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September has a funny way of sneaking up on practice owners.

One minute you’re setting goals for the year. The next, back-to-school exams are filling the schedule, fall frame lines are arriving, and somehow we’re already talking about Q3 estimated taxes.

For many optometry practice owners, the next federal estimated tax payment is due September 15.

But before you make the payment and move on with your day, there’s a question worth asking:

Does the tax plan you started 2026 with still match the year you’re actually having?

Because a lot can happen inside an optometry practice in eight months.

And sometimes, that’s very good news.

Maybe 2026 Has Been Better Than You Expected

Think back to January.

What did you expect this year to look like?

Now compare that with what’s actually happened.

Maybe your schedule has been consistently full. Your optical is having a great year. You added specialty services that are gaining traction. Your associate is producing more than expected. Or perhaps you simply had a few really strong months.

That’s worth celebrating.

It’s also worth telling your CPA.

An S corporation generally doesn’t pay federal income tax on its operating profit at the corporate level. Instead, that income typically passes through to the shareholders and is reported on their individual tax returns.

In plain English? If your practice makes more money than expected, your personal tax picture may change too.

And here’s the part that’s easy to miss: the amount sitting in your personal bank account isn’t necessarily the number that determines your taxable share of S-corp income.

You could leave cash inside the practice and still have taxable pass-through income.

That’s one reason we don’t want practice owners trying to judge their tax situation by their bank balance alone.

Or Maybe You Spent More Than You Planned

A higher tax bill isn’t the only reason to revisit your projections.

Maybe this was the year you finally replaced that OCT.

Or added an Optos.

Or invested in dry-eye technology.

Maybe you remodeled the optical, hired another staff member, brought on an associate OD, increased your marketing, or opened another location.

Those decisions changed the financial picture of your practice.

Some may have tax implications. Some may primarily affect your cash flow. And some may do both.

That’s where having current books becomes incredibly important.

If you’re trying to make September tax decisions using financials that haven’t been updated since April, you’re essentially trying to drive while looking in the rearview mirror.

Current numbers give your CPA something useful to plan with.

Then There’s the Money You’re Paying Yourself

This is where S-corp taxes can start sounding unnecessarily complicated, so let’s keep it simple.

As an S-corp owner working in your practice, you may receive money in more than one way.

You probably receive a paycheck.

You may also take shareholder distributions.

Those two things aren’t treated exactly the same for tax purposes. And the IRS requires shareholder-employees to receive reasonable compensation for the work they perform before taking non-wage distributions.

But you don’t need to become an S-corp tax expert. That’s our job.

What you should know is whether something has changed.

  • Did you increase your salary?
  • Have you taken significantly more distributions than you expected?
  • Did your practice become much more profitable?
  • Did you reduce your clinical schedule?
  • Did your role inside the practice change?

Those are exactly the kinds of things your CPA should know about.

“But I’m Already Paying Taxes Through Payroll.”

Good. That’s another piece of the puzzle.

If you’re receiving W-2 wages from your practice, you’re likely already paying some federal and state income tax through payroll withholding.

Then you may also be making quarterly estimated payments.

Your spouse may have taxes withheld from their paycheck.

You could have investment income or income from another business.

It all comes together when determining whether you’re on track. That’s why we don’t recommend looking at your September estimated payment in isolation.

The better question isn’t: “What did I pay last quarter?”

It’s: “Based on everything that’s happened this year, am I still on track?”

That’s a much more useful conversation.

You may hear your CPA talk about something called a safe harbor.

Despite the tax jargon, the concept is pretty straightforward.

The IRS generally expects taxpayers to pay enough tax throughout the year rather than waiting until they file their return. Safe-harbor rules provide thresholds that can help taxpayers avoid an estimated-tax underpayment penalty.

Here’s the important part for a practice owner:

Avoiding a penalty doesn’t necessarily mean you won’t owe money at tax time.

You could satisfy a safe-harbor requirement and still have a balance due with your return if your income increased significantly.

So when Williams Group looks at tax planning, the goal isn’t simply to check the minimum box required to avoid a penalty.

We want you to understand what’s coming.

A $30,000 tax bill feels very different when you’ve been planning for it than when you discover it in April.

Think About What’s Happened Outside the Practice, Too

Your optometry practice may be your biggest source of income, but it isn’t necessarily the only thing affecting your taxes.

Maybe you sold an investment.

Your spouse changed jobs.

You bought or sold real estate.

You started receiving additional income.

You made a large retirement contribution.

You bought another practice.

You sold part of one.

You added a partner.

You had another significant financial change that your CPA doesn’t know about yet.

There’s a simple rule here:

If you’re wondering, “Does my CPA need to know about this?” — the answer is YES!

We would much rather hear about something early and determine that it doesn’t materially affect your plan than learn about it after the year has ended.

So, Should You Change Your September Payment?

Maybe.

Maybe not.

And that’s actually the point.

Don’t increase it just because you had a good summer. Don’t decrease it just because you bought a piece of equipment. And don’t automatically send the exact same amount you paid in June simply because that’s what’s printed on a voucher.

Your estimated payment is part of a larger tax plan. If your year is tracking pretty closely with the assumptions used to build that plan, there may be nothing to change.

But if you read this article and thought:

Actually, our revenue is quite a bit higher.

We did buy a lot of equipment this year.

I’ve taken more distributions than I expected.

We hired another OD.

My spouse’s income changed.

I haven’t talked to my CPA about any of this.

That’s your cue. Not to panic.

To have a conversation.

September Gives You Something April Doesn’t: Time

That’s what we like about this point in the year.

There’s enough of 2026 behind you to have real numbers instead of projections.

And there’s enough of 2026 ahead of you to still make thoughtful decisions.

Maybe everything is exactly on track. Great.

Maybe your estimates need to change.

Maybe there’s a planning opportunity you haven’t considered yet.

Or maybe you simply need someone to look at the bigger picture and tell you where you stand.

That’s what proactive tax planning is supposed to feel like.

Not scrambling in April. Not being surprised by a number after the year is already over. And definitely not trying to become a tax expert yourself.

Your job is to run your practice. Our job is to help you understand what the financial decisions you’re making today could mean at tax time.

If your practice, or your life, looks different today than it did when your 2026 tax estimates were calculated, now is a good time to talk.

Schedule time with Patrick McReynolds to discuss your 2026 tax planning and make sure your strategy still fits the year you’re actually having.

Patrick McReynolds

Operations Manager

Email Patrick

 

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Optometry practices purchasing new equipment often focus on clinical capabilities and efficiency. However, equipment that improves access for patients with disabilities may provide an additional benefit: eligibility for the federal Disabled Access Credit, commonly called the ADA tax credit.

How the Credit Works

The credit generally equals 50% of qualifying accessibility expenditures exceeding $250, with a maximum annual credit of $5,000.

For example, if a practice incurs $10,250 of qualifying expenditures, it may be eligible for the maximum $5,000 credit. The credit may be available each year the practice incurs qualifying expenses. 

Could Medical Equipment Qualify?

Qualifying expenditures can include the cost of acquiring or modifying equipment or devices for individuals with disabilities. In an optometry practice, potential examples may include:

  • Handheld or headset-based diagnostic equipment that can be used when a patient cannot transfer into a traditional examination chair;
  • Portable visual-field or other diagnostic equipment that allows testing while a patient remains in a wheelchair;
  • Equipment installed on an adjustable or wheelchair-accessible table; and
  • Modifications to existing equipment that make it accessible to patients with physical disabilities.

The key consideration is whether the expenditure was reasonable and necessary to provide access to individuals with disabilities. Equipment does not automatically qualify simply because it is portable, handheld, or mounted on an adjustable table. The practice should be able to demonstrate that the equipment or modification was selected to remove an accessibility barrier or accommodate patients with disabilities.

Depending on the circumstances, the qualifying expenditure could be the entire cost of the equipment, the accessibility-related component of the equipment, or only the cost of modifying an otherwise standard piece of equipment.

 Documentation is Important

Practices considering the credit should retain:

  • The equipment invoice and proof of payment;
  • Product specifications describing the accessibility features;
  • Documentation showing how the equipment accommodates patients with disabilities;
  • A breakdown of accessibility-related costs, when available; and
  • Notes regarding the accessibility limitation the purchase was intended to address.

Before Making a Purchase

Please contact our tax team if you are purchasing equipment designed to improve accessibility. We can help evaluate whether the expenditure may qualify and identify the documentation that should be retained.

