confidence and makes it easier for your business to get funded.

2. Company Summary

Next up we have the company summary section, this segment provides an overview of your company’s structure and its functioning.

This section provides a brief description of the following:

• Legal Structure: This section would describe the legal terms and conditions your firm functions on, as well as the ownership structure of your firm.
• USP: This would consist of points that set your firm apart from your competitor’s firm.
• Services: This section will include the services you offer, the legal procedures you are well versed in, all in all, the client base you cater to.
• Location: This segment covers your area of service and the location of your firm. A clearly stated area of service, helps you reach the right audience.

3. Market analysis

This segment consists of a thorough analysis of the market situation. It can be split up into the following sub-segments.

• Market Trends: This would consist of all the prevailing trends in the market. It is important to know market trends because it helps your business keep up with the evolving market.
• Target Market:  This section would consist of a summary of the market you cater to. Clearly defining your niche helps you reach out to your desired customer base.
• Market Segmentation: In this section, note down the segments present in the market, as well as what segment of the market your business would fit in. This would help you narrow down the number of competitors you have, the strategies you must follow, and the major and additional services you should offer.

4. Strategy and implementations

In this section, you would include various business strategies like:

• Marketing strategy You can formulate a marketing strategy depending on your target audience and the easiest and most effective ways of reaching out to them. It is important to formulate your marketing strategy based on your USP and your vision statement.
• Pricing Strategy It is important to formulate a pricing strategy based on the market trends, the nature of the work, and your target audience.
• Milestones This segment would consist of the various milestones your business would have to reach to achieve your goal and the strategies to help you reach them.

5. Financial Plan

The financial section of your business plan would consist of the following information regarding your business.

• Financial history
• Current State of finances
• Profit and loss

Download a sample law firm business plan

Need help writing your business plan from scratch? Here you go;  download our free law firm business plan pdf  to start.

It’s a modern business plan template specifically designed for your law firm business. Use the example business plan as a guide for writing your own.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

Law Firm Business Plan Summary

All of the above segments would help you in creating a well-rounded business plan. Starting your law firm with a well-written business plan can make your growth process faster and smoother.

After getting started with Upmetrics , you can copy this law firm business plan example into your business plan and modify the required information and download your law firm business plan pdf or doc file.

It’s the fastest and easiest way to start writing your business plan.

Related Posts

How to Write a Business Plan Step by Step

Notary Business Plan

Bookkeeping Business Plan

Sample Business Plans Template

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

Plan your business in the shortest time possible

No Risk – Cancel at Any Time – 15 Day Money Back Guarantee

Popular Templates

Create a great Business Plan with great price.

• 400+ Business plan templates & examples
• AI Assistance & step by step guidance
• 4.8 Star rating on Trustpilot

Streamline your business planning process with Upmetrics .

Free Download

Law Firm Business Plan Template

Download this free law firm business plan template, with pre-filled examples, to create your own plan..

Or plan with professional support in LivePlan. Save 50% today

Available formats:

What you get with this template

A complete business plan.

Text and financials are already filled out and ready for you to update.

• SBA-lender approved format

Your plan is formatted the way lenders and investors expect.

Edit to your needs

Download as a Word document and edit your business plan right away.

• Detailed instructions

Features clear and simple instructions from expert business plan writers.

All 100% free. We're here to help you succeed in business, no strings attached.

Get the most out of your business plan example

Follow these tips to quickly develop a working business plan from this sample.

1. Don't worry about finding an exact match

We have over 550 sample business plan templates . So, make sure the plan is a close match, but don't get hung up on the details.

Your business is unique and will differ from any example or template you come across. So, use this example as a starting point and customize it to your needs.

2. Remember it's just an example

Our sample business plans are examples of what one business owner did. That doesn't make them perfect or require you to cram your business idea to fit the plan structure.

Use the information, financials, and formatting for inspiration. It will speed up and guide the plan writing process.

3. Know why you're writing a business plan

To create a plan that fits your needs , you need to know what you intend to do with it.

Are you planning to use your plan to apply for a loan or pitch to investors? Then it's worth following the format from your chosen sample plan to ensure you cover all necessary information.

But, if you don't plan to share your plan with anyone outside of your business—you likely don't need everything.

More business planning resources

How to Write a Business Plan

How to Create a Business Plan Presentation

How to Start a Business With No Money

10 Qualities of a Good Business Plan

Simple Business Plan Outline

How to Write a Business Plan for Investors

Business Plan Template

Industry Business Planning Guides

Download your template now

Need to validate your idea, secure funding, or grow your business this template is for you..

• Fill-in-the-blank simplicity
• Expert tips & tricks

We care about your privacy. See our privacy policy .

Not ready to download right now? We'll email you the link so you can download it whenever you're ready.

