WageTime is payroll for professional services firms where no two people are paid the same way. One run pays the whole roster and shows what the hours you sell actually cost.
Professional, scientific, and technical services runs about 1.79 million US establishments employing 10.8 million people (BLS), and most of them are small: a few partners, a dozen professionals, an office manager, and a payroll that quietly mixes four legally different kinds of pay. Average billable utilization across professional services organizations fell to 66.4% in 2025, a record low (SPI Professional Services Maturity Benchmark), so the industry is watching hours obsessively. The cost side of those hours deserves the same instrumentation.
The IRS has held since 1969 that bona fide partners are not employees of their own partnership: partner pay is a K-1 matter, not a W-2 one, while an S-corp owner must run reasonable W-2 wages before taking distributions. Add salaried associates, hourly admins, and a contract professional or two, and one small firm is running four tax treatments at once. Promote an associate to partner and payroll has to let go of them mid-year, cleanly.
The federal exemption tests care about duties and a salary floor ($684 a week after courts vacated the 2024 increase), not about whether you call someone salaried. DOL opinion letters treat paralegals as presumptively non-exempt, and the same logic reaches bookkeepers, billing coordinators, and admin staff. Busy season at a CPA firm is exactly where unpaid Saturday hours turn into a wage claim, and a billable-hours bonus for a non-exempt employee re-prices that overtime retroactively.
Your best candidate lives two states away now, and hiring them creates registration, withholding, and unemployment obligations where they sit. New York and Pennsylvania tax some remote days as if they were worked at the office under convenience-of-the-employer rules, and New Jersey and Connecticut retaliate in kind. A downtown office adds municipal wage taxes on top: Philadelphia alone withholds at roughly 3.7%.
Hours live in your practice management or PSA system, coded to matters and projects at billing rates, feeding utilization dashboards to the decimal. Then payroll runs on a different planet: someone re-keys non-exempt hours, reconstructs bonus inputs, and labor cost per client or matter never gets computed at all. Utilization tells you what an hour earns. Almost nobody can say what it cost.
Year-end bonuses, billable-hour thresholds, origination credit, new-business commissions: variable pay is how professional firms compete for people. On per-run-priced payroll, every off-cycle bonus check is an invoice, so bonuses get batched, delayed, or pushed through as ad-hoc “adjustments” that distort withholding and the GL alike.
A few high earners plus a small support staff is the textbook way to fail 401(k) nondiscrimination testing, and a failed test means taxable refunds to the very partners the plan was meant to serve. Meanwhile state auto-IRA mandates now reach firms with a handful of employees, so “we’ll set up benefits later” stopped being an option.
How do you pay a firm where nobody is paid the same way? WageTime runs every comp track side by side, salaried to commissioned to contract, in one payroll, with W-2s and 1099s both included at year-end.
Replaces the commission spreadsheet, the bonus tracker, and the contractor-invoice pile that never agree with the register.
Which state do you withhold for when an associate works from another one? WageTime resolves it from the addresses themselves: work and home geolocated, reciprocity applied, and the new remote hire’s state online from the first check.
| Person | Withholding | State |
|---|---|---|
| J. WhitfieldCharlotte NC · remote | Work-state withholding | NC |
| A. BrennanHoboken NJ · hybrid, NJ credit | NY withholding | NY |
| L. OseiPhiladelphia PA office | Philadelphia wage tax | PA |
| T. VanceDenver CO, remote · eff Jul 1 | New-state setup | CO |
Replaces the call to your CPA that starts with “so our new designer lives in Colorado” and ends with three registration forms.
How do billable hours connect to payroll cost? Imported clock hours flow straight into WageTime payroll, coded to your matters and projects, so labor cost reports by engagement: the cost side of the hours your utilization dashboard already prices.
| Client / job code | Hours | Labor cost |
|---|---|---|
| Meridian FoodsMERID-BRAND · 5 staff | 214.0 | $9,416.00 |
| Halstead HealthHALST-WEB · 4 staff | 168.5 | $7,245.50 |
| Bluff City TourismBLUFF-CAMP · 3 staff | 96.0 | $4,032.00 |
| Internal / new businessINT-PITCH · 6 staff | 58.5 | $2,574.00 |
Replaces the quarterly exercise where someone multiplies headcount by a blended rate and calls it project cost.
