So you have your paralegal qualifications; what are you going to do now?
Let’s look at the options available to you to progress your paralegal career…
Join a legal firm
Joining an existing paralegal firm, or a law firm, is a common first step. Being able to get more experience working as a paralegal, whilst under the umbrella of an established firm, provides you with the support you need.
Join a non-legal firm
There is a huge variety of different employment environments, such as local authorities, charities, housing associations and in-house legal departments, that you can work within to gain the experience you want and need.
Both of these are great options to get the practical experience you need to get your Licence to Practise. You need at least three years’ experience in the area of law in which you wish to practise.
Setting up your own business
Whether you want to be a general practitioner or a specialist, you have three options for setting up your own business. Let’s look at the pros and cons of each…
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Sole Practitioner
Probably the simplest option. You can work under your own name, market yourself in your preferred areas of the law and keep track of your income and outgoings.
Your marketing will have to ensure there is no inference that you are a solicitor or barrister. This is known as Holding Out and is illegal. You will have to do this, no matter what company structure you choose.
You will have to file a self-assessment tax return every year and then pay income tax on your earnings. We recommend you take some advice on what you can and cannot claim for within your tax return.
VAT
At the point you are charging more than £85,000 a year, you will have to register for VAT. You must then charge VAT on goods and services you sell to your clients. You can register for VAT below the threshold if you wish to. We recommend you think carefully about VAT, particularly if you are providing legal services to members of the public. At the point you register, either your prices will have to go up by 20% or your gross profits are reduced to take VAT into account. If you are working with businesses, it is far less of an issue.
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Partnership
A partnership is when you are working as part of a team of partners, from two people upwards. You do have to follow very specific procedures to set up a partnership, whether it is a unregistered business partnership or a an official limited partnership.
You do have to keep very precise financial records, file a partnership tax return, as well as your self assessment.
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Limited Company
A limited company is the most complex, but also provides you with the most protection. You have to register the business at Companies House, file an Annual Return, annual accounts and pay Corporation Tax on your profits. Each director is listed at Companies House and has to file a self assessment tax return. The protection comes from the fact that it is the company delivering the services, rather than you as an individual.
Professional Indemnity Insurance
You will need Professional Indemnity Insurance (PII) no matter what company structure you choose. Exactly how that is set up will depend on your company structure.
No matter what structure you are considering, we recommend that you take some independent financial advice to ensure that you make the right choice for you. Of course, we recommend that you continue your membership of NALP. Membership of a professional body will give your clients confidence. They know that a professional body will vet their members. If you have any questions about setting up your own legal practice, please get in touch. We will answer all the questions we can and then point you in the right direction for any we cannot.