Running a successful dental practice takes years of training, precision, and long hours. But many dentists overlook one of the largest drains on their profitability: using a general accountant who lacks specialty in the dental industry. According to recent advisory firm insights, dental practice owners still find themselves in sole proprietorships or misstructured entities, resulting in significant tax overpayment.
In this article, we’ll show why dentists often pay too much in tax, how a specialist accountant changes the outcome, and what steps you can take now to fix it—before the next tax season.
The surprising truth: dentists often pay too much in taxes
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- Many dental practices operate with overheads of 59%–62% of gross revenue. When overhead is high, the net income becomes smaller, yet tax planning often remains generic.
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- Advisory firms state that generic accountants frequently overlook industry-specific strategies such as equipment depreciation, entity selection, or proper payroll distributions – all of which can cost thousands.
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- Example: A dentist with $800,000 revenue, operating as a sole proprietor, may face higher self-employment tax, missed S-Corp benefits, and fewer deductions compared with a properly structured entity.
What a general accountant misses and what a specialist picks up
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- Entity structure mistakes: many practices still operate as sole proprietorships or generic LLCs taxed as Schedule C, which means all net income is subject to self-employment tax, and they are missing out on S-Corp advantages.
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- Dental-specific deductions: Equipment, dental supplies, office expansions, CE courses, and sterilization costs—all require tracking and placement-in-service timing. For example, under the new 2025 rules, a dental practice may deduct up to $2.5 million using Section 179 and benefit from 100% bonus depreciation.
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- Payroll vs. distributions: For an S-Corp dental practice, the owner must take a reasonable salary, with remaining profits taken as distributions. This split helps reduce employment tax and allows for the 20% Qualified Business Income deduction (for pass-through entities) when under certain thresholds.
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- Proactive tax timing: Specialist accountants help with end-of-year planning to ensure equipment purchases are placed in service by December 31, proper retirement plan contributions are made, and entity reviews are conducted.
Questions your accountant should be able to answer
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- “How much were your consultants able to save past clients in your niche—dentistry?”
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- “What entity type is optimal for your practice given your revenue, profit, payroll, and state tax?”
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- “Which dental-specific deductions did we miss last year?”
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- “What changes to tax law for 2025/2026 will impact my practice (e.g., Section 179 limit, bonus depreciation)?”
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- “What’s the strategy for your compensation (salary vs. distribution) to optimize your tax position?”
When it’s time to switch to a dental tax strategist
When it’s time to switch to a dental tax strategist
Consider a change if:
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- You haven’t discussed entity review in the last 2+ years.
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- You still operate as a Schedule C or generic LLC without specialist dental tax planning.
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- Your year-end tax bill seems unusually high relative to peers.
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- You receive generic tax advice that doesn’t reflect dental-specific deductions or practice dynamics.
Switching to a specialist costs meaningful money—but so does staying in the wrong structure. Many dental tax advisors estimate savings of $9,000-$35,000+ annually simply by changing out of a sole proprietorship or C-Corp into a properly managed S-Corp structure.
- You receive generic tax advice that doesn’t reflect dental-specific deductions or practice dynamics.
How Less Tax for Dentists solves this problem
At Less Tax for Dentists, we specialize in dental practice tax strategy. Our process:
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- Free Tax Analysis—We review your past 2-3 years, identify missed savings, and map your practice’s tax position.
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- Custom Strategy Implementation—Entity restructuring, payroll vs distribution planning, equipment depreciation, and retirement plans.
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- Ongoing Advisory—We proactively manage your practice tax-plan year-round, not just at tax-filing time.
Book your free analysis today at https://lesstaxfordentists.com and see what you could have saved last year.
- Ongoing Advisory—We proactively manage your practice tax-plan year-round, not just at tax-filing time.
FAQ Section
Q: Can a general CPA really cost a dentist thousands of dollars?
A: Yes — for example, if your entity is wrong—you may pay higher self-employment taxes, miss QBI deduction, or overpay payroll mix. Specialist dental tax advisors often uncover these hidden areas.
Q: What’s involved when switching to a dental tax specialist?
A: It involves reviewing your entity, converting if needed (with proper IRS filings), updating payroll, tracking new deductions and installing a year-round advisory system.
Q: How much can I save by changing accountant now?
A: While results vary widely, many dentists in advisory firm data save between $9,000-$35,000 annually by repositioning structure and applying industry-specific deductions.
Ready to stop overpaying?
Book your Free Tax Analysis and Start keeping more of what you earn—today.