Are salaried employees automatically exempt from overtime? No: exemption turns on duties and a salary floor, paralegals are presumptively non-exempt per DOL opinion letters, and WageTime keeps the hours side defensible with attested timesheets flowing straight into payroll.
| Person | Reg / OT hrs | Period pay |
|---|---|---|
| Sam DelgadoStaff accountant | 80 + 12 OT | $2,744.00 |
| Nora KimBookkeeper | 80 + 6 OT | $2,136.00 |
| Ivy ChenClient services coordinator | 80 + 9 OT | $2,150.50 |
| Reg WhitakerAdmin assistant | 78 + 0 OT | $1,638.00 |
Replaces the April true-up when someone finally counts the busy-season Saturdays.
What runs behind a package that keeps professionals from leaving? Inside WageTime: 401(k) administration that enforces IRS limits, elections synced to deductions each cycle, ACA tracking built from payroll data, and the firm’s licenses tracked on the employee record.
| Person | This period | Status |
|---|---|---|
| Grace LinPE · 12% traditional | $625.00 | Nearing cap |
| Omar HaddadProject mgr · 6% + emp match | $270.00 | On track |
| Faith MbekiCivil engineer · 8% Roth | $310.00 | On track |
| Neil PrasadPrincipal · 15% traditional | $780.00 | Nearing cap |
Replaces the January spreadsheet reconciling carrier invoices against what payroll actually deducted.
Full-service payroll is $10 a month per person paid that month, plus $50 a month per company, with unlimited runs. No long-term contracts, no per-run charges.
Off-cycle runs and bonuses cost nothing extra. No long-term contracts; cancel anytime.
Example: 50 people paid × $10 + $50 company = $550 for the month
HR & hiring, onboarding, PTO, time tracking, benefits, and workers’ comp are optional add-ons, priced separately when you’re ready.
See a demoBona fide partners are generally not employees of their own partnership for employment-tax purposes (IRS Rev. Rul. 69-184): partner compensation typically flows as guaranteed payments on a K-1, not a W-2. How your firm structures that is a decision for you and your CPA. WageTime runs everyone else: W-2 professionals and staff, 1099 contract professionals, and multi-entity groups under one login.
The IRS expects S-corp shareholder-employees to take reasonable W-2 compensation before distributions, and it can recharacterize distributions as wages when they don’t. What “reasonable” means for your firm is your CPA’s call. In WageTime, the owner’s W-2 payroll runs alongside the rest of the team, with every federal, state, and local filing handled automatically.
No. Exemption depends on a duties test plus a salary floor ($684 per week federally, after the 2024 increase was vacated in court), and several states set higher bars. Paralegals and much firm support staff are presumptively non-exempt per DOL opinion letters. WageTime tracks their hours with attestation and locking, and computes overtime automatically, including weighted-average overtime on multi-rate weeks.
Generally the state where the employee actually works, and a few states add convenience-of-the-employer rules that can reach remote days too; the specifics are fact-dependent. WageTime geolocates every work and home address to rooftop level across 11,000+ local jurisdictions, applies reciprocity and withholding overrides, and files in every state and locality automatically.
Inside WageTime, we import clock hours so there’s no double entry: tell us your practice management, PSA, or time-and-billing system on the demo and we’ll confirm the exact flow for your setup. Those hours carry job-cost codes matched to your matter or project numbering, so payroll and labor-cost reporting come from the same import.
$50 a month for the company plus $10 for each person actually paid that month: a 10-person firm is $150 in a normal month. Runs are unlimited, so semi-monthly cadence, off-cycle bonus checks, and a partner distribution month with fewer people paid all cost exactly what the formula says. No long-term contracts; cancel anytime.
The commission tiers, the busy-season timesheets, the remote roster, and one contractor you’re not sure about. Twenty minutes with a payroll specialist on a live demo company: you’ll see a mixed W-2 and 1099 run, multi-state withholding resolved from addresses, and labor cost coded to your matters and projects.
Book a 20-minute demo