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Running a thriving optometry practice requires more than just providing excellent patient care. Managing overhead, investing in new equipment, and navigating ever-changing tax laws can significantly impact your bottom line. While many optometrists focus on growing revenue, few pay close attention to tax strategy—an oversight that can cost thousands in unnecessary taxes every single year.

Yes, you read that right. By unknowingly overpaying the IRS, successful practice owners miss out on tens of thousands of dollars in legal tax savings—money that could be reinvested into their business, retirement, or personal wealth.

The good news? With the right planning, you can legally reduce your tax burden and keep more of your hard-earned money.

In this article, we’ll cover the three most common and costly tax mistakes optometrists make—and how avoiding them could put six figures back in your pocket over the next few years. Whether you're an established practice owner or just starting out, these insights can make a significant difference in your financial future. Let’s dive in.

Mistake #1: Paying Yourself the Wrong Salary in an S-Corp

One of the biggest financial missteps successful optometrists make is how they pay themselves. Many practice owners structure their business as an S-Corporation (S-Corp) to take advantage of tax savings, but without a strategic compensation plan, they end up overpaying in payroll taxes—or worse, attracting IRS scrutiny.

Why Your Salary Matters in an S-Corp

As an S-Corp owner, you don’t receive a traditional paycheck like an associate optometrist would. Instead, you’re both the business owner and an employee of your own corporation. This means your income is split into two parts:

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Salary - This is your W-2 income, subject to payroll taxes (Social Security and Medicare).

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Distributions - The remainder of your profits, which are not subject to payroll taxes.

The key to tax efficiency is striking the right balance. Paying yourself too much in salary means you’re overpaying in payroll taxes, while paying yourself too little increases your risk of an IRS audit.

The Cost of Overpaying Your Salary

Many optometrists set their salary arbitrarily high—often out of caution or habit—without realizing the tax implications. Let’s look at an example:

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Dr. Smith, an optometrist, earns $300,000 from her S-Corp.

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She decides to take a $200,000 salary, leaving $100,000 in distributions.

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Payroll taxes (Social Security + Medicare) on her salary total $18,840.

Now, what if she adjusted her salary to a more reasonable $90,000, supported by industry benchmarks?

  • Her new payroll tax liability would drop to $6,885, saving her $11,955 in Social Security taxes.
  • She also avoids $5,800 in excess Medicare tax, bringing her total tax savings to $17,755 per year.

This Doesn’t Reduce Your Take-Home Pay

A common misconception is that lowering your salary means taking home less money. That’s not the case. Dr. Smith still earns $300,000 per year, but instead of taking it mostly as taxable wages, she shifts more of it into S-Corp distributions, which aren’t subject to payroll taxes.

She can still pay herself weekly or biweekly distributions, just like a paycheck. The only difference? She’s keeping more of her money rather than giving it to the IRS.

How Low is Too Low? The IRS Rule on “Reasonable Compensation”

Of course, you can’t just pay yourself a tiny salary to maximize tax-free distributions. The IRS requires S-Corp owners to take a “reasonable salary” based on industry standards, qualifications, and the services you perform. The challenge? The IRS doesn’t define a precise formula for what’s “reasonable,” but they do look at factors such as:

  • Your experience and role in the business
  • How much similar optometrists are paid in the marketplace
  • Your practice’s revenue and profits
  • Time spent on patient care vs. administrative work

Failing to meet this standard could result in an IRS audit, where they could reclassify your distributions as wages, forcing you to pay back payroll taxes (plus penalties and interest).

Most optometrists don’t have the time or the tools to determine their optimal salary strategy—and that’s where a tax expert comes in.

Mistake #2: Missing Out on Key Business Deductions

Many optometrists unknowingly overpay the IRS every year simply because they don’t take full advantage of available business deductions. Between patient care, managing staff, and growing their practice, tax strategy often takes a backseat—leading to missed opportunities to legally lower their tax bill.

The tax code is designed to benefit business owners, but only if they know what to deduct and how to do it correctly. The reality is, most optometrists are leaving thousands of dollars on the table.

The Most Overlooked Deductions for Optometrists

While standard expenses like office rent and utilities are obvious deductions, many optometrists fail to maximize tax-saving opportunities in these key areas:

1. The Home Office Deduction & The Augusta Rule

If you handle administrative work from home—whether it’s reviewing financials, scheduling, or managing payroll—you may be eligible for the home office deduction. Even if you have a separate office space, you can still deduct a portion of your rent or mortgage, utilities, and internet costs if you use a dedicated space for business.

