Reply to Partner @ Law Firms - Unanticipated Expenses/Income or Disappointed with Starting Compensation

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[quote=Anonymous]It actually depends on the firm.  At my old mid/big firm, as a partner, even a draw partner, you are considered self employed.  Thus, whatever taxes your firm used to pay for you as your employer, you now pay yourself (FICA, I think it is).  Plus, most firms do not pay any portion of health insurance premiums for partners.   Thus, even if you get the exact same compensation you got before you made partner, you lose money.  At that firm, as a partner, I got paid monthly instead of twice monthly.  I also got a "draw" against my "income".  As a "draw" partner however, I never realized any additional "income."  Thus, aside from bonuses, that's all I got.  As an equity partner at the same firm, I actually took home less monthly draw, but got an end of the year distribution of my share of the profits.  It took me years as an equity partner to get ahead on bills.   Plus, as a partner, you get the added fun of paying quarterly estimated taxes.   One year, I actually had to put that on a HELOC.

I am currently a "shareholder" in my current firm.  As such, I am a w-2 employee, so my health insurance premium and my FICA taxes are paid.  Make a huge difference in take home.  I still get a "draw" and the true up is at the end of the year.

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