A few important considerations include:

  • The credit is subject to small-business eligibility requirements;
  • Qualification depends on the specific equipment, its intended use, and the applicable accessibility requirements;
  • The credit is claimed on Form 8826 and is subject to the general business credit limitations; and
  • Claiming the credit may affect the amount that can otherwise be deducted or depreciated.

Improving accessibility can expand the number of patients a practice can serve while making care more comfortable and inclusive. When those improvements qualify for the Disabled Access Credit, the resulting tax savings may also help offset a portion of the investment.

This information is intended for general educational purposes. Please contact our tax team to evaluate how these rules apply to a specific purchase.

Sources: IRS Form 8826 and instructions and IRS guidance on accessibility tax benefits.

A better patient experience could come with a tax benefit, too.

If you’re considering equipment that will make exams or testing more accessible for patients with disabilities, talk with the Williams Group tax team before you buy. We can help you understand whether the purchase may qualify for the Disabled Access Credit and what you should document from the start.

Schedule time to discuss whether your purchase may qualify.

Archie Keebler

Tax Manager
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Most optometry practice owners did not enter the profession because they were passionate about reconciling bank accounts or categorizing expenses. 

Your attention is naturally focused on patient care, employees, scheduling, billing, inventory, and the daily demands of running a practice. Bookkeeping can feel like something that only matters at tax time—especially when collections are strong and there is enough money in the bank to cover expenses. 

But the numbers in your accounting system affect far more than your tax return. 

Clean books can help you claim legitimate deductions, avoid costly surprises, identify unnecessary expenses, manage cash flow, secure financing, and increase confidence in the value of your practice. Disorganized books can quietly cost you money year after year. 

 

What Does It Mean to Have “Clean Books”? 

Clean books are complete, accurate, current, and organized. 

That generally means: 

  • Business and personal transactions are kept separate 
  • Accounts are reconciled regularly 
  • Income and expenses are categorized correctly 
  • Payroll, loan, and owner balances are accurate 
  • Significant financial records are organized and accessible 
  • Financial reports reflect what is actually happening in the practice 

The goal is not simply to make the accounting software look tidy. The goal is to produce financial information that can be trusted. 

The IRS allows businesses to use a recordkeeping system that suits their needs, but the system must clearly show income and expenses. Good records also help owners monitor the business, prepare financial statements, track deductible expenses, and prepare tax returns. 

 

1. Clean Books Help You Capture Legitimate Deductions 

A deductible expense cannot help reduce your taxable income if it is forgotten or miscategorized. 

An optometry practice may incur expenses for: 

  • Clinical and office supplies 
  • Equipment and software 
  • Continuing education and professional dues 
  • Marketing 
  • Payroll and employee benefits 
  • Rent, utilities, and insurance 
  • Professional services 
  • Business travel and financing costs 
  • And more 

When expenses are recorded consistently and categorized correctly, your tax advisor has a clearer picture of what the practice may be able to deduct. 

Supporting records are particularly important for significant transactions such as large asset purchases, new loans, and asset sales. That does not mean every routine invoice or receipt needs to be attached directly to its corresponding transaction in your bookkeeping software. The important thing is to maintain organized records that can be located when needed. 

Business owners are responsible for maintaining appropriate records to support the income, expenses, deductions, and credits reported on their tax returns. 

Consider a practice credit card with dozens of transactions categorized as “miscellaneous.” Some may be deductible software fees, equipment purchases, staff training costs, or advertising expenses. Others may be personal transactions. 

Without clear descriptions and consistent categorization, your accountant may need to spend additional time researching transactions or take a more conservative approach when an expense cannot be adequately identified. 

Clean books make it easier to identify legitimate deductions without improperly treating personal expenses as business expenses. 

 

2. Clean Books Reduce Expensive Tax Surprises 

A large bank balance does not necessarily mean the practice has a large amount of spendable cash. 

Some of that money may already be needed for payroll taxes, loan payments, vendor invoices, retirement contributions, upcoming payroll, insurance renewals, or owner income taxes. 

If the books are several months behind, an owner may not know how much profit the practice has earned or how much should be reserved for taxes. That uncertainty can create an unpleasant surprise when quarterly estimates or annual tax returns are prepared. 

Current books allow your tax advisor to base tax planning on actual year-to-date performance rather than outdated reports or rough estimates. 

This becomes especially important when the practice experiences a major change, such as hiring an associate, purchasing equipment, paying off debt, adding a location, or experiencing significant growth. 

When your financial records reflect those changes promptly, you have more time to prepare for their financial and tax impact. 

 

3. Clean Books Reveal Where Money Is Leaking 

Not every financial problem is dramatic. 

Practices often lose money through small, recurring expenses that receive little attention, including: 

  • Duplicate or unused subscriptions 
  • Automatic renewals 
  • Excessive processing or late fees 
  • Increasing laboratory costs 
  • Unprofitable vendor arrangements 
  • Incorrect payroll deductions 
  • Insurance payments posted incorrectly 

A single unnecessary expense may not seem significant. But several small leaks repeated every month can meaningfully reduce annual profit. 

Clean books allow expenses to be compared across months and years. An unusual increase becomes easier to spot when transactions are categorized consistently. 

For example, suppose optical laboratory costs increase while optical collections remain relatively flat. That may be a signal to investigate vendor pricing, remake rates, product mix, staff discounts, or collection procedures. 

The accounting system will not tell you the entire story. It will tell you where to start asking questions. 

 

4. Clean Books Help You Understand Whether the Practice Is Truly Profitable 

Revenue and profit are not the same. 

A practice may produce strong collections while struggling to generate enough profit for the owner. Growing revenue can even conceal growing expenses. 

Reliable financial reports can help an owner determine whether: 

  • Payroll is growing faster than collections 
  • Services are producing adequate margins 
  • Marketing investments are paying off 
  • The practice can afford additional staff or equipment 
  • Owner compensation is sustainable 

An income statement shows the practice’s income and expenses over a period of time. A balance sheet shows its assets, liabilities, and equity at a particular point in time. Both depend on accurate underlying records. 

Clean reports allow owners to move beyond one basic question—“How much is in the bank?”—and ask better questions about profitability, efficiency, spending, and future decisions. 

 

5. Clean Books Make Budgeting More Useful 

A budget built from inaccurate historical numbers is simply an organized guess. 

Reliable bookkeeping gives you a realistic starting point for planning expenses such as staff compensation, rent increases, equipment replacements, technology upgrades, marketing, insurance, and loan payments. 

It can also help you anticipate seasonal changes. 

If collections typically slow during certain months, the practice can build a larger reserve beforehand. If annual expenses tend to cluster in one quarter, those costs can be planned for rather than unexpectedly placed on a credit card or line of credit. 

Clean historical data cannot guarantee that a forecast will be correct, but it makes the forecast far more useful. 

 

6. Clean Books Can Reduce Accounting and Cleanup Costs 

Professional accounting services cost money, but disorganized accounting can cost more. 

When records are incomplete, your accountant or bookkeeper may need to spend additional time: 

  • Researching unidentified transactions 
  • Separating personal and business expenses 
  • Reconciling old accounts 
  • Correcting payroll, loan, or prior-period errors 
  • Requesting additional information from the owner 

The cost is not limited to professional fees. 

The owner and staff may also lose hours searching through emails, paper files, online accounts, and old records. That is time that could have been spent seeing patients, training employees, improving collections, or planning for growth. 

Keeping the books current is usually easier than reconstructing an entire year shortly before a tax deadline. 

 

7. Clean Books Help Protect You During an IRS Examination 

Good bookkeeping does not guarantee that a tax return will never be examined. It does make it easier to respond if the IRS requests information. 

Business owners are responsible for substantiating certain expenses, deductions, and other amounts reported on their tax returns. Depending on the transaction, relevant records may include receipts, invoices, bills, account statements, contracts, canceled checks, or other documentation. 

This does not mean every routine receipt or invoice must be attached to a transaction within your bookkeeping software. The goal is to maintain appropriate records and make sure important documentation can be located when needed. 

When the books are organized, your tax advisor can trace reported amounts back to the practice’s financial activity more efficiently. 

Clean books create a financial trail that helps show that the numbers reported on the tax return came from actual business activity rather than estimates made at the end of the year. 

 

8. Clean Books Improve Your Ability to Borrow Money 

An optometry practice may need financing to purchase a practice or building, add an exam lane, buy diagnostic equipment, renovate the office, refinance debt, or fund expansion. 

Lenders want to understand whether the practice can repay that debt. Their evaluation may include tax returns, income statements, balance sheets, cash-flow information, and other financial records. 