Potential Savings: Optometrists with a qualifying home office typically deduct between $2,500 and $5,000 per year.

But what if you could legally pay yourself for using your home to host business meetings? There’s a little-known strategy that allows business owners to rent their home to their business tax-free for up to 14 days per year. This means you could write off the expense at the business level without picking it up as income personally—a clean way to pull additional money out of the practice 100% tax-free.

2. Business Vehicle & Mileage Deductions

Many optometrists use their personal vehicle for business-related activities, such as attending industry conferences, visiting suppliers, or networking with other professionals. However, most fail to track mileage or deduct auto expenses, missing out on significant tax savings.

  • IRS Mileage Deduction (2025 Rate): $0.70 per mile
  • If you drive 10,000 business miles per year, that’s a $7,000 tax deduction—a real savings of around $2,100 or more, depending on your tax bracket.
  • Alternatively, if you lease or own a car used for business, you may be able to deduct a portion of your payment, insurance, gas, and maintenance instead.

3. Business Meals & Entertainment

If you take referral partners, vendors, or key staff members out for business-related meals, 50% of those expenses can be deducted. This includes:

  • Taking a local optometric group leader out for lunch
  • Business meals while traveling to conferences
  • Meals during practice planning sessions

Many optometrists either fail to track these expenses or hesitate to deduct them out of fear of IRS scrutiny. The key is proper documentation—saving receipts and noting who attended and the business purpose.

Potential Savings: A practice owner who spends $500 per month on business meals could deduct $3,000 per year, reducing their tax bill by roughly $900 (assuming a 30% tax rate).

4. Paying Your Children Through the Business

Another underutilized strategy? Hiring your children to work in your practice. If your children help with tasks such as:

  • Filing paperwork
  • Cleaning office spaces
  • Managing social media or marketing efforts

You can legally pay them for their work—and as long as their wages remain under the standard deduction threshold ($15,000 for 2025), they won’t owe federal income taxes. Plus, if your business is structured correctly, you may be able to avoid payroll taxes on their earnings as well.

This creates a win-win: You shift income out of your higher tax bracket, fund their college savings or investment accounts, and convert what might have been an allowance into a fully deductible business expense.

5. Retirement Contributions (SEP IRA, Solo 401(k), or Cash Balance Plans)

Optometrists often underfund their retirement accounts, missing out on one of the most powerful tax deductions available. Unlike regular employees, business owners can set up tax-advantaged retirement plans that allow for much larger contributions—and major tax savings.

  • A Solo 401(k) or SEP IRA allows up to $69,000 in contributions for 2025 (depending on income).
  • A Cash Balance Plan could allow $100,000+ in contributions, providing massive tax deferral opportunities.
  • Every dollar contributed lowers taxable income, potentially reducing an optometrist’s tax bill by $20,000 or more per year.
How Much Are You Leaving on the Table?

By not taking full advantage of these deductions, an optometrist could be overpaying the IRS by $30,000 or more annually—money that could be reinvested in the practice, retirement, or personal wealth.

The problem isn’t that these deductions aren’t available. It’s that most optometrists either don’t know about them or don’t track them properly. That’s where working with a tax expert can make all the difference.

Mistake #3: Failing to Maximize Depreciation on Equipment & Office Buildout

Running an optometry practice isn’t cheap. Between diagnostic equipment, office furniture, and leasehold improvements, practice owners often spend hundreds of thousands of dollars just to keep their office up to date. The good news? The IRS allows you to deduct these costs over time. The bad news? Most optometrists don’t realize they could be deducting much more, much faster.

The Depreciation Trap: Why Most Optometrists Pay More Than They Should

When you buy new equipment—whether it’s an OCT, an autorefractor, or a retinal imaging system—the IRS typically expects you to spread out the deduction over 5 to 7 years. If you renovate your office, those costs might be spread over 15 or even 39 years.

That’s a long time to wait for your tax savings. But here’s the thing: You don’t have to wait.

How Smart Practice Owners Cut Their Tax Bill

There are tax strategies available right now that allow you to deduct more of these expenses upfront, reducing your tax bill significantly in the year you make the investment.

For example, instead of slowly writing off a $150,000 equipment purchase over several years, an optometrist could potentially deduct $90,000 or more immediately—saving $27,000 or more in taxes this year alone.

The same goes for office renovations and leasehold improvements. Many optometrists think they have to depreciate these expenses over decades when, in reality, there are legal ways to unlock tens of thousands of dollars in deductions much sooner.

How Much Are You Leaving on the Table?

