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Payroll Services · Law Firms · Licensed CPA Ontario

Payroll Services for Law Firms

Law firm payroll has to keep three things straight at once: which lawyers are employees and which are contractors, articling students paid and reported correctly, and partner draws kept entirely out of payroll and away from the trust account. All handled by a licensed CPA.

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Wagepoint Payroll Partner
Partner Draws Kept Separate
Compensation never runs through payroll or the trust account
Remittances On Time
CPP, EI and tax remitted by the 15th, every month
Evenings & Weekends
Support until 9 PM, 7 days a week

Law Firm Payroll Has Rules No Other Business Has

Your paralegals, law clerks, legal assistants and reception are always employees, on payroll with income tax, CPP and EI withheld. Your articling and summer students are employees too, and since 2021 the Law Society of Ontario requires that articling be paid. Your associates may be employees or genuine contractors depending on the facts. And your partners are none of the above: they take draws against their share of the firm's income, which must never touch payroll.

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Gondaliya CPA team

Our Law Firm Payroll Services

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Worker Classification

Associates, paralegals, clerks and students each reviewed and placed in the correct payroll treatment.

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Partner Draws Kept Separate

Partner compensation handled as allocations outside payroll and away from the client trust account.

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Student Payroll

Articling and summer students paid per Law Society rules, with the ESA exemptions that apply to them.

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Pay Run Processing

Biweekly or semi-monthly runs on Wagepoint, with income tax, CPP and EI withheld on every cheque.

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Source Deductions

CPP, EI and income tax remitted to the CRA by the 15th of every month. Never late, never a penalty.

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T4 & T4A Filing

Year-end T4 and T4A slips and summaries filed by February, with the employee split correct.

Law Firm Payroll by a Licensed CPA

Every part of law firm payroll handled correctly, from classification to trust separation. All fees include HST.

1

Associate Classification

An associate can be an employee or a genuine contractor. The facts decide, not the title.

  • Each associate reviewed against the CRA control, tools, profit and integration test.
  • Salaried associates on fixed hours from the firm's office go on payroll with a T4.
  • Genuinely independent associates paid on a T4A or through their own corporation.
  • Contractor relationships documented to withstand a CRA review.
  • Personal Services Business risk flagged for any incorporated associate.
2

Partner Draws Off Payroll

A partnership is flow-through. A draw is not employment income and never runs through payroll.

  • Partner compensation handled as allocations against each partner's share of firm income.
  • Draws kept entirely out of payroll, avoiding incorrect withholdings and reporting.
  • A managing partner treated as a partner, not an employee, however much they run.
  • Professional corporation partners on salary run that salary through payroll with a T4.
  • Partner allocations kept separate from the staff payroll stream.
3

Trust Account Separation

Compensation must never touch client trust. The CRA reviews this in trust examinations.

  • Chart of accounts built so payroll and draws can only come from the general account.
  • Client trust funds kept untouched until fees are actually earned, per Law Society rules.
  • No compensation can be coded against trust, by design.
  • Trust reconciled and readied for a trust accounts examination.
  • Payroll remittances reviewed alongside trust, since the CRA examines both together.
4

Articling & Summer Students

Students are employees on payroll, but the ESA treats them differently.

  • Articling and summer students on payroll with income tax, CPP and EI withheld.
  • Pay meets the Law Society requirement that articling be paid, in force since 2021.
  • ESA exemptions that apply to students-at-law handled correctly.
  • Students never treated as contractors, since they are integrated into the firm.
  • T4 slips issued to every student at year end.
5

Staff Payroll & ESA

Paralegals, clerks and assistants are always employees with full entitlements.

  • Paralegals, law clerks, legal assistants and reception on payroll with a T4.
  • Overtime at time and a half after 44 hours in a week, students excepted.
  • Vacation pay at 4 percent under five years of service, 6 percent after.
  • Public holiday pay calculated to the ESA four-week formula.
  • Every employee captured accurately each pay period.
6

Remittances & Year-End Slips

Because trust examinations review payroll, a firm cannot afford loose remittance habits.