If your books are several months behind—or if your financial statements do not match other records—you may face delays, additional questions, or difficulty demonstrating the practice’s financial strength. 

Clean books will not turn an unprofitable practice into a strong loan applicant. They allow a financially healthy practice to demonstrate its strength more clearly. 

 

9. Clean Books Can Support a Stronger Practice Valuation 

A buyer is not purchasing your collections alone. 

The buyer is evaluating the future economic benefit of owning the practice. To do that, the buyer and their advisors need to understand the practice’s revenue, expenses, cash flow, assets, debts, and owner-related adjustments. 

Disorganized books create uncertainty. 

A prospective buyer may question whether expenses are complete, liabilities are missing, reported profit can be verified, or internal financial reports match the practice’s tax returns. 

Uncertainty creates risk. Buyers, lenders, and advisors may respond by asking more questions, extending due diligence, reducing their valuation, or becoming hesitant about the transaction. 

A practice owner who plans to sell “someday” should not wait until the year before retirement to clean up the books. 

Several years of consistent, credible financial records can make it easier to demonstrate trends, explain unusual expenses, support adjustments, and show the true earning capacity of the practice. 

 

10. Clean Books Help Future Owners Make Safer Buying Decisions 

Clean bookkeeping is just as important for someone preparing to purchase an optometry practice. 

A future owner should not rely solely on the seller’s reported revenue or asking price. The buyer needs to understand the practice’s operating expenses, employee compensation, debt, owner compensation, recurring costs, and actual cash flow. 

Accurate books make it easier to determine whether the practice can support the acquisition loan, provide the buyer with a reasonable income, and fund necessary improvements. 

Messy books do not always mean the practice is a bad investment. They do mean the buyer may need more extensive due diligence before relying on the reported financial performance. 

 

Warning Signs That Your Books Need Attention 

Your bookkeeping may need attention if: 

  • Accounts have not been reconciled in several months 
  • Loan or payroll balances do not match outside records 
  • There is a large “miscellaneous expense” category 
  • Personal purchases regularly appear in business accounts 
  • Equipment or owner transactions are categorized incorrectly 
  • The practice cannot produce current financial statements 
  • Financial reports change significantly after tax preparation 
  • The owner does not understand what the reports are showing 

These issues do not necessarily indicate misconduct or financial distress. They indicate that the reports may not be reliable enough for decision-making. 

 

How to Keep Your Practice’s Books Clean 

Good bookkeeping does not require the owner to personally enter every transaction. It requires a consistent process. 

 

  • Separate Business and Personal Finances: Use dedicated business bank and credit card accounts. Personal expenses should not routinely be paid through the practice. Separating the accounts reduces confusion, makes reconciliation easier, and creates a clearer record of business activity.
  • Reconcile Accounts Monthly: Bank accounts, credit cards, loans, and payment-processing accounts should be compared with outside statements regularly. Reconciliation helps identify missing, duplicated, or incorrectly recorded transactions. 
  • Use Meaningful Categories: Your chart of accounts should reflect how an optometry practice operates. Expenses should be categorized with enough detail to support tax preparation and management decisions without creating hundreds of categories that no one can use consistently. 
  • Keep Important Supporting Records Organized: Maintain organized records for significant transactions such as large asset purchases, new loans, asset sales, and other financial events where additional documentation may be important. This does not require attaching every invoice or receipt to every transaction in your bookkeeping software. Instead, establish a system that makes important records easy to locate when needed. 
  • Review Financial Reports Regularly: Review the income statement, balance sheet, and other important reports throughout the year—not only when your accountant requests them. Ask questions when something appears unusual. 
  • Close the Books Promptly: Create a monthly close process with clear responsibilities and deadlines. This may include reconciling accounts, reviewing uncategorized transactions, confirming payroll and loan balances, and preparing financial reports. 
  • Work With Professionals Who Understand Practice Operations: Healthcare practices have financial issues that may not appear in every small business, including insurance receivables, optical inventory, associate compensation, clinical equipment, owner-doctor production, and medical billing. A professional who understands optometry is better positioned to recognize when the numbers do not align with the way the practice actually operates. 

 

The Bottom Line 

Clean books do not directly create revenue. They help you keep more of the money your practice earns. 

Accurate financial records can help you capture legitimate deductions, prepare for taxes, control expenses, manage cash flow, reduce cleanup costs, secure financing, make stronger decisions, and prepare for a future transition. 

They also give you something every practice owner needs: confidence. 

You should be able to look at your financial reports and understand whether the practice is improving, where the money is going, and what decisions you can afford to make next. 

Your books should not simply satisfy a filing requirement. They should help you run a stronger, more profitable, and more valuable optometry practice. 

This article is intended for general educational purposes and does not constitute tax, accounting, legal, or financial advice. Consult qualified professionals regarding your practice’s specific circumstances. 

 

 

 

Get optometry-specific support to keep your books clean and your practice finances on track by scheduling a call with Patrick McReynolds or learn more about our tax and accounting services, specific for ODs, on our website.

Patrick McReynolds

Operations Manager

Email Patrick

 

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As an optometry practice owner, you may have heard that electing to be taxed as an S corporation can reduce your taxes. You may even have been told that every successful practice owner should make the election. 

The reality is more nuanced. 

 

An S corporation can provide meaningful tax advantages for the right practice. However, it also creates payroll requirements, additional tax filings, recordkeeping responsibilities, and rules governing how the owner is paid. Whether it makes sense depends less on the practice’s revenue and more on its profitability, the owner’s role, and the amount of income remaining after paying the owner a reasonable salary. 

 

Before making the election, practice owners should understand both the potential savings and the added responsibilities. 

 

What Is an S Corporation?

An S corporation is a federal tax classification. It is not a new type of business entity. 

A corporation—or an eligible limited liability company—can elect to be taxed as an S corporation by filing Form 2553 with the IRS. To qualify, the business must meet several requirements, including being a domestic corporation, having no more than 100 shareholders, having only allowable shareholders, and having only one class of stock. All shareholders must consent to the election. 

 

S corporations generally do not pay federal income tax at the corporate level. Instead, the practice’s income, losses, deductions, and credits pass through to the shareholders and are reported on their owner’s individual tax returns. 

 

This pass-through treatment is one reason S corporations are popular among privately owned healthcare practices. 

 

Why Do Optometry Practice Owners Consider an S Corporation?

The primary potential advantage is the way an owner’s compensation can be divided between wages and shareholder distributions and the related self-employment tax savings. 

 

An optometrist who works in an S corporation is generally both a shareholder and an employee. The practice pays the owner a W-2 salary for the work the owner performs. That salary is subject to applicable payroll taxes. 

 

If the practice earns more than the owner’s reasonable compensation and its other expenses, some of the remaining profit may be paid to the owner as a shareholder distribution. Non-wage distributions are not subject to employment taxes, although the underlying pass-through income remains subject to federal and potentially state income taxes. 

 

Consider a simplified example: 

An optometry practice earns $250,000 before paying its owner. After evaluating the owner’s clinical duties, administrative responsibilities, experience, location, and other relevant factors, the practice pays the owner a $160,000 salary. 

 

The remaining $90,000 is treated as pass-through business income and distributed to the owner rather than being paid entirely as wages. 

 

The potential savings come from the difference in employment-tax treatment. The remaining income does not become tax-free. 

 

This example is intentionally simplified. Actual results depend on payroll-tax limits, deductions, retirement contributions, state taxes, the owner’s other income, and several additional factors. 

 

The Reasonable Compensation Rule Is Critical

Practice owners cannot simply choose an artificially low salary and take the rest of the practice’s earnings as distributions. 

 

The IRS requires an S corporation to pay a shareholder-employee reasonable compensation for the services that person provides. The IRS can reclassify distributions as wages when it determines that an owner was underpaid. The reclassified amount may then be subject to payroll taxes, penalties, and interest. 

 

This issue is especially important for optometry practice owners. 

In many practices, the owner personally generates a substantial share of the revenue by examining patients, prescribing treatment, performing medical eye care, and overseeing the clinical team. The owner may also manage employees, evaluate equipment purchases, review financial performance, and make strategic decisions. 

 

The IRS indicates that revenue generated by a shareholder’s personal services generally supports wage treatment. Revenue generated through non-owner employees, equipment, and invested capital may provide greater support for non-wage distributions. 

 

That does not mean every dollar an owner produces must be paid as salary. It does mean that an owner-doctor who generates most of the practice’s revenue usually needs a defensible salary that reflects both clinical and managerial responsibilities. 

