Optometrists who practice alone are up against greater financial odds than those in partnerships, according to the Review of Optometry’s latest Income Survey. Annual income for solo doctors averaged $144,125 last year. But ODs in partnership or group practices averaged $191,195—a difference of nearly 33 percent. Like other doctors, the report surmises, optometrists are under an ever-growing pressure to invest more in technological and practice costs; group practices can share these expenses and take advantage of efficiencies of scale. That can translate to more profit.
Net is an interesting topic in the optometry world. There are actually two different “nets” we should discuss.
The Optometric Net is calculated by adding together all dollars paid to all optometrists (both employed optometrists and owner optometrists) for working in the practice plus any money left over after paying all other expenses. This is the number that is traditionally referred to as the “Net” in optometry. This practice is unique to optometrists.
A True Net is calculated by subtracting all expenses including what it costs to have optometrists in the practice from all money collected. This is the number that all other businesses in the world (except optometric practices) use to judge fiscal health.
This should help clarify this topic:
Money collected
Minus Cost of Goods
Minus Payroll
Minus Occupancy
Minus Marketing
Minus Overhead
Equals Optometric Net
Minus Optometric Payroll
Equals True Net
You need to know both numbers, the Optometric Net and the True Net. There are a two major reasons: tax consequences and future consequences.
It matters, from a tax perspective, how you remove income from a practice. This is a discussion you should have with your tax planner as soon as possible. It is your responsibility to pay any taxes that are appropriate, but if you have not had the discussion of how best to remove money from the practice with your tax planner, then that conversation needs to be scheduled now.
As the owner of the practice, how do you know how much you are going to be paid? If you are just waiting to see how much money is left over and that becomes your “payroll” amount, then you are not treating your practice as a business. Hiring an optometrist to work in your practice is a business expense. If you are working in the practice, then you need to be hired by the practice to do that work. Every business needs to know its true expenses. You need to know yours.
Start today calculating both your Optometric Net and your True Net to get a better handle on how your practice is functioning as a business.