If you’ve recently bought equipment, upgraded your office, or are planning a build out soon, there’s a good chance you could be saving $30,000–$50,000 (or more) in taxes this year—if you structure things correctly.

The problem? The IRS doesn’t make it easy. Depreciation rules are complicated, and most optometrists either don’t know their options or aren’t using them to their full advantage. That’s where expert guidance makes all the difference.

Stop Overpaying the IRS—It’s Time to Take Control of Your Taxes

If you’ve been making one (or more) of these tax mistakes, you’re not alone. Even the most successful optometrists unknowingly leave tens of thousands of dollars on the table every year—simply because they don’t have the right strategy in place.

A smart tax plan isn’t just about compliance—it’s about keeping more of what you earn so you can reinvest in your practice, your future, and your financial security. With the right approach, you could:

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Lower your payroll taxes without changing your take-home pay

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Maximize deductions you're already eligible for

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Accelerate depreciation and free up cash for your business

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Legally reduce your tax burden - year after year

The key is knowing exactly which strategies apply to your situation - and that's where expert guidance makes all the difference.

The best tax strategies don't happen by accident. If you want to stop overpaying in taxes and keep more of your hard-earned money, let's talk.

Schedule a call today and let's create a tax plan that works for you.

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Ryan Poirier

Certified Public Accountant
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Best Practices for Having Your Children on Your Payroll

As optometry practice owners, finding innovative ways to optimize operations and finances is always on the agenda. One effective strategy is incorporating your children into your business workforce. This approach not only provides potential tax benefits but also imparts valuable life skills to your children. In this guide, we will delve into the best practices for having your children on payroll, focusing on legal compliance, appropriate tasks, fair compensation, and essential record-keeping.

Understanding Age-Appropriate Work

Before assigning tasks to your children, ensure that these tasks are suitable for their age:

  • For Young Children (Ages 5-12): Simple office tasks like filing, shredding, or basic cleaning.
  • For Teenagers (Ages 13-17): More complex roles such as assisting with administrative duties, managing social media accounts, or participating in community outreach initiatives.

Always tailor tasks to align with both their capabilities and the needs of your practice.

Ensuring Fair Compensation

Paying your children a fair wage is crucial. Here’s how you can ensure compliance and fairness:

  • Market Rate Compensation: Pay rates should align with what you would pay an unrelated employee for the same job.
  • Consistent Paychecks: Regularly scheduled payments via check or direct deposit help formalize the employment relationship.

Maintaining Accurate Records

Record-keeping is not just a best practice; it's a necessity:

  • Detailed Logs: Keep a detailed record of hours worked and tasks performed.
  • Formal Documentation: Ensure all work is documented through timesheets or a digital tracking system.

This documentation is essential for tax purposes and validates the employment as a legitimate business arrangement.

Aligning Work with Business Operations

The work your children do should directly relate to your practice’s operations. Avoid assigning household chores as part of their job duties, and instead focus on tasks that contribute to your business goals.

Handling Employment Paperwork

Compliance with federal employment laws is non-negotiable:

  • W-4 and I-9 Forms: Complete these forms to document your child’s eligibility to work and handle tax withholdings correctly.
  • Setting Up a Bank Account: A bank account in your child’s name not only teaches financial responsibility but also aids in transparent financial practices.

Exploring the Benefits of Child Employment

Employing your child can lead to significant financial and educational benefits:

Tax Advantages:
  • Income Shifting: Transfer income from your higher tax bracket to your child’s lower one.
  • Tax Savings: Potentially reduce the amount of taxes owed by taking advantage of lower tax brackets.
Financial Education:
  • Early Financial Literacy: Introduce concepts of earning, saving, and responsible spending.
  • Roth IRA Contributions: Enable them to start a Roth IRA, fostering early habits of savings and investment.

Understanding Tax Implications

  • No Withholdings Necessary: If your child earns less than the standard deduction, you may not need to withhold taxes.
  • Exemption from Certain Taxes: If your practice is a family-owned partnership, your child’s earnings might be exempt from Social Security, Medicare, and FUTA taxes.

Integrating your children into your optometry practice is not just a financial decision but a strategic move that can benefit your family in multiple ways. From teaching valuable work ethics to securing tax benefits, the advantages are manifold. However, it’s essential to maintain a professional approach, ensuring all legal requirements are met. For tailored advice, always consult with a tax professional or accountant knowledgeable about optometry practices.

By following these guidelines, you can optimize your family’s financial situation while providing a practical learning experience for your children within your business.