 

A reasonable-compensation analysis may consider: 

  • The owner’s duties and responsibilities 
  • Hours worked in the practice 
  • Clinical production 
  • Management and administrative work 
  • Experience and training 
  • Compensation paid to comparable optometrists 
  • Local employment-market conditions 
  • The amount of revenue generated by associates, staff, equipment, and other practice assets 

The practice should document how the salary was determined rather than selecting a number based only on the desired tax savings. 

 

Other Potential Benefits of an S Corporation

Pass-Through Taxation 

Because income generally passes through to the shareholders, an S corporation can avoid the traditional double taxation that may occur when a C corporation pays corporate income tax and then distributes taxable dividends to its owners. 

 

A More Structured Owner-Pay System 

Operating as an S corporation requires the owner to distinguish among salary, distributions, expense reimbursements, and personal withdrawals. 

 

Although this creates more work, it can also encourage better financial habits. Owners may gain a clearer understanding of what they earn as practicing optometrists versus what they earn from owning a profitable business. 

 

Potential Tax Planning Flexibility

An S corporation may create opportunities to coordinate owner compensation with retirement planning, health insurance, estimated taxes, equipment purchases, and other business decisions. 

 

However, these areas are closely connected. Changing the owner’s salary can affect payroll taxes, retirement-plan contributions, the qualified business income deduction, and personal cash flow. 

 

The decision should therefore be modeled as a complete tax strategy—not treated as a single tax-saving tactic. 

 

What Are the Drawbacks?

Additional Payroll and Filing Requirements

An owner-employee must generally be placed on payroll. The practice may need to: 

  • Calculate and deposit payroll taxes 
  • File quarterly and annual payroll returns 
  • Issue a W-2 
  • Maintain payroll records 
  • File a separate Form 1120-S tax return 
  • Provide Schedule K-1 information to each shareholder 
  • Track owner distributions and shareholder basis 

 

For a calendar-year business, Form 1120-S is generally due on the 15th day of the third month after the end of the tax year. Form 2553 generally must be filed no later than two months and 15 days after the beginning of the tax year in which the election is intended to take effect, although late-election relief is often available. 

 

Accounting, payroll, and tax-preparation costs can reduce or eliminate the expected savings for practices with modest profits. 

 

You May Owe Tax Without Receiving the Cash

Shareholders may owe income tax on their allocated share of S corporation income even when the practice does not distribute all of that income to them. 

 

For example, the practice may retain cash to purchase equipment, cover operating expenses, repay debt, or build reserves. The owner may still need personal funds to pay the tax associated with the retained income. 

 

This makes cash-flow planning and a clear distribution policy important, particularly when a practice has multiple owners. 

 

Shareholder Basis Must Be Tracked

An S corporation shareholder’s stock and debt basis changes as the practice earns income, incurs losses, makes distributions, and receives additional capital. 

 

Basis affects whether a distribution is taxable and whether an owner can deduct certain losses. The IRS places the responsibility for tracking basis on the shareholder, not the corporation. 

 

Poor basis records can create problems years later, especially during a practice sale, ownership transition, audit, or large distribution. 

 

Distributions Do Not Support Retirement Contributions

S corporation distributions are not considered earned compensation for retirement-plan purposes. Owner contributions and employer contributions to a 401(k) are generally based on W-2 compensation, not shareholder distributions. 

 

Paying a lower salary may reduce payroll taxes, but it may also reduce the amount the owner can contribute to a retirement plan. That tradeoff should be included in the analysis. 

 

The Qualified Business Income Deduction Can Complicate the Decision

The qualified business income deduction generally allows eligible taxpayers to deduct up to 20% of qualified business income and was made permanent under legislation enacted in 2025. 

 

However, reasonable compensation paid by an S corporation is not included in QBI. In addition, healthcare services are treated as a specified service trade or business, which can limit or eliminate the deduction for owners whose taxable income exceeds the applicable thresholds. 

 

Because optometry is a healthcare profession, practice owners should evaluate how an S corporation election and the proposed owner salary may affect the QBI deduction rather than assuming the election will always lower the total tax bill. 

 

State Treatment Varies

Not every state follows the federal S corporation treatment in the same way. A state may impose franchise taxes, minimum taxes, entity-level taxes, separate elections, or additional filing requirements. 

A federal tax benefit may therefore be reduced by state-level costs. 

 

When Might an S Corporation Make Sense?

An S corporation may be worth considering when: 

  • The practice consistently earns more than a defensible market-rate salary for the owner 
  • The expected tax savings exceed the additional payroll, accounting, and filing costs 
  • The owner is prepared to run payroll and maintain accurate records 
  • The practice has stable cash flow 
  • The ownership structure satisfies S corporation requirements 
  • The election fits the owner’s retirement, benefit, and long-term transition plans 

There is no universal profit threshold at which an S corporation automatically becomes worthwhile. 

The relevant number is the practice’s expected profit after paying reasonable owner compensation—not its collections, production, or gross revenue. 

 

When Might It Not Be the Best Choice?

An S corporation may provide limited benefit when: 

  • The practice is new and has little or no profit 
  • Nearly all of the practice’s profit represents reasonable compensation for the owner’s work 
  • The owner does not want the added payroll and compliance responsibilities 
  • The additional professional fees would consume most of the projected savings 
  • The practice expects to add an owner who is not an eligible S corporation shareholder 
  • The owners need an economic arrangement that does not fit the S corporation’s ownership restrictions 
  • State taxes or fees significantly reduce the federal benefit 

A new practice owner does not necessarily need to make an S corporation election immediately. 

 

For a startup, the first priority may be reaching sustainable profitability. For someone purchasing an established practice, the projected cash flow may make it appropriate to evaluate the election as part of the acquisition and entity-formation process. 

 

Questions to Ask Before Making the Election

Before moving forward, ask your tax advisor: 

  1. What will the practice’s annual profit be before owner compensation? 
  1. What salary would reasonably reflect my clinical and administrative work? 
  1. How much profit would remain after paying that salary? 
  1. What are the projected payroll-tax savings? 
  1. What additional payroll, tax-preparation, and state costs will the practice incur? 
  1. How will the election affect my QBI deduction? 
  1. How will my salary affect retirement contributions? 
  1. How should health insurance and other owner benefits be handled? 
  1. What records should we maintain to support reasonable compensation? 
  1. How could the structure affect a future associate buy-in, partner addition, or practice sale? 

Your advisor should be able to show you a comparison of the projected total taxes and expenses under each available structure. A recommendation based only on a broad rule of thumb is not enough. 

 

The Bottom Line

An S corporation can be an effective tax-planning tool for a profitable optometry practice, but it is not automatically the right answer for every owner. 

 

The strongest candidates are practices producing consistent profit beyond what would reasonably be paid to the owner for clinical and management services. Even then, the potential payroll-tax savings must be weighed against additional compliance costs, retirement-plan effects, QBI limitations, state taxes, and long-term ownership goals. 

 

Do not make the election simply because another practice owner did. 

 

Review your actual numbers, establish a defensible salary, and work with an advisor who understands the financial realities of private optometry practice. The right structure should support both your current tax strategy and the future of your practice. 

 

This article is intended for general educational purposes and does not constitute tax, legal, or financial advice. Tax laws and individual circumstances vary. Consult a qualified advisor before selecting or changing your business’s tax classification. 

 

Get optometry-specific financial support by scheduling a call with Patrick McReynolds or learn more about our tax and accounting services, specific for ODs, on our website.

Patrick McReynolds

Operations Manager

Email Patrick

 

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Proper expense categorization does more than keep the books organized. It affects how accurately a practice owner can evaluate profitability, monitor overhead, plan for taxes, manage debt, and understand where the practice’s cash is going.

When transactions are placed in the wrong categories, financial statements may still balance, but they can present a misleading picture of the practice. Loan principal may be mistaken for an expense, payroll costs may be recorded twice, or owner payments may be mixed with staff compensation. Accurate categorization turns financial statements into useful management tools rather than reports reviewed only at tax time.

The WGF Reporting Approach

To give practice owners fuller financial insight, WGF accountants prepare management reports that show material cash-based activity in one place.

Items such as loan principal payments, owner distributions, personal transactions, and other balance-sheet activity may be included in clearly labeled sections of the management report. This allows the doctor to see where the practice’s cash went without having to compare the profit and loss statement with several balance-sheet accounts.

At year-end, those transactions are reorganized according to their proper accounting and tax treatment.

This approach provides the best of both worlds: a practical monthly view of cash activity and accurate year-end financial statements for tax preparation.

The important distinction is that a transaction can affect cash without being an operating expense. A loan principal payment, for example, reduces available cash but does not reduce accounting profit.

