Payroll for Solo Attorney Practices: A Step-by-Step Guide
Learn how to set up and manage payroll for a solo attorney practice, including options, costs, and compliance steps.
Running a solo law practice means wearing many hats, and payroll is one of the most critical yet overlooked tasks. Whether you hire your first employee or bring on a part-time paralegal, you need a system that pays them accurately, withholds the right taxes, and keeps you compliant. This guide walks you through the entire process, from choosing a payroll provider to running your first payroll, with realistic costs and practical steps.
Step 1: Get 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. If you’re a solo practitioner with no employees, you might use your Social Security number, but once you hire anyone, you must get an EIN. Apply online at IRS.gov; it’s free and takes about 15 minutes. You’ll also need to register with your state’s labor department for state tax IDs, which can be done through your state’s website.
Step 2: Classify Your Workers Correctly
Misclassifying employees as independent contractors can lead to hefty penalties. For a solo attorney, you might hire a legal assistant, a bookkeeper, or a receptionist. If you control how, when, and where they work, they’re likely an employee. If they work for other clients and set their own hours, they might be a contractor. When in doubt, use IRS Form SS-8 to get a determination, but for most solo practices, anyone who works regularly in your office is an employee.
Step 3: Choose a Payroll Service or Software
You have three main options: do it yourself with spreadsheets, use payroll software, or hire a full-service payroll provider. Here’s a comparison of common options as of 2026:
| Option | Best For | Cost Range | Key Features |
|---|---|---|---|
| Manual (spreadsheets) | One employee, minimal complexity | $0 (but time-intensive) | Full control, but high risk of errors |
| QuickBooks Payroll | Small firms already using QuickBooks | $50-$100/month | Integrated accounting, tax filing |
| Gusto | Solo attorneys with 1-5 employees | $40-$80/month | Easy setup, automatic tax payments |
| ADP Run | Growing practices | $80-$150/month | Scalable, HR add-ons |
| Paychex Flex | Practices needing HR support | $100-$200/month | Dedicated rep, compliance help |
| SurePayroll | Budget-conscious solos | $30-$50/month | Simple, no frills |
For most solo attorneys, Gusto or QuickBooks Payroll offer the best balance of cost and features. They handle tax calculations, file federal and state taxes, and issue W-2s at year-end. Expect to pay $40-$100 per month, plus a small per-employee fee (often $6-$12).
Step 4: Gather Employee Information
Before your first payroll, collect from each employee:
- Form W-4 (federal withholding)
- State withholding form (if applicable)
- I-9 (employment eligibility verification)
- Direct deposit information (bank account and routing number)
Keep these in a secure file, either physical or digital. You’ll need them for tax filings and audits.
Step 5: Set Up Payroll Schedule and Pay Rates
Decide how often you’ll pay: weekly, biweekly, or semimonthly. For solo practices, biweekly is common because it’s easier to manage cash flow. Determine each employee’s hourly rate or salary. For example, a legal assistant in a small city might earn $18-$25 per hour, while a paralegal with experience could earn $25-$40 per hour. Check your state’s minimum wage and overtime rules; most non-exempt employees must get time-and-a-half for hours over 40 in a week.
Step 6: Run Your First Payroll
With your payroll service, enter the employee’s hours and any reimbursements (like mileage). The software calculates gross pay, federal and state withholding, Social Security (6.2%), Medicare (1.45%), and any state disability insurance. It also calculates your employer share of payroll taxes (another 7.65% for Social Security and Medicare). Review the numbers, then approve the payroll. Your service will debit your bank account and pay your employees via direct deposit, typically within 2-4 business days.
Step 7: Pay and File Taxes
Your payroll service will handle most tax filings, but you’re ultimately responsible. They’ll file Form 941 (quarterly federal tax return) and state unemployment insurance reports. You must also pay federal tax deposits, which are due semiweekly or monthly depending on your liability. Your service will schedule these payments automatically. Keep records of all filings and payments for at least four years.
Step 8: Handle Year-End Tasks
By January 31, you must provide each employee with a Form W-2. Your payroll service will generate these and file them with the Social Security Administration. Also, file Form 940 (federal unemployment tax) by January 31. If you had any contractors, you’ll need to issue 1099-NECs by January 31 as well.
Step 9: Stay Compliant with New Hire Reporting
Within 20 days of hiring, report the new employee to your state’s new hire registry. This is used for child support enforcement. Most payroll services can do this automatically, or you can do it online in a few minutes.
Step 10: Review and Adjust Regularly
Payroll isn’t a set-it-and-forget-it task. Review your payroll costs quarterly. If your practice grows, you might add benefits like health insurance or retirement plans, which affect payroll. Also, stay updated on tax rate changes; for 2026, the Social Security wage base is projected to be around $176,100, and the federal unemployment tax rate is 6% on the first $7,000, but you get a credit for state taxes paid.
FAQ
Can I pay myself through payroll?
Yes, if you’re an S-corp or C-corp, you must pay yourself a reasonable salary. If you’re a sole proprietor or LLC, you don’t have to run payroll for yourself; you take draws and pay self-employment tax on Schedule SE. But running payroll for yourself can simplify retirement contributions.
What if I only hire a part-time contractor?
If they’re truly independent, you don’t need to run payroll. Just pay their invoices and issue a 1099-NEC at year-end if you paid them over $600. But be careful: if they work like an employee, you risk penalties.
How much time does payroll take each month?
With a payroll service, expect 1-2 hours per month for data entry and review. Manual payroll can take 5-10 hours per month, plus the stress of tax filings.
What happens if I miss a payroll deadline?
You’ll face late fees and interest on unpaid taxes. The IRS charges 0.5% per month on unpaid taxes, up to 25%. Your state may add more penalties. It’s better to set up automatic payments to avoid this.
The Bottom Line
Payroll for a solo attorney practice is manageable if you follow a systematic approach. Start by getting an EIN, classify workers correctly, and choose a payroll service that fits your budget, like Gusto or QuickBooks Payroll. Gather employee forms, set a schedule, and let the software handle tax calculations. Stay on top of tax filings and year-end tasks. With these steps, you can focus on your clients, not payroll headaches. If you’re ever unsure, consult a CPA or payroll specialist; the cost is worth the peace of mind.