  • Income tax, CPP and EI, plus employer shares, remitted by the 15th of the following month.
  • Late remittance penalties from 3 percent to 10 percent avoided entirely.
  • Employer Health Tax remitted once payroll exceeds the exemption threshold.
  • WSIB premiums calculated and reconciled where coverage applies.
  • T4 and T4A slips and summaries filed by the February deadline.

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Case Studies

Partner Draws Corrected Off Payroll

A growing firm had been running two partners' draws through payroll, producing incorrect CPP and EI deductions and a tangled year end. We moved the draws off payroll to partnership allocations, corrected the reporting, and kept the associate and staff payroll clean. The figures here are illustrative of the work we do, not a specific client file.

Draws off payroll, reporting corrected

Articling Students Set Up Correctly

A firm taking on its first articling students was unsure how to pay and report them. We set them up as employees with full source deductions and T4s, applied the ESA exemptions that apply to students, and confirmed the pay met the Law Society requirement. The figures here are illustrative of the work we do, not a specific client file.

Students paid and reported properly

Associate Classification Reviewed

A firm paid two associates as contractors on T4A, but both worked fixed hours from the firm's office on the firm's files, textbook employees. We reclassified them onto payroll before a CRA review, avoiding exposure for unremitted CPP and EI plus penalties. The figures here are illustrative of the work we do, not a specific client file.

Reassessment exposure removed

Trust and Payroll Kept Clean

A firm's bookkeeping allowed compensation to be coded against the trust account by accident. We rebuilt the chart of accounts so payroll and draws can only come from general, reconciled trust, and readied the firm for a trust accounts examination. The figures here are illustrative of the work we do, not a specific client file.

Trust protected, exam-ready

Who Is an Employee, Who Is a Contractor, and Who Is a Partner

A law firm carries all three at once, and each is paid a different way. Here is how it usually falls. We confirm every case on its own facts before payroll runs.

RoleUsual StatusHow They Are Paid
Paralegal / law clerk / legal assistantAlways employeeT4, income tax, CPP and EI withheld
Reception / bookkeeper / office managerAlways employeeT4, full source deductions
Articling and summer studentsEmployee (some ESA exemptions)T4, full source deductions, paid per LSO rules
Associate on salary, fixed hours, firm's filesEmployeeT4, full source deductions
Associate: own hours, own arrangements, bills the firmPossible contractorT4A or paid via their corporation
PartnerNot an employeeDraw against allocated partnership income, never payroll
Lawyer practising through a professional corporation, on salaryEmployee of the PCT4, source deductions on salary portion

The three streams must never be mixed. Running a partner's draw through payroll, or paying an employee-in-substance associate as a contractor, both create problems the CRA will find. Please confirm each classification before payroll is set up. See our payroll services.

Partner Draws and the Trust Account: Two Lines You Never Cross

A partnership is a flow-through entity. It does not pay tax itself; each partner is taxed on their allocated share of the firm's income on their own return, and a draw is simply cash taken out against that share. It is not employment income, and running it through payroll produces incorrect withholdings and reporting. A managing partner is still a partner, not an employee, however much of the firm they run.

The second line is the trust account. Partner draws, associate salaries and every payroll dollar come from the general account, never from client trust. Trust funds are client money, governed by Law Society rules, and can only move to general once fees are actually earned. We set up the chart of accounts so compensation can never be coded against trust, which is exactly what a trust accounts examination looks for.

Never run a partner draw through payroll, and never let compensation touch trust. These are the two most common and most damaging errors in law firm books. We build the accounts so neither can happen by accident, and we keep partner allocations entirely separate from staff payroll.

Articling and Summer Students: Employees With a Twist

Students are on payroll like any employee, but the Employment Standards Act treats them differently, and the Law Society requires that articling be paid. Getting both right matters.

QuestionThe Answer for Students
On payroll?Yes, income tax, CPP and EI withheld, T4 at year end
Must articling be paid?Yes, the Law Society of Ontario has required paid articling since 2021
ESA overtime and public holidays?Students-at-law are exempt from several ESA parts, so treatment differs
Summer students?Employees on payroll, same withholding as articling students
Contractor instead?No, a student integrated into the firm is an employee, not a contractor

Do not treat a student as a contractor to save on deductions. A student working under the firm's supervision, on the firm's files, is an employee. The exemptions that apply to students are about specific ESA entitlements, not about whether they go on payroll. We set students up correctly from day one.

