Practice Management

Social Security Is No Different For Home Office Attorneys

By chucknewton

Grant Griffiths at Home Office Warrior writes briefly about the bane of Social Security taxes on the home office attorney or business.  He calls it a "disadvantage" for the spare room tycoon, and his post has elicited some comments that support this theory.  I disagree in part.  I do not state that Social Security taxes are not a burden.  I disagree that they are any greater burden on carpet commuters.  It is simply not correct to think that because you work for yourself that you have to pay both ends of the Social Security tax, for the employer and employee -- the "double whammy" as Grant calls it -- when those incorporated, with staff and outside office space do not.  It is true that if I have Chuck Newton, Inc. that Chuck Newton, Inc. would be responsible for half of the tax liability and that I, Chuck Newton, the individual would be responsible for the second half, but who exactly has to earn the money for Chuck Newton, Inc. that pays the business half?  Who in reality has to pay the tax on behalf of Chuck Newton, Inc.?  My point is that it comes out of the same pocket.  Only the corporate structure causes much more complication and costs than merely being a home office solo practitioner.

If you are an associate at another law firm, as opposed to having your own practice, it is true the practice will have to pay half of your Social Security tax.  But, believe me you will have to more than earn that benefit back for the practice.  If the practice has to pay $7,000.00 in social security taxes on your behalf, how much do you think you will have to earn for the firm to cover this cost in order to maintain yourjob.  $14,000?  $21,000.00?  $28,000?  Believe me when I say the associate is paying both parts of the social security tax anyway, and many more times this amount, or the associate will not be an associate much longer.

The social security tax is the bane of every businesses' existence to some extent, but it should not the reason to chose whether you should continue to work for another or a firm, or to go out on your own.

And, like it or not, Social Security is one tax that is directed to serve the public good.

Full post as published by Chuck Newton on February 02, 2008 (boomark / email).