Retirement Plans for Pet Grooming Business Owners: Solo 401(k) and Plans with Bathers

By Yarik Yarosh, CPA ·September 5, 2026 ·3 min read

Written by Yarik Yarosh, CPA (US & Canada) September 5, 2026 · FL CPA license AC61704 · CPA Ontario

Pet grooming businesses are not SSTBs, so the QBI deduction is available at all income levels. Retirement contributions reduce taxable income and provide long-term savings, and for groomers earning $60,000-$120,000 in net profit, the Solo 401(k) can shelter $30,000-$50,000 per year. Once the grooming shop hires bathers, assistants, or additional groomers as W-2 employees, the Solo 401(k) is unavailable and the owner must choose a plan that includes those employees.

✓Key takeaway

A solo groomer (no employees other than a spouse) uses the Solo 401(k): $23,500 employee deferral plus 25% of net SE income (or W-2 salary for S-Corp), up to $70,000 combined. A grooming shop with employees uses a SIMPLE IRA (lower deferral, lower employer cost) or Safe Harbor 401(k) (higher deferral, higher employer cost). The SIMPLE IRA is often the best fit for grooming shops with 1-3 employees because the mandatory employer match (up to 3% of compensation) is modest for lower-paid bathers ($25,000-$35,000/year), and many part-time bathers never enroll (reducing the actual cost). The grooming industry’s relatively low wages and moderate turnover make the SIMPLE IRA’s cost structure attractive compared to the Safe Harbor 401(k)‘s mandatory 3% non-elective contribution on all eligible employees.

How much can a solo groomer contribute?

Hypothetical example

Round numbers. A solo pet groomer earns $80,000 in net self-employment income (after the SE adjustment, the calculation base is approximately $74,280).

Solo 401(k):

Employee deferral: $23,500
Employer contribution: 25% of $74,280 = $18,570
Total: $42,070

Tax savings at 22% marginal rate: approximately $9,255. The $42,070 contribution reduces the groomer’s taxable income from $80,000 to approximately $37,930 (after standard deduction), dropping them into the 12% bracket on most of their remaining income.

With S-Corp ($42,000 salary):

Employee deferral: $23,500
Employer contribution: 25% of $42,000 = $10,500
Total: $34,000

The sole proprietor Solo 401(k) actually allows a higher total contribution than the S-Corp in this case because the employer contribution base (25% of net SE income) is larger than 25% of the S-Corp salary. The S-Corp still saves on SE tax, and the combined S-Corp + Solo 401(k) benefit may exceed the sole proprietor + Solo 401(k) benefit depending on the specific numbers.

Illustrative numbers only, not a real client and not advice for your facts.

What about a grooming shop with bathers?

A grooming shop that hires bathers (assistants who wash, dry, and prep dogs before the groomer does the styling) has W-2 employees. Bathers typically earn $28,000-$38,000/year and have moderate turnover.

SIMPLE IRA for a shop with 2 bathers:

Owner deferral: $16,000
Owner match (3% of $80,000 net): $2,400
Bather matches (assuming 1 of 2 enrolls, 3% match on $30,000): $900
Total employer cost: $3,300
Owner total contribution: $18,400

The $18,400 total is lower than the Solo 401(k)‘s $42,070, but the trade-off is having employees who help the owner groom more dogs per day (and earn more revenue). The retirement plan cost ($3,300) is modest compared to the additional revenue the bathers generate.

Related guides:

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Cite this page

Yarik Yarosh, CPA. "Retirement Plans for Pet Grooming Business Owners: Solo 401(k) and Plans with Bathers." Blue Cloud CPA, September 5, 2026. https://bluecloudcpa.com/guides/pet-grooming-retirement-plans

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.