So You Want to Open Your Own Dental Practice?

Published on: 05/24/2025

For years, you sat in the operatory thinking about what it would be like to finally do it—open your own practice, call the shots, and build something you could truly be proud of. If you’re reading this, you probably know the feeling. Maybe you’ve worked as an associate for a while, or maybe you're fresh out of residency, eager to create a practice that reflects your values and vision for patient care.

Let me say this: it’s not only possible—it’s worth it. Yes, it’s a big leap. Yes, it can feel overwhelming. But owning your own practice means you get to set the tone. You choose your team. You decide how you treat your patients, what your workdays look like, and how your career evolves over time.

And let’s talk about the elephant in the room: the income potential. Dentists who own their practices earn, on average, significantly more than associates. According to ADA data, practice owners often make 30–50% more annually than non-owners, with even greater upside as they grow. That extra income can translate into faster debt repayment, better retirement savings, and the freedom to reinvest in your team, technology, and future.

But, like placing a complex crown prep, success comes down to preparation. Clinical excellence is only one side of the equation. The other side—business operations and tax strategy—can make or break your long-term success. If you’re thinking of going out on your own, here are a few things you should consider from day one:

1. Choose the Right Business Structure

Your entity choice—LLC, S Corporation, or C Corporation—will affect how you’re taxed, how you pay yourself, and how you handle liability. Many new dental practices choose an S Corporation because it allows the owner to take a reasonable salary and treat remaining profits as distributions, which are not subject to self-employment tax. This can lead to meaningful tax savings over time.

However, forming an S Corporation comes with strict IRS compliance requirements. You must pay yourself a "reasonable compensation" as a W-2 wage, and you’ll have to file a separate corporate tax return (Form 1120-S). Alternatively, an LLC is often simpler and more flexible for new practice owners, but it doesn’t provide the same potential tax advantages unless it elects S Corp treatment.

If you expect to have multiple owners or plan to grow aggressively, a C Corporation might be appropriate—though it comes with the drawback of double taxation unless profits are retained within the company. Choosing the right entity at the start can save you thousands and help you avoid expensive restructuring later.

2. Start-Up Costs and Deductions

Dental practices have significant up-front expenses—from leasing and renovating office space to purchasing dental chairs, X-ray equipment, sterilization systems, and practice management software. These costs can easily exceed $300,000 to $500,000.

The IRS allows many of these investments to be deducted under Section 179, which lets you write off qualifying equipment and software in the year it’s placed in service (up to an annual limit). Additionally, bonus depreciation lets you deduct 60% of the cost of qualified assets in 2024, even if they exceed Section 179 limits.

Even pre-opening expenses such as legal fees, consulting, and some marketing costs may qualify as start-up costs. Up to $5,000 can be deducted immediately, with the remainder amortized over 15 years. Keeping detailed records and working with a CPA ensures you capture every deduction available.

3. Don't Skip the Bookkeeping

Many dentists focus so heavily on patient care and launching their practice that they neglect their books until tax season—which is often too late to fix costly errors. From the very beginning, you should establish a reliable system for tracking income and expenses.

Using accounting software like QuickBooks Online, paired with a professional bookkeeper or CPA, helps ensure accuracy. Your books should be reconciled monthly to catch discrepancies early. This not only keeps you IRS-ready, but also gives you real-time insights into your financial health: Are you profitable? Can you afford new hires? Are overhead costs creeping up?

Accurate bookkeeping also supports loan applications, budgeting, and practice valuation. The earlier you build good habits, the more time you'll have to focus on patients, not paperwork.

4. Plan for Estimated Taxes

As a dental practice owner, you no longer have an employer withholding taxes on your behalf. Instead, the IRS expects you to make quarterly estimated tax payments based on your income. Missing a deadline or underpaying can trigger penalties and interest.

Your payments will cover not only income tax, but also self-employment or payroll taxes, depending on your business structure. This means a significant portion of your income—sometimes 30% or more—needs to be set aside.

Working with a CPA to calculate your projected earnings and required payments each quarter helps you avoid surprises and stay compliant. You’ll also want to monitor changes in income as your practice grows or slows—adjusting your estimates accordingly.

5. Retirement Planning Starts Now

One of the most powerful tax planning tools for small business owners is retirement saving. Not only does it secure your financial future, but it can significantly reduce your taxable income in the present.

As a practice owner, you have several options: a Solo 401(k) allows you to contribute as both employer and employee, potentially deferring over $66,000 annually (for 2024); a SEP IRA offers easier administration and works well if you have no employees; and a Safe Harbor 401(k) can help if you plan to hire staff and want to avoid discrimination testing.

Making consistent contributions over time, even if modest at first, gives you compounding benefits. It also sends a positive signal to lenders and potential partners that you’re building a sustainable business.

6. Don’t Overlook the “Little” Deductions

It's easy to miss deductions in a dental practice because so many expenses feel routine. But those "small" items add up. Think uniforms, continuing education courses, professional dues, licenses, business insurance, office supplies, and even your cell phone if used for business purposes.

If you use a home office for administrative work or remote charting, a portion of your home expenses may be deductible too. Meals with referral partners or business travel to conferences are also potential write-offs if properly documented.

Every dollar you deduct reduces your taxable income. A CPA familiar with dental practices can help you stay organized and compliant without leaving money on the table.

Thinking About Starting Your Practice? Let’s Talk.

Opening a dental office is exciting—but the financial side can get complicated fast. At Brogan PC, we help dentists build strong foundations for their practices through smart bookkeeping, tax planning, and financial guidance.

Let’s schedule a time to talk about your plans, your numbers, and how we can help you make the most of your new practice.

Albert Brogan, CPA, MBA

Founder & Principal, Brogan PC

Helping business owners make smarter decisions with CFO insight and CPA standards.

📍 Based in Virginia

💼 BroganPC.com

📧 Albert@broganpc.com

📞 Call or text me anytime: 540-525-0623

This article is for informational purposes only and not legal or financial advice