Accountants do more than annual tax filings; they are business advisors that help you reach your goals. Consider where your practice is headed and your exit, and an accountant can help design and implement your succession plan. Here are two common scenarios:

Transitioning your practice to an associate, junior partner or family member

If you are considering transitioning your business to someone within your practice, assess the qualifications and business acumen of the purchaser. How are their skills in...?

  • Client retention
  • Ability to lead team members
  • Ability to continue the practice's legacy

These are important questions if you want to retain the integrity of the practice as you exit. OD's can forget these important business skills when evaluating a successor in favour of technical abilities. Your practice is a business where its leader needs to work "on the business" not just "in the business."

This is especially important if you are transitioning your practice to a family member; don't skip these steps! In our experience, it is critical to have proper assistance when family is involved.

Sale of the practice to another optometrist (outside your practice), medical clinic or other party

If there are no imminent successors working with you in the practice, it may be advantageous to solicit third party purchasers that include large corporate buying groups of similar practices, large OD practices or other integrated health networks. Choosing this route could mean receiving a higher value for the practice, potential to continue working comfortably with less financial risk and being able to work more flexible hours. To be attractive to these potential investors, the business should be set up in a professional manner including strong OD assistants, administrative staff, systems and processes where the practice can continue to operate smoothly upon your exit.

When you are moving down the line with a succession plan, your accountant can be your strategic advisor and assist with the purchase and sale agreement. Key components of the agreement include: purchase price, term, retention payouts and financing. Accountants also perform financial modelling and tax planning to ensure the deal makes sense and you will be paid out in a reasonable timeline. For example, one of the most beneficial tax advantages is to use the capital gains exemption on the sale of a corporation. This will save you approximately $200,000 of tax if planned properly. Overall, the goal is to maximize the amount of after-tax money that you will receive.

This article originally appeared in the e-newsletter for the Ontario Association of Optometrists in June 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.