Be accountable: Hire a C.P.A.

Optometric Management,  May 2000  by Christensen, Bobby

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In this regular feature, a leading practice management and clinical expert offers advice on using strategies, mentors and new experiences to strengthen and grow your practice.

See how an accountant can help you to increase your profits, plan for your future and much more.

We leave school knowing how to practice optometry, but we have to figure out by the "seat of the pants" how to run a business. My partners and I started out "practicing" how to run our business, but we realized it was better to seek professional help.

For more than 20 years now, our accountant, Galen Taylor, C.P.A., has specialized in helping optometric practices with accounting services and business planning, plus tax planning and preparation.

Using an accountant who understands optometry and has the database to compare our practice with others gave us a head start, to say the least.

No tax surprises

Planning for next year's taxes is an ongoing task for small business owners. Each state has its own set of tax rules that change almost on a yearly basis. The federal tax system also morphs itself every year. Professional advice throughout the year can help you develop a sound plan and avoid end-of-year tax surprises.

Galen sends us graphs and statistics after every tax season comparing our practice to others for which he provides tax preparations. These comparisons are anonymous. They include such things as cost of goods, staff salaries, overhead, rent and practice net. Divisions are established based on practice size to give us an idea of how our practice compares to other practices in the same range of gross income.

These comparisons allow us to establish practice trends and alert us to problem areas that need attention. Then we can make early course corrections.

A few years ago, we noted that our frame costs were higher than others in our same practice size group. We investigated and realized that our inventory was grossly overstocked. We elected to reduce inventory, change staff buying habits and join a network allowing better frame discounts. Frame costs were reduced and our net improved.

Financial planning

Structuring staff benefit packages while weighing tax consequences can save you and your staff income tax while providing some very valuable benefits. Benefits can include uniform allowances and medical expenses.

Planning for retirement should start when you begin your practice. Often, other expenses and goals push the funding of your retirement down the list of priorities.

Your C.PA. can help you get started. He can plan a budget that might include debt reduction, in addition to saving a portion of your monthly income in a retirement vehicle such as an IRA, SEP or retirement trust. Most optometric physicians don't have the time to become experts on which type of retirement plan will best fit their circumstances. Let an expert help.

Planning a new building or home? Plans, designs and permits distract your attention from financial obligations. Don't forget: Financial planning is needed before you start. What tax breaks are available? Which method of financing will save the most interest and loan fees? Are tax credits available for special disability access? How much will your overhead increase, and can you manage expenses if the patient load doesn't increase?

Making projections regarding these scenarios and others may mean the difference between success and failure, especially in an economic downturn.

Well equipped

Galen has helped us realize the optimum tax advantages when buying equipment. Tax credits and full deductions at the corporation level can save you money.

Other equipment can be purchased by a leasing company (owned by you or your family members), which leases the equipment to the professional corporation. This allows the depreciation to be taken at a personal level. Family members who have a lower tax rate can own the leasing company.

Equipment leasing helps reduce the tangible assets of the practice, potentially allowing an easier sale of the practice to a new practitioner.

Your family-- or the I.R.S?

Hard work, sound investing and a healthy practice can often help us realize our dreams of a substantial estate.

An estate attorney and your C.P.A. can help you plan for a transfer of wealth with less tax incidence when you die. Tax incidence can be greater than 50%. Now, who would you rather see get your money - your church and family or the I.R.S.?

My bank statement reveals that the I.R.S. has just cashed my check for 1999.

Galen's office is calling. I guess it's time to plan for Uncle Sam's take in 2000. OM

Copyright Boucher Communications, Inc. May 2000
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