Shahzib Shahbaz
Shahzib Shahbaz

The Tax Structure Mistake Costing Solo Attorneys Thousands

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If you're a solo attorney or small firm owner earning over six figures — there's a good chance you're leaving $10,000 to $30,000 on the table every year.

The culprit?
The wrong business structure.

At Shahbaz & Associates, we’ve worked with dozens of legal professionals who set up a simple LLC, never changed it — and unknowingly overpaid the IRS year after year.

Let’s walk through what’s happening — and what you can do to fix it.

1. You're Paying Self-Employment Tax on All Your Income

If you're operating as a sole proprietor or single-member LLC, you’re paying self-employment tax (15.3%) on your entire net income.

🧾 On $200,000 of income, that’s over $30,000 just in self-employment tax.

2. The S Corp Election Can Cut That in Half

With an S Corporation, you can:

  • Pay yourself a reasonable salary (which is subject to payroll taxes)
  • Take the rest of your profits as distributions, which aren’t subject to self-employment tax

📉 That same $200K income might only have $100K subject to payroll tax — slashing your SE tax in half.

3. Most CPAs Don’t Know Legal Practices Well Enough

We’ve seen generalist accountants set up the wrong structure because they:

  • Don’t understand contingency fee income
  • Don’t model cash flow correctly
  • Can’t advise on quarterly estimates for high-income attorneys

At Shahbaz & Associates, we build custom tax strategies specific to your practice — whether you’re a PI attorney, immigration lawyer, or estate planning solo.

4. You Can Layer In Retirement and Health Savings

Once structured correctly, you can start building in:

  • Solo 401(k) contributions up to $66,000
  • Defined benefit plans if your income is high and consistent
  • HSA contributions to lower taxable income while covering medical costs

💡 These strategies compound savings year over year — and can double as long-term planning tools.

5. Structuring Isn’t Just About Tax — It’s About Growth

The right structure:

  • Makes your business bankable
  • Helps you qualify for law firm lines of credit
  • Sets the stage for adding partners or building out a team

You Know the Law. We Know the Tax Code.

We speak lawyer — and we build tax plans for attorneys who want to grow smarter, keep more of what they earn, and stop wondering if they’re missing something.

Not Sure If You're Set Up Right?

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