Making a profit sharing contribution in your optometry practice

There comes a time and place where a successful optometry practice that is “cash flow rich” is in a position to start thinking about how and when they should begin utilizing their practice as not only an asset for future sale but also as a vehicle to help them accumulate wealth and defer taxes on profits earned today.

Enter the profit sharing plan.

In this article that I authored for Review of Optometric business, I share information around a number of important topics that influence the decision to make a profit sharing contribution. We start by looking at the characteristics of a practice that is ready to make a profit sharing contribution and then make sure that you understand the two basic options you have with the net profit of your practice.

It’s important to understand that a profit sharing plan is just that: a plan that shares the profits of the business. Practice owners can sometimes get hung up on this concept, so I’ve found that one of the best ways to illustrate this concept is with an example. In the article, I share a hypothetical situation of how much the owners of a practice that has a 3% non-elective “safe harbor” match would be able to contribute for their own retirement as a percent of the overall contribution.

I wrap up the article by talking about the non-financial benefits of (quite literally) making an investment in your team members and how it can help build team loyalty and empower your team to help the practice succeed.