Download as Docx

Download as PDF

Finish your business plan with confidence

Step-by-step guidance and world-class support from the #1 business planning software

From template to plan in 30 minutes

• Step-by-step guidance
• Crystal clear financials
• Expert advice at your fingertips
• Funding & lender ready formats
• PLUS all the tools to manage & grow

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

Business Plan Legal Structure: Sample Example

Exploring the sample legal structure of a business plan example.

Starting new business, one important documents you’ll need comprehensive business plan. This plan not only outlines your goals and strategies for success but also specifies the legal structure of your business. The legal structure you choose can have significant implications your business’s taxes, liability, overall operations.

Let’s take closer look sample Legal Structure of Business Plan Example:

Legal Structures

There are several legal structures to choose from when creating a business plan. Each structure has its own set advantages disadvantages, so it’s essential select one best aligns your business’s goals needs.

It’s important consult legal professional determine which legal structure best suits your business’s needs.

Case Study: XYZ Company

Let’s consider example how choice legal structure can impact business. XYZ Company is a small tech startup looking to expand its operations. Initially set up as a sole proprietorship, XYZ Company later decides to restructure as an LLC to limit personal liability and attract potential investors.

Legal Structure in Business Plan

When including legal structure your business plan, it’s crucial provide detailed explanation why particular structure chosen how aligns business’s goals. Investors lenders want see strong rationale chosen structure its potential impact business’s success.

Ultimately, Legal Structure of Business Plan Example should carefully considered thoroughly documented ensure business set success.

Demystifying the Legal Structure of a Business Plan Example

Legal structure of business plan example.

Below sample Legal Structure of Business Plan Example.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

Recent Posts

• Trading Name vs Business Name Singapore: Key Differences Explained
• Letter of Credit Governing Law: Understanding Legal Requirements
• Share Purchase Agreement Definition: What You Need to Know
• Kerala Service Rules Malayalam: Comprehensive Guide and Updates
• Void Contract Examples: Understanding the Legal Implications

Recent Comments

• December 2023
• November 2023
• October 2023
• September 2023
• August 2023
• February 2023
• January 2023
• December 2022
• November 2022
• October 2022
• September 2022
• August 2022
• February 2022
• January 2022
• December 2021
• No categories

Previous Post Marriage Contract Korean Drama Ep 7 Eng Sub | Watch Online

Next post expert website development contract agreement guide.

Comments are closed.

Privacy Overview

Virtual Legal Staffing

• Social Media

Organic Marketing

Law Firm Growth

• Social Media Management
• LS Press Release
• Press Release

Key Elements of Creating a Business Plan for Solo Practitioners

For solo practitioners in the legal profession, having a well-crafted solo law firm business plan is essential for long-term success. A business plan provides a roadmap to guide your practice, establish goals, and outline strategies for growth and profitability. In this guide, we’ll delve into the essentials of creating a robust solo law firm business plan for solo practitioners. This comprehensive plan includes market analysis, targeted marketing strategies, and accurate financial forecasting, all tailored to the unique challenges and opportunities of running a solo practice.

Executive Summary: Captivating Overview of Your Solo Practice

The executive summary is a critical component of a solo practitioner’s business plan, serving as a succinct and powerful snapshot of the entire document. It condenses the key elements of your business plan into a concise overview that captures the attention of readers and gives them a comprehensive understanding of your solo practice.

Importance of an Executive Summary

As the first section that readers encounter, the executive summary holds significant importance. It acts as a gateway, providing a glimpse into your business and setting the stage for the rest of your business plan. Its purpose is to grab the reader’s attention, highlight the most compelling aspects of your solo practice, and create a positive first impression.

Within the executive summary, you will summarize essential elements of your business plan. This includes identifying and describing your target market, defining your unique selling proposition (USP), and outlining your marketing strategy. By providing a clear and concise summary of these key aspects, the executive summary enables readers to quickly grasp the fundamental elements that make your solo practice distinct and compelling.

Benefits of an Executive Summary

One of the primary benefits of the executive summary is its ability to convey the overall viability and potential of your solo practice to investors, partners, or other stakeholders. It allows them to assess the market opportunity, understand your competitive advantage, and evaluate the feasibility of your business model. The executive summary acts as a persuasive tool, compelling readers to delve deeper into your business plan and consider the opportunities for collaboration, investment, or support.

Furthermore, the executive summary serves as a reference point throughout the business plan. It provides a framework for the subsequent sections, ensuring that the details and strategies discussed align with the overarching goals and objectives outlined in the summary. This cohesiveness and alignment between the executive summary and the rest of the business plan contribute to its effectiveness in conveying a clear and compelling vision for your solo practice.