Stay ahead of your tax planning by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Archie Keebler

Tax Manager
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Keeping You Updated on Tax Changes for 2025

At Williams Group, we’re committed to keeping you informed about key tax changes that can impact your financial planning and your optometry practice. As we look ahead to 2025, here are two important updates we’d like to highlight from the SECURE 2.0 Act of 2022 and the IRS mileage rate adjustment.

Enhanced Catch-Up Contributions: More Savings for Older Employees

Starting in 2025, employees aged 60 to 63 can take advantage of increased catch-up contributions for their 401(k) or 403(b) retirement plans. The maximum catch-up contribution for this group will rise to $11,250, compared to the current $7,500 limit. This adjustment acknowledges the critical need for individuals nearing retirement to bolster their savings during their highest earning years.

Additionally, here are the contribution limits for 2025 across various retirement accounts:

  • 401(k): $23,000, with an additional $11,250 catch-up contribution for those aged 60-63.
  • SIMPLE IRA: $17,000, with a catch-up contribution of $5,500 for participants aged 50 and older.
  • Traditional and Roth IRAs: $7,000, with a $1,000 catch-up contribution for participants aged 50 and older.
  • Health Savings Accounts (HSAs): $4,150 for individuals and $8,300 for families, with a $1,000 catch-up contribution for account holders aged 55 and older.

For employers, this presents an opportunity to reinforce employee loyalty and financial well-being. Highlighting these increased contribution limits during employee discussions or benefits meetings can foster a culture of financial security within your practice. Additionally, contributions made by employees not only enhance their retirement readiness but also allow for potential tax deferrals, benefiting both employees and the practice.

Automatic Enrollment: Setting Employees Up for Success

Another notable provision of SECURE 2.0 is the mandatory automatic enrollment requirement for new 401(k) and 403(b) plans established after December 29, 2022. Starting in the 2025 plan year, employers must automatically enroll eligible employees into their retirement plans unless the employee opts out. The initial deferral rate must be at least 3%, increasing annually by 1% until it reaches a minimum of 10%, but no more than 15%.

This automatic enrollment provision is a game-changer for employee participation rates, ensuring that more individuals take proactive steps toward building their retirement savings. For practice owners, it simplifies plan administration and promotes a forward-thinking benefits package that can attract and retain top talent. While automatic enrollment may require some initial setup and communication, it ultimately helps employees achieve financial security with minimal effort on their part.

IRS Mileage Rate for 2025: Plan for Reimbursements

The IRS has announced that the standard mileage rate for 2025 will be 70 cents per mile. This represents an important update for businesses that reimburse employees for work-related travel. Properly tracking and reimbursing mileage at the correct rate not only keeps your practice compliant but also ensures fair compensation for your employees.

Key Takeaways for Practice Owners

These tax updates are more than just regulatory changes; they’re opportunities for your practice to:

  • Support Employee Financial Wellness: The enhanced catch-up contributions and automatic enrollment features ensure employees are set up for long-term success.
  • Boost Recruitment and Retention: Offering robust retirement plans makes your practice more competitive in the job market.
  • Maintain Compliance: Adhering to new rules, like the automatic enrollment mandate, safeguards your practice from potential penalties.
  • Optimize Tax Benefits: Retirement plan contributions, both from employees and employers, come with potential tax advantages that can reduce the overall tax burden.

Stay Ahead with Williams Group

Staying informed and proactive about tax and retirement plan changes is essential for navigating the evolving financial landscape. Whether you’re updating your mileage reimbursement policies or implementing new retirement plan features, working closely with our team can ensure you’re maximizing opportunities for your practice and employees. 

If you’re ready to discuss how these 2025 updates can impact your optometry practice, or if you need guidance on integrating these provisions into your financial strategy, contact Williams Group today. Together, we can build a stronger financial future for your practice and your team.

Stay ahead of your tax planning by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Archie Keebler

Tax Manager
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Ryan Poirier

Certified Public Accountant
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Tax laws are constantly evolving, and as an optometry practice owner, staying informed about potential changes is key to maintaining financial stability. The best tax strategies not only focus on today’s savings but also prepare for tomorrow’s challenges. In this final post of our tax planning series, we’ll explore how upcoming policy shifts could impact your practice and offer tips to keep you ahead of the curve.

Anticipating Policy Changes

The tax landscape is shaped by political, economic, and social factors, which means changes can happen quickly. From adjustments to corporate tax rates to shifts in small business incentives, staying proactive ensures you’re prepared to adapt.

For example, discussions around increasing corporate tax rates or phasing out certain deductions could affect your optometry practice’s profitability. On the other hand, new credits or incentives aimed at supporting small businesses could present valuable opportunities. Partnering with a CPA who tracks these changes can help you navigate them effectively.

