Year End Tax Planning Strategies for Practice Owners

December 05, 2021
Employing Children in the Practice
One interesting college/general savings idea is to employ your children through your practice, shifting funds from your top tax bracket to theirs. Federally, employees who make less than $10,400/year are not required to file a tax return and most states (but not all—consult your CPA on this before proceeding) match that. The icing on the cake is that children under 18 are not subject to social security and Medicare taxes. 
So if you pay your children less than $10,400—say $6,000 to be contributed to a Roth IRA- you are shifting dollars from your top tax bracket into essentially a 0% state and federal tax bracket.
Employing your children has be to justifiable though. Most CPAs will do an hourly calculation to see how much you paid per hour of work. My preference is to use kids for marketing projects and pay modelling fees on retainer. Regardless, make sure the pay is justifiable where it’s modeling new frames, videoing an optometric vocabulary word of the week, answering the phones over the summer, or cleaning the baseboards in your practice.
I put my money where my mouth is on this one and use my kids as examples of how optometric practice owners can employ their children through their practices. Here are my kids playing grown ups with my favorite Orgreens and daddy's Calvin Kleins.

I know this time of year is hectic, but once the clock strikes midnight on 12/31, these strategies expire for 2021. Let me know what questions you have and see you on Wednesday evening!