ESA Rules and CRA Remittances for Your Staff

For everyone who is an employee, Ontario's Employment Standards Act and the CRA remittance rules apply in full. These are where day-to-day payroll errors happen.

ObligationThe RuleWhy It Trips Firms Up
OvertimeTime and a half after 44 hours in a weekStudents are exempt, other staff are not
Vacation pay4% of gross under 5 years, 6% after 5 yearsVacation pay and vacation time are two separate duties
Public holiday payESA four-week formula, not a normal day's payFirms often just pay a regular day, which is wrong
Remittance timingBy the 15th of the following month for monthly remittersInterest compounds daily from the due date, no grace period
Late remittance penalty3% rising to 10% the later it isTrust examinations also review payroll remittances
Year-end slipsT4 and T4A with summaries by the February deadlineThe employee-versus-contractor split must be right on the slips

What Our Law Firm Payroll Service Includes

Everything from classification to year-end slips, on a flat monthly fee. No hourly billing. All fees include HST.

IncludedWhat We Do
Worker classification reviewWe confirm each associate, student and staff member's status before payroll runs.
Payroll setup and processingWe open your CRA payroll account if needed and run every pay cycle on Wagepoint.
Source deductions and remittancesWe withhold income tax, CPP and EI and remit to the CRA on time each month.
Partner draws kept separateWe handle partner allocations outside payroll and away from the trust account.
ESA and student rulesWe apply the correct overtime, vacation, holiday and student-exemption rules.
EHT, WSIB and year-end slipsWe remit EHT and WSIB where they apply and file T4, T4A and summaries by February.

Why Choose Gondaliya CPA for Law Firm Payroll?

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Legal Payroll Expertise

Associates, students, partners and trust kept in their proper lanes, not treated as one business.

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Licensed CPA Ontario

A certified CPA team stands behind every pay run and every slip.

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Flat Monthly Fee

All fees including HST, no hourly billing, no year-end slip surprises.

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Fully Remote

Payroll delivered through our secure portal, wherever your firm is.

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Transparent Flat-Fee Law Firm Payroll Pricing

ServiceFeeFrequencyDetails
Payroll Setup & Classification ReviewFREEOne-timeWorker classification confirmed and CRA payroll account opened with your first engagement.
Solo / Small Firm PayrollQuoted upfrontMonthlyAssistant, clerk and a student or associate, full source deductions and remittances.
Multi-Lawyer Firm PayrollQuoted upfrontMonthlyAssociates, paralegals and students, with partner draws kept separate.
Partnership Payroll & DrawsQuoted upfrontMonthlyStaff payroll plus partner allocation support, trust kept clean.
Year-End T4 / T4A FilingIncludedAnnualAll slips and summaries filed by the February deadline.

All fees include HST, so the number quoted is the number you pay. Payment is by Interac e-Transfer to info@gondaliyacpa.ca with auto-deposit enabled and the security question set to Not Applicable. Please use our pricing calculator for an exact figure.

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Law Firm Payroll: Cities We Serve

Licensed CPA payroll for law firms across Ontario, delivered virtually.

TorontoMississaugaBramptonScarboroughEtobicokeNorth YorkMarkhamVaughanOttawaAll of Ontario

