Structuring Professional Practices – CPD Seminar
On 10 February 2017, the Newcastle Law Society will be running a CPD seminar focusing on tax, super and legal practice. Kym Butler, principal of Butlers Business & Law, will be presenting on structuring professional practices. Kym is both a Chartered Accountant and lawyer, and is highly experienced in structuring professional practices. Click here to read his biography page.
Gone are the days when professional practices were restricted to the traditional partnership structure. Regulatory changes in most professions have allowed professionals to choose from a wide range of practice structures. This has had a tremendous effect on how legal practices are structured. It is important that principals choose the right structure which suits the goals and needs of the practice and the principal lawyers. Choosing a professional practice structure is not just a decision principals make when they initially set up the practice. The structure must be continuously reviewed to ensure that it is tax effective and maximises asset protection. For principals in existing practices, the challenge becomes how to move out of one structure into another with minimal transaction costs.
What types of practice structures are available?
There are a variety of practice structures available to for professional practices, including:
- sole trader
- discretionary trust
- partnership of discretionary trusts
- unit trusts, and
- service trust or service entity.
Currently, the structuring of legal practices in NSW is governed by the Legal Profession Uniform Law (NSW). Under these laws, the following practice structures are permissible: sole practitioners, partnerships, incorporated legal practices and unincorporated legal practices. The structures listed above will be legally permitted so long as they fit within one of these broad categories. For example, a partnership of discretionary trusts falls into the ‘partnership’ category, while a company would be classified as an ‘incorporated legal practice.’ Importantly, in New South Wales there are requirements in relation to who can share in the profits of a legal practice. This means that firms need to be particularly careful in who holds shares in an incorporated practice.
What should you consider when choosing a professional practice structure?
There are a range of important considerations that arise when you are considering different professional practice structures. The most important considerations are:
- asset protection
- administrative efficiencies
- limitation of liability
- control of the entity
- entry and exit of practitioners
- income splitting
- relationship breakdown, and
- succession and estate planning.
The choice of structure can also influence the name you choose for a firm, and job titles of practitioners. Kym’s presentation will address the most important factors that influence the choice of practice structures for law firms.
About the CPD Seminar
The seminar will be held on 10 February 2017 at UNH240, Level 2, University House, Cnr. King and Auckland Streets, Newcastle from 2:00pm to 5:00pm. There will be two presenters joining Kym to present. Ben Symons, barrister of State Chambers, will be presenting on estate planning, superannuation, SMSFs and taxation. Sean James, director and Chartered Accountant of Numus Business Services, will be presenting on negative gearing. Tickets cost $90.00 for members, $150.00 for non-members, and $25.00 for students. Click here to view the flyer, or here to register your attendance online.