Big Law Life

#23: Personal Tax Planning for Equity Partners with Kelley Brubaker

Jun 5, 2024

37:08

In today’s episode, I am joined by Kelley Brubaker, a CPA advising attorneys and their firms, and the host of the “Your Profitable Law Firm” podcast. Kelly shares how law firm shareholders and owners can better approach tax planning, budgeting, and the transition from W-2 employees to equity partners.

Learn how to manage unpredictable income, set up multiple bank accounts for better financial management, and the importance of early consultation with tax professionals.

At a glance:

02:32 - Kelly Brubaker’s experience transitioning from Big Four to owning her own firm
04:30 - The importance of understanding tax implications when transitioning to an equity partner
07:15 - Understanding the financial and tax changes when becoming an equity partner
09:14 - Explanation of K-1 forms and tax responsibilities for equity partners
10:29 - Importance of early tax planning and quarterly payments to avoid penalties
12:37 - High interest rates and penalties for not paying taxes properly
13:37 - Advice on consulting tax professionals immediately upon making partner
14:45 - Managing unpredictable distributions and setting up bank accounts for different financial purposes
16:38 - Planning for capital calls and understanding their tax implications
18:15 - Managing unpredictable income and expenses throughout the year as a partner
19:56 - Using the Profit First methodology to manage finances and tax obligations
22:17 - Setting up bank accounts for specific expenses
24:08 - Explanation of basis and its tax implications for partners
25:25 - Importance of separating personal and business expenses for tax purposes
26:53 - Misconceptions about business deductions and the impact of the 2017 tax code changes
28:32 - Tracking business expenses and using technology to manage finances
29:46 - Common financial mistakes new partners make and how to avoid them
31:10 - The need for continuous involvement and awareness of firm finances
32:19 - Understanding state and local tax implications when firms expand to new jurisdictions

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