Separate Operating and Non-Operating Activity

A well-organized financial statement should clearly separate the practice’s core operating expenses from associate doctor compensation, financing activity, ownership activity, and other transactions shown below operating income.

Operating expenses generally include:

  • Staff compensation
  • Payroll taxes and staff benefits
  • Rent and occupancy costs
  • Clinical, optical, and laboratory supplies
  • Software and technology
  • Marketing
  • Insurance
  • Professional fees
  • Office and administrative expenses

Items that should be separated or shown below operating income may include:

  • Associate doctor compensation
  • Owner doctor compensation and distributions
  • Loan interest
  • Loan principal payments
  • Personal expenses paid through the practice
  • Income tax payments
  • Equipment purchases
  • Gains or losses from equipment sales
  • Unusual or one-time activity

Associate doctor compensation is a recurring cost of providing patient care, but presenting it below operating income gives the practice owner a clearer view of the performance of the practice’s core operations before doctor compensation.

This structure allows the owner to evaluate operating income before associate and owner doctor compensation, debt repayment, owner withdrawals, and other activity that may otherwise obscure the performance of the practice’s day-to-day operations.

Divide Loan Payments Between Interest and Principal

Recording an entire loan payment as an expense is a common bookkeeping error.

A loan payment normally includes:

  • Interest, which is the cost of borrowing and is generally recorded on the profit and loss statement
  • Principal, which reduces the loan balance and belongs on the balance sheet

For example, if a $4,000 payment includes $700 of interest and $3,300 of principal, only the $700 should normally be recorded as interest expense. The remaining $3,300 reduces the outstanding liability.

Recording the full payment as an expense understates profit and leaves the loan balance inaccurate.

The full payment may still appear in a WGF management report to show the effect on cash, but the principal and interest should remain separately identified.

Separate Payroll Into Three Categories

Payroll is often one of the largest costs within a practice, yet many financial statements group all compensation into one general payroll category.

For better visibility, compensation should be divided into at least three groups.

Staff Compensation

This includes wages paid to technicians, opticians, front-desk employees, billing staff, administrators, and other support team members.

Separating staff wages allows the owner to evaluate staffing costs compared with revenue, patient volume, and operating hours. Staff compensation should generally remain within the operating expense section of the financial statements.

Associate Doctor Compensation

Associate doctor compensation should be kept separate from staff payroll and presented below operating income for management-reporting purposes.

This allows associate compensation to be compared with doctor production, collections, scheduled hours, and patient volume without distorting the practice’s staff compensation or core operating expenses.

When associate and staff compensation are combined, it becomes difficult to determine what is driving payroll changes or whether the practice’s support staffing is operating efficiently.

Owner Doctor Compensation

Owner compensation should also remain separate. Depending on the practice’s entity structure, owner payments may include wages, draws, distributions, guaranteed payments, reimbursements, or benefits.

Combining owner payments with staff or associate compensation can distort staffing costs, doctor compensation, and operating profitability.

Record Equipment Sales and Trade-Ins Correctly

When a practice sells or trades in equipment, the transaction involves more than recording the replacement purchase.

The accounting records may need to reflect:

  • The original cost of the equipment
  • Accumulated depreciation
  • The remaining book or tax basis
  • Cash received
  • The assigned trade-in value
  • Any related loan payoff
  • The resulting gain or loss

A taxable gain can occur even when equipment is sold for less than its original purchase price because depreciation may have reduced its tax basis.

Failing to record the disposal correctly can leave old equipment on the balance sheet and cause the related gain or loss to be omitted from tax records.

Practice owners should provide their accountant with purchase records, depreciation schedules, trade-in documents, sales agreements, and loan payoff information.

Record Liability Payments on the Balance Sheet

Payments toward an existing liability should generally reduce that liability rather than create another expense.

This issue commonly appears with:

  • Payroll taxes
  • Employee tax withholdings
  • Health insurance
  • Retirement contributions
  • Credit card payments
  • Sales tax
  • Loans

For example, a payroll system may record payroll tax expense and create a payroll tax liability when payroll is processed. When the practice later sends the payment, it should reduce the liability. Recording the payment as another expense would count the same cost twice.

Credit card payments work the same way. The individual purchases are categorized when they occur. Paying the credit card later reduces the balance owed; it does not create another expense.

Before categorizing a payment, determine whether the underlying expense has already been recorded and whether the payment is simply satisfying an existing liability.

Keep Personal and Business Activity Separate

Personal expenses are not ordinary practice expenses and should not be hidden within office supplies, travel, meals, repairs, or other business categories.

When a personal purchase is paid through the practice, it should be recorded as an owner draw, distribution, shareholder activity, receivable, or another appropriate balance-sheet category based on the entity structure. The transaction should not be deleted because cash still left the business. It simply needs to be classified correctly. Keeping separate personal and business accounts remains the best practice. It simplifies bookkeeping, reduces questions at tax time, and makes financial statements easier to interpret.

Reconcile Bank and Credit Card Accounts Monthly

Accurate categorization cannot be confirmed until every bank and credit card account has been reconciled.

A complete monthly reconciliation should:

  • Match deposits and withdrawals to the statement
  • Identify missing or duplicate transactions
  • Record bank fees and interest
  • Review credit card charges
  • Confirm payments were applied to the correct liabilities
  • Investigate old outstanding checks or deposits
  • Resolve uncategorized transactions
  • Eliminate unexplained reconciliation differences

There should be no unresolved difference when the process is complete. Unreconciled accounts can hide duplicate expenses, missing deposits, unauthorized charges, deleted transactions, and payments posted to the wrong accounts.

Review the Financial Statements Monthly

Practice owners should review their financial statements regularly rather than waiting until tax season.

A monthly review should include:

  • Revenue and operating income
  • Staff compensation
  • Associate and owner doctor compensation
  • Occupancy costs
  • Supply and laboratory expenses
  • Marketing
  • Debt payments
  • Equipment purchases
  • Owner payments
  • Personal activity
  • Uncategorized expenses
  • Unusual month-to-month changes

Unexpected increases should be investigated before the accounting period is considered complete.

Common Warning Signs

Bookkeeping may need additional review when financial statements show:

  • Large miscellaneous or uncategorized balances
  • Entire loan payments recorded as expenses
  • Credit card payments on the profit and loss statement
  • Payroll tax payments recorded twice
  • Associate doctor compensation combined with staff payroll
  • Owner distributions included in payroll
  • Personal transactions included in operating expenses
  • Equipment purchases recorded as routine supplies
  • Sold equipment still listed as an asset
  • Negative liability balances
  • Old unreconciled transactions

These issues do not always indicate a major problem, but they should be explained and corrected.

The Bottom Line

Expense categorization directly affects how well a practice owner can understand profitability, staffing costs, doctor compensation, debt obligations, owner compensation, cash use, and potential tax issues.

The strongest reporting systems provide both visibility and accuracy. They allow owners to see where their cash is going while preserving the proper distinction between operating expenses, doctor compensation, assets, liabilities, financing activity, and owner transactions.

When accounts are categorized consistently, compensation is separated into meaningful groups, liabilities are handled correctly, equipment activity is recorded properly, and bank accounts are reconciled monthly, financial statements become practical tools for making better business decisions.

This article provides general educational information and is not a substitute for tax or accounting advice based on a practice’s specific circumstances.

Get optometry-specific financial support by scheduling a call with Patrick McReynolds or learn more about our bookkeeping services, specific for ODs, on our website.

Patrick McReynolds

Operations Manager

Email Patrick

 

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When reviewing financials for an optometric clinic, one of the most common areas of confusion comes down to how insurance receipts differ from private pay.

On the surface, revenue is revenue. But from a bookkeeping and performance standpoint, how that revenue is collected—and when it hits the bank—can significantly impact how your financials look and how you interpret them.

Let’s break down the key differences and why they matter.

 

1. Timing Differences: Immediate vs. Delayed Cash Flow

Private Pay

Private pay transactions are straightforward:

  • Patient pays at the time of service (cash, card, HSA, etc.)
  • Funds are deposited quickly (often same day or within a few days)
  • Revenue and cash flow are closely aligned

From a bookkeeping standpoint, this creates clean, predictable reporting.

 

Insurance Receipts

Insurance is a different story:

  • Service is performed today
  • Claim is submitted
  • Payment may not arrive for 2–6 weeks (or longer)
  • Payment may be partial, with adjustments and patient responsibility remaining

This creates a timing gap between production and cash collection.

