The world of optometry has seen one of the most significant shifts of any medical specialty, evolving into a visual front line retail industry with increased competition each year.
Big box stores adding “while you wait” optometry services to their slate of offerings and the rise of online shopping have contributed to the creation of challenges for optometrists trying to offer a full slate of services on site and remain competitive with the market.
The Challenges of Retailing In Edmonton
While at one time, optometry focused solely on the assessment of one’s vision, allowing for billing directly to the public medical system or private insurers, the evolution to include the retail component of the eyeglasses themselves has changed the financial context of this industry. Some of the added considerations which were not a factor before now include:
Ensuring Provincial and Federal compliance with Provincial Sales Tax, when applicable, and the Goods and Services Tax creates additional administration to ensure that you are doing everything appropriately. Which items are taxed provincially and which are not requires detailed accounting and reporting. Rutwind Brar can assist with your sales tax returns and have specialists in this area on our team.
Financing your inventory
As customers come to expect one stop shopping for eyewear, that creates an additional financial stress for the optometrist to cover the cost of inventory long in advance of a confirmed sale. We can help with the reporting that lenders are looking for before they will support these business expenses. Equally important are the volume of inventory write-downs you will require, as it is difficult to determine which models will sell well and need to be retained in stock. This can create a significant reporting issue which will be a concern to your lender.
Specific lease requirements
Often shops located within a mall or in a designer shopping district may be required to meet specific design and layout requirements to meet the theme of the property and appear to be consistent with neighboring retailers. These costs need to be borne by the business, often with little opportunity for negotiation. In a shopping mall, you may also be required to report sales as part of your lease agreement. Rutwind Brar is well versed in the preparation of these reports and can assist to ensure you are in compliance.
Let Us Navigate The Tax Requirements For You
Both Provincial (PST) and Federal (GST) tax require the calculation of your input tax credits, which do offer some financial relief for your business. You do have the opportunity to claim back a portion of the Provincial and Federal taxes you pay as part of your business expenses, but only on a portion of your expenses – recognizing that some fees are exempt, some are zero-rated and some are fully taxable. It’s not only just a pro-rating of costs that determines your input tax, and we can help ensure that you are taking advantage of the best calculation possible.
Tax-Exempt Capital Gains on the Sale of Your Practice
The advantages of incorporation are similar for optometrists as other professions. We can help you to identify the advantages of these strategies for optimal tax benefit as a private corporation. One of the greatest advantages for a private corporation may well be in the event of a sale of the practice. For most other professions, the same circumstances do not apply. In the event of a sale, we can help you as an optometrist to maximize your capital gains exemption. In fact, you could sell your shares for a gain as high as $825,000 (2016, future years’ increase indexed to inflation) without paying any income tax. In the case of a multi-location enterprise, it’s possible to leverage that exemption per location, which can create significant financial benefits.
At Rutwind Brar, we can assist on both sides of the sale, also assisting the buyer to take full advantage of the tax effect of a share purchase. We have a wealth of experience in ensuring that due diligence has been addressed for buyers of corporate shares to ensure a successful completed transaction between both parties.
I have been using Rutwind Brar for over 7 years now as someone who is self-employed. They have always been professional, and they get my taxes done really quickly without missing a thing. I have referred several people to them as well, all of whom have been happy with their services.Dr. Stephanie Du, Optometrist, Mission Eye Care