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Run the Payroll Fee Auditor →Blog · Payroll Management · Law Firm
Law Firms: Payroll Tax Guide (2026)
Payroll tax for a law firm is the federal stack every employer runs, withholding, 7.65 percent employer FICA, FUTA, deposits and Form 941, plus the law firm items this page cites: IRS Paying yourself, IRS Publication 541, Guaranteed Payments and IRS Publication 15 (2026). BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Tax rules specific to law firms
Partners are not employees and should not be issued a Form W-2 for distributions or guaranteed payments from the partnership. Those amounts are reported to the partner on Schedule K-1 of Form 1065.
Guaranteed payments are amounts paid to a partner for services or capital without regard to partnership income. They are not subject to income tax withholding; the partnership generally deducts them on Form 1065 line 10 and the partner reports them as ordinary income on Schedule E.
Attorney and staff bonuses are wages subject to Social Security, Medicare, FUTA and income tax withholding. Bonuses paid separately from regular wages are supplemental wages withheld at a flat 22 percent, rising to 37 percent on an employee's supplemental wages above $1 million in a calendar year.
The stack every law firm runs
On one of the paralegals and legal assistants at the May 2025 national median of $62,890, the employer share of Social Security and Medicare is $4,811 a year, FUTA is $42 after the 5.4 percent state credit on the first $7,000, and income tax withholding follows the employee's W-4. Deposits are monthly or semiweekly depending on the prior lookback period, with a next-business-day deposit whenever $100,000 accumulates. Form 941 is due the last day of the month after each quarter; W-2s and any 1099-NEC at the $2,000 threshold are due January 31.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Partners are not employees and should not be issued a Form W-2 for distributions or guaranteed payments from the partnership. Those amounts are reported to the partner on Schedule K-1 of Form 1065. [IRS Paying yourself]
- Guaranteed payments are amounts paid to a partner for services or capital without regard to partnership income. They are not subject to income tax withholding; the partnership generally deducts them on Form 1065 line 10 and the partner reports them as ordinary income on Schedule E. [IRS Publication 541, Guaranteed Payments]
- Attorney and staff bonuses are wages subject to Social Security, Medicare, FUTA and income tax withholding. Bonuses paid separately from regular wages are supplemental wages withheld at a flat 22 percent, rising to 37 percent on an employee's supplemental wages above $1 million in a calendar year. [IRS Publication 15 (2026)]
Read the full guide to how to calculate payroll taxes, and the rest of the law firm payroll library.
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Frequently Asked Questions
Law firm payroll tax: IRS Paying yourself
Partners are not employees and should not be issued a Form W-2 for distributions or guaranteed payments from the partnership. Those amounts are reported to the partner on Schedule K-1 of Form 1065.
Law firm payroll tax: IRS Publication 541, Guaranteed Payments
Guaranteed payments are amounts paid to a partner for services or capital without regard to partnership income. They are not subject to income tax withholding; the partnership generally deducts them on Form 1065 line 10 and the partner reports them as ordinary income on Schedule E.
What is the employer tax cost on one of the paralegals and legal assistants?
At the $62,890 national median (BLS OEWS, May 2025): $4,811 in employer Social Security and Medicare, $42 in FUTA after the state credit, plus state unemployment at the employer's assigned rate.
What does managed payroll cost for a law firm?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Billable hours tracking, partner draw vs. salary and attorney bonus structures are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Law Firms. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: IRS: Understanding Employment Taxes
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