 

2. How This Flows Through the Financial Statements

Your accounting method plays a big role here, but most optometry clinics (including our bookkeeping clients) operate on a cash-based reporting approach for management purposes.

Under a Cash-Based (Operating Net) View

Private Pay:

  • Revenue is recorded when cash hits the bank
  • Financials reflect performance in near real-time

 

Insurance:

  • Revenue is recorded only when the insurance payment is received
  • This means:
    • A strong production month may look weak if collections lag
    • A later month may look inflated when prior claims are paid

Result: Monthly revenue can fluctuate based on insurance timing, not actual clinical performance.

 

3. The Disconnect Between Production and Collections

This is where many clinic owners get tripped up.

Your practice management system may show:

  • High production
  • Strong patient volume
  • Healthy billing activity

 

But your financials (based on bank activity) may show:

  • Lower revenue for the same period
  • Increased variability from month to month based on when insurance payments are received
  • Limited visibility into what has been earned but not yet collected

That’s not an error—it’s a timing difference.

 

4. Evaluating Performance the Right Way

Because of these differences, it’s important not to rely on a single data point.

What to Watch for Instead

1. Trends Over Time

Look at rolling 3-month or 12-month trends rather than a single month:

  • Smooths out insurance timing delays
  • Gives a clearer picture of true performance

 

2. Consistency in Collections

Ask:

  • Are collections generally keeping pace with production over time?
  • Are delays increasing or staying consistent?

 

3. Accounts Receivable Insights

Rather than trying to track A/R within your accounting system, rely on the A/R reports within your practice management software:

  • Monitor outstanding insurance balances
  • Identify aging trends or slow-paying carriers
  • Ensure collections align with production over time

 

5. Why This Matters for Decision-Making

If you don’t account for these differences, you may:

  • Underestimate a strong month
  • Overestimate a “catch-up” month
  • Make incorrect staffing or expense decisions

 

For example:

  • Cutting costs after a “slow” month that was actually a collection lag issue
  • Over-hiring after a “strong” month that included prior period insurance payments

 

6. Practical Takeaways for Optometry Clinics

  • Private pay provides real-time visibility
  • Insurance creates delayed visibility
  • Cash-based financials are accurate for cash flow, but not perfect for timing of production

To manage this effectively:

  • Focus on trends, not single months
  • Understand your payer mix
  • Use financials alongside production reports from your practice management system
  • Monitor collection timing patterns through A/R reports

 

7. How Williams Group Financial Approaches Reporting

At Williams Group Financial, our goal is to make your financials as useful and actionable as possible, even with the inherent timing differences that come from insurance reimbursements.

We structure our reporting to focus on cash flow visibility through an operating net approach, which allows you to see all cash activity flowing through your business in a single, easy-to-understand format. This includes not just income and expenses, but also items that typically sit on the balance sheet, such as loan payments and owner distributions.

 

Because we understand the disconnect between production and collections, we also emphasize:

  • Consistent monthly reporting timelines so you can evaluate trends reliably
  • Quarterly benchmarking to compare performance over time and against industry standards

This approach helps ensure that even when timing differences exist, you still have clarity around the overall health and performance of your clinic.

 

Final Thought

Neither insurance nor private pay is better from a bookkeeping standpoint—but they require different interpretation.

The key is understanding that your financials are telling you a cash story, not always a production story.

Once you make that distinction, your reporting becomes much more useful—and your decisions much more informed.

 

Get optometry-specific financial consulting by scheduling a call with Patrick McReynolds or learn more about our bookkeeping services, specific for ODs, on our website.

Patrick McReynolds

Operations Manager

Email Patrick

 

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For years, meals provided for the convenience of the employer such as food during long clinic days or snacks kept in the breakroom have generally been 50% deductible.

Starting January 1, 2026, an important tax change will affect optometry practices that occasionally provide meals or snacks for staff and those expenses will no longer be deductible at all. 

Practices can still provide food for their team, but the cost will no longer reduce taxable income. For optometry practice owners, this change likely won’t alter daily operations, but it will affect how these expenses show up on your tax return.

Why the Deduction Is Changing

Under current tax rules, many businesses have been able to deduct 50% of employer-provided meals when they were considered necessary for business operations. However, the Tax Cuts and Jobs Act (TCJA) included a provision that phases out this deduction beginning in 2026.

Once the rule takes effect:

  • Meals provided for the convenience of the employer will become fully nondeductible
  • The expense will still be allowed from a business standpoint
  • But it will no longer reduce taxable income

For practices that regularly provide meals or snacks for staff, this simply means those expenses will now be treated similarly to other nondeductible costs.

What This Means for Optometry Practices

Common examples many optometry practices provide food for their team include:

  • Lunch brought in during long clinic days
  • Food provided during staff meetings or training sessions
  • Meals during extended work hours
  • Breakroom snacks or refreshments available to employees

These expenses will remain acceptable from a practice management perspective, but they will no longer generate a tax deduction.

For most practices, the financial impact will be relatively small. Still, it’s helpful to understand how these expenses will be treated going forward.

Meal Expenses That Will Still Be Deductible

Not all meal deductions are disappearing. Certain business meals will still qualify for a 50% deduction, including:

  • Meals With Referral Sources or Business Partners
    • Meals where business is discussed with referral partners, vendors, or other professionals can still qualify as business meals.
  • Meals During Business Travel
    • Food purchased while attending conferences, continuing education events, or other business travel will continue to qualify for a 50% deduction.

To remain deductible, these meals must follow standard IRS rules:

  • Expense cannot be lavish or extravagant
  • Documentation should include date, location, attendees, and business purpose

Proper recordkeeping will continue to be important for these deductions.

Events That Remain 100% Deductible

Some employee-related events will still qualify for a full deduction. These include activities considered employee morale events, such as:

  • Holiday parties
  • Staff appreciation events
  • Occasional celebrations open to all employees

Because these events are considered employee benefit activities rather than routine meals, they continue to receive different tax treatment.

How Optometry Practices Can Prepare

For most optometry practices, this change won’t significantly alter day-to-day operations. Many offices will continue providing meals or snacks for staff when it makes sense operationally. However, practices may need to review how these expenses are tracked and categorized in their accounting records. Separating meal categories can make tax reporting easier once the rule takes effect.

For example, track:

  • Staff meals
  • Business development meals
  • Travel meals
  • Employee morale events

Clear categorization helps ensure that deductible expenses are handled correctly while nondeductible costs are properly recorded.

While the financial impact of routine staff meals and breakroom food will no longer be tax deductible will likely be modest for most optometry practices, understanding the rule ahead of time can help ensure expenses are properly categorized and tax reporting remains accurate. 

As always, small planning decisions throughout the year can make tax preparation smoother and help prevent surprises.

If you’re unsure how this change may affect your practice or if you’d like help reviewing your bookkeeping categories, working with an optometry-specific CPA can help ensure everything is handled correctly.

Not a Williams Group client and feeling unsure about your categories? Schedule time with Archie Keebler, CPA, one of Williams Group’s premier optometry-specifc CPAs.

Archie Keebler

Tax Manager
Email Archie

 

 

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A Practical Guide to Reducing Payroll Stress, Improving Clarity, and Protecting Profitability

Payroll shouldn’t be the most stressful part of running your practice. But for many optometrists, it is. Not because the math is complex, but because the systems behind payroll often lack clarity and consistency. This guide outlines four actionable steps to reduce payroll stress, improve team clarity, and protect profitability based on Williams Group’s experience processing payroll for hundreds of optometric clients.

Payroll quickly becomes a headache and your labor costs quietly rise when:

  • Job roles are unclear 
  • Time tracking varies by person or shift 
  • Staffing levels aren’t aligned to patient flow 
  • And payroll information has to be manually re-entered into accounting 

The good news? These challenges are solvable with structure. 

The Root of Payroll Problems in Optometry Practices

Most payroll issues start with role confusion. This confusion leads to inconsistent productivity, which shows up as payroll inefficiency. When employees aren’t sure which tasks are theirs, practice owners often see: 

  • Inefficient labor: work being duplicated 
  • Unhappy patients: tasks being skipped 
  • Managerial burnout: staff asking for direction rather than acting
Step 1: Clarify Job Roles with Measurable Responsibilities

Clear job descriptions are more than lists of tasks and should spell out: 

Role  Responsibilities  Measurable Indicators 
Optician  Frame styling, lens consulting, adjustments, retail optical sales  Capture rate %, average optical sale, remakes 
Technician  Pre-testing, case history, special testing  Patients pre-tested per hour, accuracy of charting 
Patient Care Coordinator Scheduling, check-in/out, insurance verification  Scheduling conversion rate, wait time management 


When responsibilities connect to metrics, expectations become easier to manage and coach. 