Frequently Asked Questions

Do I run payroll for my associate lawyers?
It depends on classification. An associate who works set hours under the firm's direction, uses the firm's office and staff, and is paid a salary is an employee, on payroll with income tax, CPP and EI withheld and a T4. A genuinely independent associate who sets their own hours, works from their own arrangements and bills the firm may be a contractor on a T4A. The facts decide it, not the title.
How do I know if a lawyer is an employee or a contractor?
The CRA applies its control, tools, chance of profit and integration test. Most associates in a firm look like employees: fixed schedule, firm's premises, firm's clients, salary. A true contractor controls their own work, bears risk of profit and loss and is not integrated into the firm. We assess each arrangement before payroll is set up.
Are articling students employees?
Yes, for payroll purposes. Articling students are on payroll with income tax, CPP and EI withheld and a T4, and since 2021 the Law Society of Ontario requires that articling be paid. They are, however, exempt from several parts of the Employment Standards Act, so their overtime and public holiday treatment differs from other staff. We handle both correctly.
Which law firm staff are always employees?
Paralegals, law clerks, legal assistants, receptionists, bookkeepers, office managers and articling students are always employees. They work set hours under the firm's direction using the firm's resources. They go on payroll with full source deductions and a T4. There is no contractor argument for these roles.
How are partners paid, and does it go through payroll?
Partner draws must never run through payroll. A partnership is a flow-through entity: each partner is taxed on their allocated share of the firm's income on their personal or corporate return, and a draw is simply cash taken out against that share, not employment income. Running a draw through payroll produces incorrect withholdings and reporting. We keep partner compensation entirely separate from staff payroll.
Can partner draws touch the trust account?
No, ever. Partner draws and any firm compensation must come from the general account, never the client trust account. Trust funds are client money and can only be transferred to the general account once fees are actually earned, consistent with Law Society obligations. We set up the books so compensation can never be coded against trust.
What is the ESA overtime threshold for my legal staff?
In Ontario the overtime threshold is 44 hours in a week for staff covered by the ESA, after which they are paid time and a half. Articling students are exempt from the overtime provisions, so they are treated differently. We apply the correct rule to each category of worker.
How does vacation pay work for law firm employees?
Vacation pay and vacation time are two separate ESA obligations. Vacation pay is 4% of gross for employees with less than five years of service, rising to 6% after five years, and paying it out does not remove the duty to provide the time. We calculate and track both for your staff.
How is public holiday pay calculated?
Under a specific ESA formula based on the employee's earnings in the four weeks before the holiday, not simply a normal day's pay. Firms often just pay a regular day, which is incorrect. We apply the proper formula for every eligible employee on each of Ontario's public holidays.
When are my law firm payroll remittances due to the CRA?
Most firms are monthly remitters, so the income tax, CPP and EI withheld in a month, plus the employer shares, are due by the 15th of the following month. Interest compounds daily from the due date with no grace period. We track your schedule and remit on time as part of each pay run.
What happens if I miss a payroll remittance deadline?
The CRA charges a penalty starting at 3% and rising to 10% the later the remittance is, plus daily compounding interest, and repeated lateness escalates it. Because trust account examinations also review payroll, a firm cannot afford loose remittance habits. We remit on your behalf so the deadline is never missed.
Do you handle bonuses for associates and staff?
Yes. Associate and staff bonuses are employment income subject to income tax, CPP and EI, but the withholding is calculated using the CRA's bonus method rather than the regular tables. We apply the correct method so the deductions are accurate and the employee is neither over nor under withheld.
Can an associate be paid through their own corporation?
Sometimes, where the associate has genuinely incorporated and the relationship is a true contractor one. But if the substance is employment, the CRA can look through the corporation and reassess, and a Personal Services Business finding removes the small business deduction and most expense deductions. We review the arrangement before you rely on it.
Do you file T4 and T4A slips for my firm?
Yes. We prepare and file T4 slips for your employees, including associates on salary and articling students, and T4A slips for any genuine contractors, with the summaries to the CRA by the February deadline. Getting the employee-versus-contractor split right on the slips is part of what protects you in a review.
What payroll software do you use for law firms?
We run payroll on Wagepoint, which calculates deductions at current CRA rates, tracks your remittance schedule and submits on your behalf, and syncs to QuickBooks Online or Xero. You get direct deposit, digital pay stubs and a clean audit trail, with partner compensation kept entirely outside the payroll stream.
How much does law firm payroll cost?