Strategies to Stay Ahead

While it’s impossible to predict every change, there are strategies you can implement now to future-proof your optometry practice:

  • Build Financial Resilience: Maintain a cash reserve to help weather any unexpected tax increases or economic challenges.
  • Diversify Income Streams: Consider expanding into services or products that are less impacted by potential tax increases.
  • Stay Flexible: Ensure your practice’s structure allows for quick adjustments, such as changing your tax entity if needed.

Leveraging Professional Expertise

Navigating tax changes doesn’t have to be overwhelming. CPAs and financial advisors can provide insights tailored to your optometry practice. They can help you model the potential impacts of new policies, optimize your current strategies, and identify opportunities to save.

For instance, if new credits become available for hiring or equipment upgrades, a professional can guide you through the application process to maximize your benefits.

Conclusion

The tax landscape is ever-changing, but with the right strategies and a proactive approach, your optometry practice can thrive no matter what lies ahead. By staying informed, building financial resilience, and leveraging professional expertise, you can turn potential challenges into opportunities.

Thank you for joining us on this tax planning journey. If you have questions or would like personalized advice, our team is here to help. Let’s work together to secure a strong financial future for your practice.

For more advanced tax moves, start by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Ryan Poirier

Certified Public Accountant
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Tax planning isn’t just for the end of the year. For optometry practice owners looking to make the most of their financial strategy, advanced moves like capital loss harvesting, inventory management, and strategic contributions can provide ongoing benefits throughout the year. In this post, we’ll explore how to incorporate these powerful tools into your regular tax planning to maximize savings and maintain a healthy bottom line.

Capital Loss Harvesting: Turn Losses Into Gains

Capital loss harvesting isn’t limited to the end of the year. It’s a strategy that can be employed at any time to offset capital gains or even ordinary income.

For example, if you notice that certain investments—stocks, mutual funds, or even cryptocurrency—aren’t performing as expected, selling them can generate a capital loss that reduces your tax liability.

If your losses exceed your capital gains, you can deduct up to $3,000 of the losses against your ordinary income.

Additionally, any unused losses can be carried forward to future tax years, ensuring no opportunity is wasted. To effectively use this strategy, monitor your portfolio regularly and keep an eye on IRS rules, such as the 'wash sale' rule, which requires waiting 31 days before repurchasing the same asset.

Inventory Management: Stay Ahead of the Game

Effective inventory management isn’t just about what you purchase—it’s about ensuring your inventory aligns with your financial and business goals year-round. For optometry practices that hold inventory, such as eyeglass frames, regular reviews can help identify opportunities to optimize stock levels. Buying necessary supplies in advance can help reduce taxable income, but overstocking can tie up cash flow.

If your optometry practice qualifies as a 'small business' under IRS guidelines, you might also be eligible to deduct inventory costs as expenses rather than capitalizing them. This ongoing approach to inventory management keeps your finances flexible and your tax filings efficient.

P.S. Not sure what the magic number is for your store? We can help! Schedule an appointment with one of our experienced consultants who have worked across multiple practices to find the right stock levels for your business. Let’s make sure your inventory strategy works for you.

Retirement Contributions and Financial Planning

Contributing to retirement accounts isn’t just a smart move at tax time—it’s a foundational part of year-round financial planning. Whether you have a 401(k), SIMPLE IRA, or traditional IRA, making regular contributions throughout the year ensures you’re consistently reducing taxable income while building a secure future. For 2025, the 401(k) contribution limit is $23,000, with an additional $7,500 catch-up contribution if you’re 50 or older.

Additionally, consider other ways to smooth out expenses and deductions throughout the year. For example, planning employee bonuses, pre-paying certain expenses, or setting up regular contributions to Health Savings Accounts (HSAs) can all contribute to a well-balanced tax strategy.

Conclusion

Advanced tax strategies like capital loss harvesting, inventory management, and retirement contributions offer year-round opportunities to strengthen your practice’s financial health. By making these tools a regular part of your tax planning, you can maintain flexibility, reduce your tax burden, and keep your practice on a solid financial foundation. In the next and final post, we’ll explore how potential tax policy changes could impact your practice and how to stay ahead. Stay tuned!

For more advanced tax moves, start by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Ryan Poirier

Certified Public Accountant
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As an optometry practice owner, your financial decisions can have a significant impact on your bottom line. One area where you can make smart moves is by employing family members and taking advantage of available tax credits. These strategies not only reduce your tax liability but also provide opportunities to reinvest in your practice and support your loved ones.