Step 2: Align Staffing to Patient Flow

Overstaffing during slow periods and understaffing during busy periods is one of the biggest and most expensive payroll inefficiencies in eye care. Use historical patient volume reports, optical sales trends, daily/seasonal appointment patterns. 

To build staffing systems like: 

  • Split shift coverage during peak hours 
  • Cross-training to flex coverage where needed 
  • Scheduled “admin blocks” during slow periods so paid time is still productive 

By having better alignment there will be less waste and improved patient experiences.

Step 3: Use Time Tracking That Is Consistent, Transparent, and Enforced

If time is recorded differently depending on the day, person, or mood, payroll will always feel chaotic. 

Look for time tracking tools that: 

  • Require clock-in/out at the same station (not from phones) 
  • Track breaks and OT automatically 
  • Sync with scheduling software 
  • Export directly into payroll systems 

Consistency protects both the practice and the employee.

Step 4: Use Payroll Software That Integrates Directly with Accounting 

If someone has to manually re-enter payroll into QuickBooks, Xero, or your accounting platform: 

  • Errors creep in 
  • Reporting takes longer 
  • Month-end feels painful 
  • Labor costs are harder to analyze 

Payroll systems that sync with accounting provide: 

  • Instant labor cost visibility 
  • Cleaner bookkeeping 
  • Less time spent fixing errors 

Look for software that integrates payroll, scheduling, and time tracking so information flows automatically. 

The Result: Predictable Payroll and Less Stress

When job roles are clear, staffing aligns with demand, and payroll software does the heavy lifting: 

– Payroll becomes more predictable
– Labor costs stay under control
– Team accountability improves
– Managers spend less time correcting errors
– You get a clearer picture of practice profitability 

This is how practices reduce stress and cost creep  without burnout or micromanaging. 

Payroll problems rarely mean someone is doing something wrong. They usually mean the system needs more structure. And structure is something you can build — sustainably. 

If payroll has become a recurring pain point in your practice, you don’t have to figure it out alone. 

Williams Group helps optometrists: 

  • Clarify job roles 
  • Optimize staffing levels 
  • Implement integrated payroll + accounting systems 
  • Build predictable, efficient financial operations 
  • Process payroll wages and tax payments for direct deposit

Schedule a consultation to evaluate your current payroll workflow. 

Get optometry-specific payroll support by scheduling a call with Archie Keebler, CPA or learn more about our accounting services, specific for ODs, on our website.  

Archie Keebler

Tax Manager
Email Archie

 

 

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The Optometry Trap: When a “Write-Off” Isn’t the Win You Think

You know the moment. You’re at an optometry conference, you demo the new toy (I mean equipment), and suddenly your brain starts doing that thing where it turns a capital purchase into a personality trait. Or maybe it’s the end of the year and you don’t like the tax number Archie or Ryan (Williams Group Accountants) said you might owe next year.
Then someone says the magic words: “It’s a write-off.”

If you’ve ever caught yourself thinking, “well if it’s a write-off, it’s basically free,” we need to talk.

Meet Sue (an optometrist and her very persuasive equipment rep)

Sue owns a growing optometry practice. Her schedule is full, optical sales are strong, and her staff is doing that heroic thing where they keep the day moving even when everything’s on fire behind the scenes.

Sue gets pitched a shiny piece of equipment when the rep uses all the right phrases like: “It’ll change patient care,” “it increase referrals,” and “it will pay for itself.”
Sue questions: “Will I be able to write it off?”
The rep smiles. Sue smiles. The IRS does not smile. The IRS has never smiled. Not once.

First, What a “Write-Off” Actually Does
Here’s the thing: a deduction reduces your taxable income. It does not reduce your tax bill dollar for dollar.
Example – If you spend $50,000 on equipment and you get a $50,000 deduction, you did not “save $50,000.” You reduced the income you pay tax on by $50,000.
The actual tax benefit depends on your situation, your marginal rate, and whether you can even use the deduction this year.
I like to describe it as a 25% off sale. It saves you some money, but it’s not a slam dunk!
Also —and this is important— a deduction never fixes a bad business purchase. It just makes the bad purchase slightly less painful.

The Five Costs That Usually Get Ignored (Until They Show Up on Your Doorstep)
Most practices focus on the purchase price. The real cost is usually “purchase price plus the entourage.”
 
What usually gets forgotten:
  • Maintenance contracts and software fees. Monthly subscriptions have a way of multiplying like rabbits.
  • Training time. If your lead tech is in training, they’re not in clinic doing lead tech things.
  • Downtime and bottlenecks. New workflows are messy before they’re magical.
  • Consumables and add-ons. The base unit is never the whole story.
  • Staffing and scheduling impacts. If it adds 6 minutes per patient and you don’t have a plan, it may quietly shrink capacity.
None of these are reasons not to buy equipment. They’re reasons to buy with your eyes wide open. Ask the salesman about these issues before you commit to purchase.

The IRS “Rules of the Road” for Equipment Purchases
When you buy equipment for the practice, the IRS generally wants you to treat it differently than everyday supplies. Pens, contact lens solution, and printer paper get used up quickly, so they’re usually expensed right away. Equipment is different because it has a useful life that stretches beyond the current year, so the default rule is you capitalize it and recover the cost over time through depreciation.
There’s a common shortcut many practices use called the $2,500 de minimis safe harbor. In plain English: if you have a consistent accounting policy and you attach the election to your return, you can usually expense items that cost $2,500 or less per invoice (or per item, if itemized) instead of capitalizing them. Anything above that amount is typically capitalized unless you use a specific tax provision that allows faster write-offs.
The result? “I bought it” is only step one. The next step is deciding whether it’s a supply expense, a capital asset, or a capital asset you’re choosing to expense faster.

The Tax Reality Checks That Keep You Out of Trouble
Reality Check #1: The Timing Is About “Placed in Service,” Not When You Swipe the Card
For depreciation purposes, property is generally considered placed in service when it is ready and available for its specific use, even if you have not actually used it yet.
Translation: ordering it in December is not the same as having it installed, calibrated, and ready to use.
This is the trap that gets optometrists every year. The equipment is in a box. The contractor reschedules. Training is “next week.” And suddenly your “year-end write-off” is actually next year.
 
A Quick Example (because this is exactly how it happens)
Sue buys an OCT in December. It arrives. Everyone cheers. The install gets pushed to January. Training happens mid-January. It’s ready and available for use in January.
Sue still bought it in December, but the placed-in-service timing points to January. The tax deduction is shelved for next year. That’s not the IRS being mean. That’s just the IRS being the IRS.
If Sue had planned the timeline ahead of time, she would’ve known the likely tax year and could’ve decided whether the purchase still made sense.
 
Reality Check #2: “Immediate Write-Off” Is Not Guaranteed
Sometimes you can expense more up front, sometimes you depreciate over time, and sometimes you have choices. Section 179 is an election that lets you expense qualifying property up to certain limits, and it’s tied to when the property is placed in service. There’s also Bonus Depreciation we can use.
The rules and limits change over time, and the best choice depends on your tax picture. The point isn’t “always expense everything.” The point is “choose on purpose.”
 
Reality Check #3: Losses Aren’t Always as Useful as People Think
A big deduction is only a win if it offsets income you would otherwise be taxed on. If the purchase creates a loss, that loss might be limited or pushed into a future year depending on your setup and your broader return.
So if the clinic is already in a low-profit year, buying equipment purely for tax reasons can be like bringing a snowblower to Arizona. Technically, a tool. Practically, an odd choice.
 
Reality Check #4: Documentation Matters, and Vibes Don’t Count
If you ever get questioned, you want a clean story: what it is, what it cost, when it became ready and available for use, and that it’s used for business.
Helpful paperwork usually includes the invoice, delivery confirmation, install documents, training confirmation, and any “go-live” notes. The IRS is very into boring proof.

The “Buy It Like a Grown-Up” Playbook for 2026
Here’s a simple framework Sue can use that keeps both the business and tax sides aligned.
1) Start with the Business Case
Before tax savings are considered, answer two questions: Will this increase capacity, improve medical revenue, reduce headaches, or improve patient experience in a measurable way? And do we have the people and workflow to actually use it?
If the honest answer is “it would be cool,” that’s fine. Just don’t call it tax strategy.
 