Market Analysis: Understanding The Legal Landscape

A thorough market analysis is a critical step for solo practitioners when developing a comprehensive business plan. It involves systematically evaluating the market in which your solo practice operates, enabling you to gain a deeper understanding of your target market, competitors, and overall industry dynamics. By conducting a comprehensive market analysis, you can make informed decisions, tailor your services, and effectively position your practice to attract potential clients.

Step 1: Identify Your Target Market

The first step in market analysis is defining your target market, considering demographics, legal needs, and competitive environment. Defining specific individuals or businesses needing your services allows focused marketing and tailored service development. Understanding your target market directs efforts and resources efficiently, enhancing your success potential.

Step 2: Analyze Market Trends

To stay competitive, analyzing market trends that impact your solo practice is essential. Stay informed about changes in the legal landscape, emerging technologies, and evolving client preferences. By monitoring market trends, you can adapt your strategies and stay ahead of the curve. Ensuring that your practice remains relevant and meets the evolving needs of your target market.

Step 3: Identify Your Ideal Client

Identifying your ideal client is essential for effective market analysis and service alignment. Unique characteristics and preferences of the client dictate service tailoring and marketing strategies. Understanding the ideal client enhances targeted messaging and content relevance, ensuring services meet their specific needs. This approach improves client satisfaction and fosters lasting relationships.

Step 4: Assess Demand for Your Services

To effectively gauge market demand for your legal services, an in-depth analysis of the market size is essential. Alongside considering the intensity of competition and growth prospects to fully comprehend the demand landscape for your specialized legal services. Insight into service demand enables the identification of unique niches, growth areas, and distinct opportunities versus your competitors. Through this analysis, strategic choices regarding pricing, services provided, and resource distribution can be made to maintain competitiveness and profitability.

Competitive Analysis: Differentiating Your Practice

Conduct a competitive analysis to understand the strengths and weaknesses of your competitors, both direct and indirect. Identify what sets you apart from others and develop a unique selling proposition (USP) that highlights your strengths and addresses the needs of your target market. Differentiating yourself in a crowded legal market is essential for attracting and retaining clients.

Marketing Strategy: Effective Outreach and Brand Building

Develop a comprehensive marketing strategy that outlines how you will reach and attract potential clients. Consider various marketing channels such as online marketing, networking, referrals, and community involvement. Create a marketing plan that includes tactics for branding, online presence, content creation, and client acquisition. A well-designed marketing strategy will help raise awareness of your solo practice and generate a steady flow of potential clients.

Organizational Structure: Building an Efficient Practice

Consider the organizational structure of your solo practice. Define roles and responsibilities, including support staff or virtual assistants. Create an organizational chart to visualize the structure and ensure you have the necessary resources to run your practice smoothly. Additionally, outline your legal structure (e.g., sole proprietorship or professional corporation) and any regulatory requirements.

Financial Projections: Ensuring Financial Health

Develop financial projections that outline your expected revenue, expenses, and cash flow. Consider factors such as operating costs, pricing strategies, and billing practices. Estimate your potential client base, average case value, and projected growth. This will provide a clear understanding of your practice’s financial health and help you make informed decisions to ensure profitability and sustainability.

Effective Law Firm Incubation Services from Legal Soft

Creating a business plan is a critical step for solo practitioners in the legal industry. It provides a roadmap to navigate the complexities of running a successful practice, attracting potential clients, and achieving long-term growth. 

By incorporating market analysis, marketing strategies, and financial projections, solo practitioners can establish a strong foundation for their legal journey. Remember, a well-crafted business plan is not only a document but also a dynamic tool that guides your decisions and actions as a solo practitioner.

At Legal Soft, we understand the unique challenges faced by solo practitioners in the legal industry. That’s why we offer law firm incubation services , including guidance and support in creating a comprehensive business plan tailored specifically for solo practitioners. 

Book a demo here to get started on creating a business plan that sets you on the path to solo practice success.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

We will contact you as soon as possible

Speak with a representative.

• I Work at a Law Firm
• I'm a Virtual Assistant

Book A Demo Now

• Testimonials

Virtual Staffing

• Legal Virtual Assistants
• Virtual Demand Writer
• Virtual Marketing Specialist
• Virtual Assistant Smart Device

Branding and Outreach

• Mobile Apps
• Website Development & Maintenance
• Client Survey
• Attorneys Newsletter
• GMB Optimizations
• SMS Campaigns
• Directory Listing
• Website Development
• Legal Virtual Assistant
• Practice Growth
• Practice Setup
• Practice Management
• Lead Generation & Management
• Automated Intake Forms
• Intake Set up
• [email protected]
• (424) 341-4917

Subscribe to Our Newsletter!

• 21731 Ventura Blvd. Suite 100, Woodland Hills, CA 91364

Ⓒ 2023 Legal Soft - All Rights Are Reserved