We quote an exact flat monthly fee upfront based on your number of employees and pay frequency, with no hourly billing, and all fees include HST. There are no per-slip surprises at year end. Please use our pricing calculator for an exact figure.
Do you file WSIB and Employer Health Tax for law firms?
Yes where they apply. Ontario Employer Health Tax applies once your payroll exceeds the exemption threshold, and WSIB may apply depending on coverage. We calculate and remit both alongside your regular payroll. These are employer costs, separate from what is withheld from staff.
What if the CRA is examining my firm's trust and payroll accounts?
We can help. A trust accounts examination reviews whether you withheld and remitted the correct income tax, CPP and EI, reconciled your wage journal to the T4s, and reported bonuses and benefits correctly. We prepare the reconciliations, respond to the CRA and correct any gaps. See our CRA audit resolution services.
Do you account for benefits and health spending accounts?
Yes. Where your firm provides benefits or a Health Spending Account, we account for the taxable and non-taxable portions correctly on payroll and the T4. Employer-provided benefits for staff are generally deductible to the firm.
Can you catch up a firm that is behind on payroll?
Yes. If remittances are late, slips are unfiled, or classification was handled incorrectly in prior years, we bring the payroll current, file the outstanding slips and remittances, and where relief is available, pursue it. See our CRA support.
How are summer law students paid?
Summer students are employees on payroll with full source deductions and a T4, the same as articling students for withholding purposes. Their pay is employment income. We set them up correctly whether they are with you for a summer term or a full articling year.
Do partners need to be on payroll if they also manage the firm?
No. Even a managing partner is a partner, not an employee, and their compensation is a draw against their allocated partnership income, not salary. This differs from a corporation, where an owner-employee is typically paid a salary through payroll. We apply the treatment that matches your firm's structure.
What about a law firm structured as a professional corporation?
A lawyer who practises through a professional corporation and takes a salary from it runs that salary through payroll with source deductions and a T4. Many take a mix of salary and dividends. We set up the corporate owner payroll and coordinate it with the compensation strategy, separate from the associate and staff payroll.
How quickly can you set up payroll for my firm?
Once we have your employee details, business number and payroll account, setup typically takes a few business days. If you do not yet have a CRA payroll account, we open one for you. We aim to have you ready for your next pay period.
Do you serve law firms outside Toronto?
Yes. We are a licensed Ontario CPA firm serving law firms across Ontario and Canada, virtually. Payroll is delivered entirely through our secure portal, so your location is never a constraint.
Is my firm too small for professional payroll?
No. Even a solo practitioner with an assistant and an articling student benefits, because the classification, ESA and remittance rules apply regardless of size, and the penalties for getting them wrong do not scale down. Small firms are often where student and associate treatment goes wrong unnoticed.
Do you keep payroll separate from client trust accounting?
Yes, strictly. Payroll runs from the general account, and we set up the bookkeeping so no compensation can be coded to trust. Trust funds are client money governed by Law Society rules and can only move to the general account once fees are earned. Keeping the two clean is central to how we handle legal payroll.
Do you coordinate payroll with my firm's bookkeeping and tax?
Yes, and that is the advantage of one CPA firm. Your payroll, bookkeeping, trust reconciliation and tax all connect, so the wage expense, source deductions and partner allocations flow through consistently. See our payroll services.
Are reimbursed disbursements taxable to my staff?
No. A genuine reimbursement of a firm expense paid by an employee, with receipts, is not employment income and is not taxed or run through source deductions. It is only when an allowance is a flat untracked amount that it can become taxable. We set the treatment correctly so legitimate reimbursements stay tax-free.
How do I get started with law firm payroll?
Please book a free consultation and tell us how many staff, associates and students you have, and how partners are compensated. We confirm each classification, keep partner draws and trust separate, quote a flat monthly fee, and set up compliant payroll. Book Free Consultation →

Meet Your Law Firm Payroll Specialists

Sharad Gondaliya, CPA

Sharad Gondaliya, CPA

Founder & Managing Director
Gondaliya CPA Professional Corporation

Sharad advises law firms on worker classification, partner draw structuring, trust accounting and payroll compliance.

Vandana Goel, CPA

Vandana Goel, CPA

Senior Accountant
Gondaliya CPA Professional Corporation

Vandana runs payroll processing, source deductions, remittances and year-end T4 and T4A filing for legal clients.

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Law Firm Payroll Has Three Streams. Let a CPA Keep Them Straight.

Gondaliya CPA classifies every worker, pays and reports your students correctly, keeps partner draws off payroll and away from trust, remits on time and files clean T4s and T4As, wherever your firm is. Flat monthly fee. All fees include HST.

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