This term I’m taking, as I’ve written before, Business Planning (for the modest enterprise) and Accounting for Lawyers. Those two courses along with Community Property involve a lot of math and learning things I never planned on actually learning.
For example, I spent yesterday morning learning the tax implications of forming a General Partnership. We have 3 hypothetical clients and in deciding what to advise them we are supposed to look at the liability issues, flexibility issues, control issues, and tax implications of General Partnerships, Limited Partnerships, Corporations, and LLCs. My sub-group gets to do GPs. Thursday we started on the tax stuff, and I was utterly lost. I spent yesterday morning figuring it out and emailed my prof to see if I was in the ballpark or still totally lost. Seems I’ve figured it out at least enough to be in the ballpark. Whew.
If someone had told me 15 years ago that I would be learning taxes, at any level, I would have laughed. Hard. But here I am, learning that contributing services for an equity share in the partnership can have negative implications for the personal taxes of that person unless the cash contributors structure their contributions partially as loans.
Yes, I know, it’s exciting stuff. Not.
But it is important and I plan on taking Federal Income Tax, hopefully next term. I’m not looking forward to that on one level, because it is hard for me, but it will be good to learn.
So yesterday it was the math and “logic” of taxes, and today I read my Community Property (a bit of math in dividing estates) and then did my Accounting homework. There I learned how to do double-entry bookkeeping, the old-fashioned way, with a pencil and paper. I had to create T-accounts and a balance sheet for an imaginary company. $5000 initial cash investment… record in Cash and Owners’ Equity; $2000 purchase of equipment, on credit… Assets and A/P get entries; etc. Surprisingly, I got it right the first time.
Again, I never expected to learn that stuff in that detail. I’ve used Quickbooks and have seen (and generated) balance sheets before using that application, but I never thought about learning how to do it manually. Like anything else, learning the old way is a good idea– QB things make much more sense now.
Now I’m going to have a beer and watch some of the Chargers game.