How to Set Up Payroll for a Solo Attorney Practice in 2026
A step-by-step guide to setting up payroll for a solo attorney practice in 2026, covering tax IDs, payroll services, and compliance.
Setting up payroll for a solo attorney practice in 2026 involves more than just writing yourself a check. You need to handle federal and state tax registrations, choose a payroll processing method, and stay compliant with employment laws. This guide walks you through the concrete steps, with realistic costs and timelines, so you can get payroll running without unnecessary stress.
Step 1: Obtain Your Employer Identification Number (EIN)
Before you can run payroll, you need an EIN from the IRS. This is a nine-digit number that identifies your business for tax purposes. Even if you’re a solo attorney with no employees, you need an EIN if you plan to pay yourself as an employee (which is common for S-corp owners) or if you hire any staff.
- Apply online at IRS.gov: it takes about 15 minutes and is free.
- You can also apply by fax or mail, but online is fastest.
- If you’re a sole proprietor with no employees, you can use your Social Security number, but an EIN is still recommended to keep business and personal taxes separate.
Step 2: Register with State and Local Tax Agencies
Most states require you to register for state payroll taxes, including state income tax withholding and state unemployment insurance (SUI). Some states also have local taxes, such as city or county payroll taxes.
- Check your state’s department of revenue or labor website for registration forms.
- Typical registration costs: $0 to $50, depending on your state.
- You’ll receive a state tax ID number, which you’ll need for filing state payroll tax returns.
- If you’re in a state with no income tax (like Texas or Florida), you still need to register for SUI.
Step 3: Decide How to Run Payroll: DIY, PEO, or Payroll Service
You have three main options: manual payroll (DIY), using a payroll software, or hiring a professional employer organization (PEO). Each has different costs and levels of responsibility.
| Method | Cost Range (Monthly) | Pros | Cons |
|---|---|---|---|
| Manual (DIY) | $0 (plus your time) | Full control, no fees | High risk of errors, time-consuming, must keep up with tax law changes |
| Payroll Software (e.g., Gusto, QuickBooks Payroll) | $40-$100 per month | Automated calculations, tax filing, direct deposit | Annual contract, per-employee fees |
| Full-Service Payroll (e.g., ADP, Paychex) | $100-$200 per month | Handles everything, including tax filings and W-2s | More expensive, may have long-term contracts |
| PEO (e.g., Insperity, TriNet) | $200-$500 per month (or a percentage of payroll) | Provides HR support, benefits, and compliance | Highest cost, may be overkill for a solo practice |
For a solo attorney with no employees, a payroll software like Gusto or QuickBooks Payroll is often the sweet spot: it automates calculations and filings, and costs $40-$60 per month. If you plan to hire staff soon, consider a full-service option for more support.
Step 4: Gather Employee Information (Including Yourself)
If you’re paying yourself as an employee, you need to complete a W-4 form for federal withholding and a state equivalent if applicable. If you have staff, collect:
- Full legal name, address, and Social Security number.
- W-4 and state withholding forms.
- I-9 verification documents (within 3 days of hire).
- Bank account details for direct deposit.
- Pay rate and pay schedule (e.g., biweekly, semi-monthly).
Step 5: Set Up Payroll Schedule and Pay Rates
Decide how often you’ll run payroll. Common schedules: weekly, biweekly, semi-monthly, or monthly. For a solo attorney, biweekly or semi-monthly is typical.
- Determine your salary: if you’re an S-corp, you must pay yourself a “reasonable salary” (often $80,000-$120,000 for attorneys, but depends on your location and revenue).
- For a sole proprietorship, you can take draws, but if you have employees, you must run payroll for them.
- Set up a pay schedule in your payroll software.
Step 6: Run Payroll and Pay Taxes
Once everything is set up, you’ll run payroll each pay period. The software will calculate gross pay, federal and state withholdings, FICA (Social Security and Medicare), and any other deductions.
- Federal payroll taxes are due on a schedule: monthly or semi-weekly, depending on your total tax liability.
- State taxes have their own due dates, usually monthly or quarterly.
- Your payroll service or software can file and pay these taxes for you, but you must ensure funds are available.
Step 7: File Quarterly and Annual Returns
Even with a payroll service, you’re ultimately responsible for filing returns. Key forms:
- Form 941 (Employer’s Quarterly Federal Tax Return): due by the last day of the month after each quarter (April 30, July 31, Oct 31, Jan 31).
- State unemployment tax returns: typically quarterly.
- Form W-2 and W-3: due by January 31 for the previous year.
- Form 940 (Federal Unemployment Tax): due by January 31.
Your payroll software can generate these forms, but you need to review and submit them.
Step 8: Stay Compliant with Employment Laws
As an employer, you must follow federal and state labor laws. For a solo practice, key areas:
- Minimum wage and overtime: ensure you pay at least the federal or state minimum, whichever is higher.
- New hire reporting: report new hires to your state within 20 days.
- Poster requirements: display labor law posters in your workplace.
- Recordkeeping: keep payroll records for at least 3 years.
FAQ
Q: Can I pay myself as a sole proprietor without running payroll? A: Yes, if you’re a sole proprietor with no employees, you can take owner’s draws. You don’t need to run payroll for yourself, but you must pay self-employment tax quarterly. However, if you’re an S-corp, you must run payroll for yourself.
Q: What is the cheapest way to set up payroll? A: The cheapest is DIY, but it’s risky. The most cost-effective automated option is a payroll software like Gusto or QuickBooks Payroll, starting around $40 per month.
Q: Do I need workers’ compensation insurance for a solo practice? A: It depends on your state. Some states require it even for a solo owner, others exempt you if you have no employees. Check your state’s requirements.
Q: What happens if I miss a payroll tax deadline? A: You’ll face penalties and interest. The IRS charges a failure-to-deposit penalty of 2% to 10% of the unpaid tax, depending on how late you are. Avoid this by setting up automatic payments.
The Bottom Line
Setting up payroll for a solo attorney practice in 2026 is manageable if you follow these steps: get your EIN, register with state agencies, choose a payroll method that fits your budget, and stay on top of filings. For most solo attorneys, a payroll software at $40-$60 per month is a smart investment that saves time and reduces errors. Start with the EIN application this week, and you’ll have payroll running within a month.