Payroll Taxes for Solo Attorney Practices: What You Owe
Learn what payroll taxes solo attorneys owe, how to calculate them, and practical steps to stay compliant in 2026.
As a solo attorney, you’re responsible for more than just legal work. If you have employees, you must handle payroll taxes correctly. This guide breaks down exactly what you owe, how to calculate it, and what steps to take this week to avoid penalties.
Understanding Your Payroll Tax Obligations
When you run payroll, you act as a collection agent for the government. You withhold taxes from employee paychecks and also pay employer-side taxes. Here’s what you owe:
- Federal Income Tax Withholding: Based on each employee’s W-4 form. Use IRS Publication 15-T to calculate.
- Social Security and Medicare (FICA): 6.2% for Social Security (up to the wage base of $168,600 in 2026) and 1.45% for Medicare (no limit) withheld from the employee. You also pay a matching 6.2% and 1.45% as the employer.
- Additional Medicare Tax: 0.9% on employee wages over $200,000 (single filers). You withhold this but do not match it.
- Federal Unemployment Tax (FUTA): 6% on the first $7,000 of each employee’s wages, but you get a credit of up to 5.4% if you pay state unemployment taxes on time, netting 0.6%.
- State Taxes: State income tax withholding (if applicable) and state unemployment insurance (SUTA), which varies by state and experience rating.
How to Calculate and Pay Payroll Taxes
Follow these steps to stay compliant:
- Determine pay frequency: Common options are biweekly (26 pay periods) or semimonthly (24). Choose what works for your practice.
- Calculate gross pay: Multiply hourly rate by hours worked, or use salary.
- Withhold federal income tax: Use the IRS withholding tables or a payroll service.
- Calculate FICA: Multiply gross pay by 6.2% for Social Security and 1.45% for Medicare. Add the employer match.
- Withhold state taxes: Check your state’s tax agency for rates and rules.
- Pay taxes: Use the Electronic Federal Tax Payment System (EFTPS) for federal taxes. State payments are made through your state’s system.
- File returns: File Form 941 quarterly for federal taxes and Form 940 annually for FUTA. State returns vary.
Payroll Tax Deadlines You Can’t Miss
Missing deadlines results in penalties. Here are the key dates for 2026:
- Quarterly Form 941: Due April 30, July 31, October 31, and January 31 (for the prior quarter).
- Federal tax deposits: Semiweekly or monthly, depending on your total tax liability. If you owe less than $2,500 in a quarter, you can pay with your 941.
- Form 940: Due January 31, 2027, for 2026.
- State filings: Check your state’s schedule; most are quarterly.
Common Mistakes Solo Attorneys Make
Avoid these pitfalls:
- Misclassifying employees as independent contractors: This can lead to back taxes and penalties. When in doubt, use IRS Form SS-8.
- Not paying payroll taxes on time: The IRS charges a penalty of 0.5% per month on unpaid taxes, up to 25%.
- Forgetting to file Form 941: Even if you have no taxes due, you must file.
- Using personal funds to pay business taxes: Keep payroll taxes in a separate account.
Payroll Options for Solo Practices
You can handle payroll manually, use a payroll service, or use a PEO. Here’s a comparison:
| Option | Price Range | Pros | Cons |
|---|---|---|---|
| Manual (DIY) | $0 (your time) | Full control, no fees | Time-consuming, error-prone |
| Basic payroll software | $20-$50/month per company | Affordable, automated calculations | You still file and pay taxes |
| Full-service payroll service | $50-$150/month per company | Handles deposits and filings | More expensive |
| PEO (Professional Employer Organization) | $100-$300/month per employee | Handles HR, benefits, and payroll | Long-term contract, higher cost |
For a solo attorney with one or two employees, a full-service payroll service like Gusto or ADP is often worth the cost. It saves time and reduces error risk.
Steps to Take This Week
- Review your current payroll setup: If you’re doing it manually, consider switching to a service.
- Verify employee classifications: Ensure everyone is correctly classified as employee or contractor.
- Set up EFTPS: If you haven’t already, register at eftps.gov.
- Check your state’s tax registration: Make sure you’re registered for SUTA and state withholding.
- Schedule a reminder for your next payroll tax deadline: Use a calendar alert.
FAQ
Q: Do I have to pay payroll taxes if I’m the only employee? A: If you’re a solo practitioner with no employees, you don’t have payroll taxes. You pay self-employment tax on your net income, which covers Social Security and Medicare.
Q: What’s the penalty for not paying payroll taxes? A: The IRS charges a failure-to-deposit penalty of 2% to 10% depending on how late you are. Plus, interest accrues on unpaid amounts.
Q: Can I use a payroll service for just one employee? A: Yes, many services like Gusto and QuickBooks Payroll offer plans for small businesses with one employee, starting around $20-$40 per month.
Q: What is Form 941 and when is it due? A: Form 941 is the Employer’s Quarterly Federal Tax Return. It’s due by the last day of the month following each quarter (April 30, July 31, October 31, January 31).
The Bottom Line
Payroll taxes are a serious responsibility for solo attorneys with staff. Know what you owe, use a reliable payroll system, and never miss a deadline. By taking the steps above, you’ll avoid penalties and keep your practice financially healthy.