Employing Family Members: A Win-Win Strategy

One of the most overlooked tax-saving strategies is employing your family members in your optometry practice. Under current tax laws, you can pay your children or other family members a reasonable wage for legitimate work they perform. This reduces your practice’s taxable income while also shifting income to family members who may be in lower tax brackets.

For example, you could hire your child to assist with tasks like filing, cleaning, or even managing your practice’s social media presence. As long as the wages are reasonable and the work is documented, the payments are deductible as a business expense. Plus, your child can use their standard deduction to avoid paying taxes on the income.

If you pay your child less than $15,000 in 2025, they are not required to file a tax return.

However, if you choose to file one, the income is considered 'earned income,' which makes them eligible to contribute to a Roth IRA. This is where the real power of this strategy comes into play. By contributing the maximum $7,000 annually to a Roth IRA for the next 10 years, your child’s retirement account can benefit from decades of compound growth.

Assuming an average annual growth rate of 7%, those contributions alone could grow to approximately **$1,549,635** by the time your child retires in 50 years. This sets them up for long-term financial independence while also teaching them valuable lessons about saving and investing.

Leveraging Tax Credits: Free Money for Your Practice

Tax credits are one of the most effective ways to reduce your tax liability because they directly reduce the amount of tax you owe, dollar for dollar. Here are two credits that can make a big difference for your optometry practice:

  • Work Opportunity Tax Credit (WOTC): This credit rewards businesses that hire individuals from certain target groups, such as veterans or long-term unemployed individuals. You can receive up to $9,600 per eligible employee, depending on the group.
  • Disabled Access Credit: If you make your optometry practice more accessible to individuals with disabilities, you may qualify for this credit. For instance, installing ramps or modifying restrooms could make you eligible for up to $5,000 in tax credits.

Combining Strategies for Maximum Impact

By employing family members and taking advantage of tax credits, you can create a comprehensive tax strategy that benefits your practice and your family.

For example, you could hire a family member to oversee accessibility improvements in your office, making your practice eligible for both the wage deduction and the Disabled Access Credit.

Conclusion

Employing family members and leveraging tax credits are practical ways to reduce your tax burden while investing in your optometry practice and your loved ones. These strategies require careful documentation and planning, but the rewards are well worth the effort. In the next post, we’ll explore advanced tax moves, including capital loss strategies and inventory deductions, to help you save even more. Stay tuned!

Maximize your tax savings by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Ryan Poirier

Certified Public Accountant
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Taxes fund everything, but when you run a practice, understanding how to minimize them legally and effectively is crucial. Two often-overlooked strategies—the Augusta Rule and the Home Office Deduction—offer unique opportunities to reduce your tax burden while leveraging your existing assets.

The Augusta Rule: Turn Your Home Into a Business Asset

The Augusta Rule (Section 280A(g) of the tax code) allows you to rent your home for up to 14 days per year, tax-free. For practice owners, this is an excellent way to reduce your taxable income while keeping more for yourself.

For example, you could rent your home to your practice for management or board meetings at a reasonable market rate. If you charge $1,000 per meeting and host 14 meetings a year, that’s $14,000 in tax-free income for you while providing a tax deduction for your practice. Documentation is essential: keep invoices, ensure the rate matches local meeting space costs, and record the purpose of each meeting.

The Home Office Deduction: Deduct a Portion of Your Home Expenses

If you use a dedicated space in your home exclusively for business purposes, you may qualify for the home office deduction (Section 280A(c)). This allows you to deduct a portion of your home expenses, including utilities, internet, property taxes, and more, proportional to your office size.

Additionally, a home office turns your commute into a business expense. Instead of non-deductible personal mileage, trips between your home office and practice become tax-deductible. With proper documentation of your office space and expenses, this strategy can save you thousands each year.

Maximize Savings by Combining These Strategies

By using the Augusta Rule and the home office deduction together, you can maximize your savings. For example, host quarterly meetings at your home while using a designated office space for administrative tasks. Together, these strategies can significantly reduce your tax bill.

Conclusion

These strategies exemplify how proactive tax planning can create meaningful savings for your practice. Talk to your CPA about how you can implement these tools to benefit your bottom line. Next up, we’ll explore how employing family members and leveraging additional tax credits can offer even more opportunities for savings. Stay tuned!

Ready to put the Augusta Rule to work for your practice?