2) Match the Purchase to Your Profit Year
Equipment strategy works best when it’s paired with a year where the practice has real taxable income. Depreciation is cost recovery, not a magic trick.
If you’re unsure what your year looks like, grab our most recent Cash Flow or Tax Planning document and see how we’ve predicted your year to turn out. Double check sales—if Doctor Days made sales take a plummet, we might need to reconsider the profit for that year.
 
3) Plan the Calendar, Not Just the Purchase
If you care which tax year the deduction lands in, you need a timeline that includes delivery, install, calibration, training, and being ready for clinical use. That’s what “placed in service” is getting at.
This is especially important late in the year, when vendors and contractors are booked and delays are normal.
 
4) Decide How You Want to Take the Deduction
At a high level, your options often include depreciating over time or electing faster methods like Section 179 when available and appropriate.
This is where planning matters. Sometimes you want the bigger deduction now. Sometimes you want to spread it out to stabilize taxes across years. Sometimes you want to preserve deductions for a higher-income year. Book some time with Archie or Ryan to discuss which would be better for your specific case.
 
5) Build the Total Cost Into Your Budget
If you buy equipment and then get surprised by maintenance fees, software, and staffing needs, that’s not a tax problem. That’s a planning problem.
A clean rule: if the ongoing costs make you flinch, you’re not ready to buy it yet.
The Bottom Line
If you want to buy equipment because it improves care and strengthens your optometry practice, great. That’s the best reason.
If you want to buy equipment because “it’s a write-off,” pause. A deduction is a nice side effect, not the main event. The main event is whether the purchase makes your practice better and whether it fits your profit, cash flow, and execution plan.

Thinking About a Purchase (or Already Committed to One?)
If you want support on planning your next purchase, reach out to your Williams Group accountant with your 2026 wish list and your expected go-live dates. We’ll help you sort the purchases into three buckets:
  1.  smart now
  2.  smart later
  3.  cool but let’s not pretend it’s strategy
Not a Williams Group client and feeling unsure about a purchase or want a real equipment strategy for 2026, not “buy stuff in December and hope,” schedule time with Archie Keebler, CPA, one of Williams Group’s premier optometry-specifc CPAs. We’ll review your profit trends, cash flow, and timelines, then map out what to buy, when to buy it, and how to document it so the tax outcome actually matches the plan.

Archie Keebler

Tax Manager
Email Archie

 

 

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Is An Associate OD an Employee or a 1099 Contractor?

Bringing on an associate OD is a major decision for your optometry practice. But classifying that associate incorrectly could expose you to a pile of IRS penalties, payroll tax issues, and even legal troubles at the state level.

The employee vs. independent contractor question isn’t just about taxes, it’s about how your practice functions day to day, and whether the associate is truly independent or a core part of your team.

This practical guide, built specifically for optometry practice owners, will walk you through how to structure the relationship correctly, what the IRS really looks for, and how to protect your practice from costly missteps.

How the IRS Defines the Relationship: 3 Key Factors

Contrary to popular belief, you don’t get to choose whether an associate OD is a contractor or employee. The IRS looks at the facts and circumstances, not what you write on the contract or how you pay them. Here are the three main categories the IRS uses to assess worker classification:

1. Behavioral Control

If the practice controls how the associate OD performs their work, they’re typically an employee.

Examples in an optometry practice:

  • Practice sets their clinic hours
  • Practice assigns patients to their schedule
  • Associate uses practice’s staff (techs, front desk, billing)
  • Associate follows office protocols for exams, documentation, and billing
  • Owner reviews the associate’s clinical performance

Bottom line? If the associate OD is following the practice’s directive, they’re most certainly an employee.

2. Financial Control

This part gets overlooked, but it matters. Indicators of an independent contractor include the ability to operate their own business. In an optometry setting, this rarely applies. 1099 contractor characteristics would typically include:

  • Investing in their own tools or equipment
  • Covering their own CE, licensing, and malpractice
  • Setting their own fees
  • Invoices you for services
  • Realizes a potential to earn a profit or take a loss

Most optometry practices fail these tests because the clinic controls financial aspects of care delivery.

3. Type of Relationship

This one zooms out and looks at the overall working relationship.

Here’s what the IRS checks:

  • Is there a formal written employment agreement?
  • Is the practice providing benefits like PTO, health insurance, or a 401(k)?
  • Is this a long-term relationship that’s integral to the business?
  • Do you represent the associate publicly (e.g., on your website)?

In almost every full-time associate scenarios where associates provide core services that are essential to the practice, these questions point straight to employee status.

Can an Associate OD Ever Be a True Contractor?

Yes, but it’s rare and requires some very specific structuring. Here are the cases where a 1099 contractor may be possible:

  • The OD operates through their own entity (LLC or S-corp)
  • The OD sets their own schedule with no control from the practice
  • The OD uses their own equipment, staff, and provides services independently
  • The OD invoices you instead of receiving a paycheck
  • The OD is brought in for specialty or limited work, such as:
    • Fill-in or vacation coverage
    • Low-vision specialist seeing patients periodically
    • Mobile OD services contracting with the practice

But here’s the catch: If the associate OD works only for you, follow your protocols, and see your patients; they’re your employee.

Optometry-Specific Classification Traps to Watch Out For

Optometry isn’t like other industries. Patient care is heavily regulated, and that adds extra complexity. Some high-risk areas to be mindful of:

Patient Scheduling

If your front desk is booking patients for the associate, that is employee behavior.

Billing & Medical Records

Using your EHR and billing systems shows you’re in control of the clinical and financial side. That’s another employee signal.

Malpractice Insurance

If you’re footing the bill for malpractice coverage, the IRS sees that as an employer responsibility.

Non-Competes & Non-Soliciation 

You generally can’t restrict the future practice of a true contractor this way. These kinds of enforceable clauses only hold water with employees.

How Compensation Structures Tip the Scale

W-2 Employee:

  • Paid hourly, daily, or salaried
  • Bonuses based on production (optional)
  • Eligible for benefits
  • Payroll taxes withheld
  • Licensing/CE covered by practice

Independent 1099 Contractor:

  • Paid per diem or per exam
  • No benefits
  • Handles their own taxes
  • Provides their own malpractice coverage
  • Invoices the practice directly

If the compensation structure looks like a traditional employee arrangement, the IRS will treat them as an employee, regardless of what the contract says.

Practical Examples

Example 1: Full-Time Associate OD in a Busy Practice
  • 40 hours a week
  • Practice sets hours
  • Uses practice staff
  • Standardized exam protocol

Employee

Example 2: Part-Time Saturday OD
  • Schedules vary based on OD availability
  • Paid per diem
  • Not integrated into staff meetings or internal procedures

Could be a contractor if structured properly

Example 3: Fill-In Associate OD for Vacations
  • Works occasionally
  • Provides invoice
  • No ongoing commitments

Contractor

Example 4: Mobile OD Providing Specialty Exams
  • Brings own equipment
  • Bils per patient

Contractor

Consequences of Misclassification

Misclassifying an associate OD isn’t just a paperwork issue, it can create a financial mess for your practice. Here’s what a misclassification can trigger:

  • Back payroll taxes (plus interest)
  • Employer’s share of Social Security & Medicare
  • Penalties for not withholding federal and state taxes
  • Wage claims at the state level
  • Workers’ comp exposure
  • Liability for benefits that should’ve been offered

And yes, the IRS can look back three years or more during an audit.

Best Practices for Staying Compliant

If Hiring as an Employee (W-2):

  • Use a formal employment agreement
  • Provide a clear compensation structure
  • Set and enforce consistent clinic protocols
  • Run payroll properly
  • Offer benefits as desired

If Hiring as a Contractor (1099):

  • Require that they operate as an LLC or PC
  • Ensure they set their own hours and patient load
  • Have them invoice you
  • Avoid offering benefits or training
  • Skip the non-compete (but a non-solicit might still work)

For most optometry practices, hiring an associate OD means hiring an employee, not a contractor. A contractor arrangement is only appropriate when the OD is genuienly independent, works for multiple practices, or provides speialty/occasional services. 

Correct classification protexts your practice, minimizes risk, and ensures compliance with IRS and state rules. If you’re unsure, don’t guess. Talk to a CPA who understands optometry and can guide you through the compliance maze.

At Williams Group, we specialize in accounting, payroll, and advisory services for optometrists. Whether you’re bringing on your first associate OD or restructuring your current team, we’ll help you do it right and keep the IRS off your back. 

Get optometry-specific classification support by scheduling a call with Brad Rourke, CPA, ABV or learn more about our accounting and tax services specific for ODs on our website.  

Archie Keebler

Tax Manager
Email Archie

 

 

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