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Master your tax savings by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Ryan Poirier

Certified Public Accountant
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"Taxes are what fund everything." That’s a direct quote I often share when discussing the importance of understanding Title 26—the tax code. It’s what keeps our country running. For optometrists, mastering the tax code isn’t just about compliance; it’s about making your practice more efficient and profitable.

In this post, I’ll walk you through some foundational tax strategies that are highly beneficial for practice owners. From leveraging key deductions to planning proactively, these steps can significantly impact your bottom line.

Why Tax Planning Matters for Optometrists

Tax planning isn’t just something you do in April—it’s a year-round activity. As a practice owner, you’re responsible for both your patients and your business, and taxes are one of the biggest expenses you’ll manage. Getting your tax strategy right means you’ll keep more of what you earn, giving you the flexibility to invest in your team, equipment, or even yourself.

Let’s talk about why this matters. Title 26 of the U.S. Code—our tax law—is one of the most important pieces of legislation because it funds everything. Without it, there’s no Homeland Security, no Department of Justice, no Health and Human Services. As small business owners, you’re directly contributing to this system, but the good news is that the code also provides opportunities to reduce your tax burden if you understand how to use it.

Key Tax Deductions for Practice Owners

The tax code is designed to encourage investments in your business, and there are several provisions you can take advantage of as an optometrist.

  1. Bonus Depreciation:
    This one’s big. With bonus depreciation, you can deduct the bulk (60% in 2024) of the cost of equipment—new or used—in the year you purchase it. That means whether you’re buying diagnostic tools or office furniture, you can immediately write off most of the expense instead of spreading it over several years. This deduction was a game changer for many of our clients back in 2018 when it came into play under the Tax Cuts and Jobs Act.
  2. Qualified Business Income Deduction (QBI):
    This deduction allows a 20% reduction on your pass-through income. Let’s say you make $100,000 in pass-through income from your practice. Before 2018, you’d pay taxes on the full $100,000. With the QBI deduction, you’re only taxed on $80,000. That’s a significant savings for practice owners operating as S Corporations or Partnerships.
  3. Standard Deduction Changes:
    The Tax Cuts and Jobs Act also nearly doubled the standard deduction, which has simplified things for many taxpayers. For example, the standard deduction for single filers is now $14,600, and for married couples, it’s $29,200. This change means fewer people need to itemize deductions, but it also requires careful planning to maximize your tax benefits.

The Role of Proactive Planning

Here’s the thing: waiting until tax season is too late. Tax planning is about looking ahead and making decisions now that will benefit you later.

  • Track Everything: Keep detailed financial records throughout the year. It makes life easier for you and your CPA.
  • Talk to Your Tax Pro: Schedule regular check-ins with your tax advisor to ensure you’re staying on top of opportunities.
  • Plan Ahead: Whether it’s buying equipment, contributing to a retirement account, or considering a home office deduction, proactive planning can save you thousands of dollars.

Conclusion

At the end of the day, tax planning is about making sure your hard work pays off—literally. By understanding and leveraging foundational strategies like bonus depreciation, the QBI deduction, and proactive planning, you can ensure you’re keeping more of your money to invest back into your practice.

Taxes don’t have to be overwhelming. With the right strategies and a solid understanding of the law, you can take control of your financial future. In the next post, we’ll explore more advanced strategies like the Augusta Rule and home office deductions—two areas where practice owners can find significant savings. Stay tuned!

Master your tax planning by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Ryan Poirier

Certified Public Accountant
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In the complex world of tax planning, finding ways to optimize your financial situation can be a game-changer. For optometrists working in clinics, one powerful strategy to consider is salary reduction. While it may seem counterintuitive to voluntarily reduce your income, there are several compelling benefits to doing so. In this blog post, we'll delve into the advantages of opting for a salary reduction in a clinic setting and explore how it can positively impact your overall financial health.

  1. Reduce Social Security and Medicare Tax

For many optometrists, a significant portion of their income is subjected to Social Security and Medicare taxes. These payroll taxes can take a sizable bite out of your earnings. However, by choosing to take a lower salary, you can reduce the amount of income subject to these taxes. This means that not only will you keep more of your hard-earned money, but you'll also see a reduction in your tax liability.

  1. Increase Qualified Business Income (QBI)

One of the most compelling reasons to consider a salary reduction is the potential increase in Qualified Business Income (QBI). QBI is a key factor in determining the deduction you can claim on your tax return, thanks to the Qualified Business Income Deduction (QBI Deduction), which was introduced with the Tax Cuts and Jobs Act.

By lowering your salary, you can increase the portion of your income classified as QBI, which, in turn, can lead to a larger deduction on your tax return. 

  1. Simplify Tax Payments

Quarterly estimate payments can be a headache for many optometrists. Keeping track of when and how much to pay can be a daunting task. However, with a salary reduction strategy in place, you may find that you can increase your federal and state (if applicable) withholdings. This means that more taxes are withheld from your paychecks throughout the year, reducing or even eliminating the need for quarterly estimate payments.

This shift towards a recurring payment of taxes can provide financial stability and peace of mind. Instead of scrambling to make four large payments throughout the year, you can budget more effectively with consistent, smaller withholdings.

  1. Recurring Owner Distributions

Now, you might be wondering how to manage your finances with a reduced take-home pay. The answer lies in the strategic use of recurring owner distributions. These distributions are generally non-taxable and can be used to replace the reduced income from your salary. By carefully planning these distributions, you can ensure that your living expenses are covered, all while reaping the tax benefits mentioned earlier.

In essence, opting for a salary reduction doesn't mean a reduction in your overall income; it means a smarter distribution of your earnings, allowing you to maximize tax benefits and simplify your financial life.

As an optometrist working in a practice, the benefits of taking a salary reduction can be substantial. From reducing your tax liability through QBI optimization to simplifying your tax payments and ensuring a steady flow of income through owner distributions, this strategy can significantly enhance your financial well-being. It's essential to work closely with a qualified tax advisor or financial planner to implement these strategies effectively and in compliance with tax laws. By doing so, you can make the most of your clinic ownership and enjoy the financial rewards that come with it.

Maximize your benefits by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Archie Keebler

Tax Manager
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Tax laws can be complex, but understanding the nuances can make a significant difference in your financial strategy. One such provision that can benefit homeowners is Section 280A(g), commonly known as the Augusta Rule. This rule provides an opportunity for individuals to exclude rental income if their property is rented out for less than 15 days in a year. In this blog post, we'll delve into the details of the Augusta Rule, explore its requirements, and offer some practical recommendations for homeowners looking to take advantage of this provision.

Section 280A(g) in a Nutshell: 

The Augusta Rule, outlined in Section 280A(g) of the Internal Revenue Code, offers homeowners the ability to exclude rental income from their taxable earnings under specific conditions. Here are the key details:

  1. Primary Use Must Be Personal: To qualify for the Augusta Rule, the property's primary use must be personal. This includes primary residences, secondary homes, and vacation homes. In other words, it's not applicable to properties used exclusively for rental purposes.
  2. Expenses Are Not Deductible: While you can exclude rental income, it's important to note that expenses related to these rentals are not deductible. This means you won't be able to deduct costs like maintenance, repairs, or utilities for the period the property is rented under the Augusta Rule.
  3. Non-Consecutive 14 Days: The 14 rental days do not need to be consecutive. This flexibility allows homeowners to take advantage of sporadic rental opportunities without losing the tax benefits provided by the rule.
  4. Reasonable Rental Price: The rental price must be reasonable. While this might seem subjective, it's crucial to ensure that the rent charged is consistent with market rates. 

Tax Planning Opportunity for Business Owners:

Have you ever explored the option of utilizing your home for corporate meetings or office parties? If so, you could potentially leverage the Augusta Rule, allowing your business to compensate you for the business use of your home. As noted earlier, this income can be excluded on a personal level.

Practical Recommendations:

If you're considering utilizing the Augusta Rule to exclude rental income, here are some practical recommendations:

  1. Market Research: Before setting a rental price, conduct thorough research to determine what constitutes a reasonable cost in your area. Check prices for similar properties on rental websites, inquire about rates for hotel conference rooms, and explore other potential sources to establish a competitive rental price.
  2. Document Everything: Keep meticulous records of your rental arrangements. Document the pricing agreed upon, the formal agreement to rent the residence, and minutes of any meetings or discussions related to the rental. These records will be crucial in case of any inquiries or audits.
  3. Involve Relevant Parties: If multiple individuals are involved in making decisions related to the business, be sure to include them in any meetings at the residence. This transparency ensures that all stakeholders are aware of and agree to the rental arrangements.

The Augusta Rule, found in Section 280A(g), provides a valuable opportunity for homeowners to exclude rental income from their taxable earnings when certain conditions are met. By understanding the rule's requirements and following practical recommendations, homeowners can navigate the complexities of tax law and make the most of this tax-saving provision. Always consult with a tax professional or advisor to ensure you are taking full advantage of available tax benefits while staying in compliance with tax regulations. 

Get help understsanding the Agusta rule by scheduleing a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Archie Keebler

Tax Manager

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