Top 6 Financial Tips for Dentists and Practice Owners

Author: Donald E. Williams, Jr.

As CFO for Integrity Dental Services, our dental practice customers frequently ask me for financial and tax tips for their dental practice. While every dental practice is unique, and any specific financial or tax advice needs to come directly from the dental practice’s accountant, this article identifies several financial and tax tips that a dental practice may want to consider.

Financial Tip #1: Efficient and Effective Appointment Scheduling

The number one financial tip I give to dental practices is to make patient appointment scheduling be as efficient and effective as possible. Efficient and effective appointment scheduling is the best way for a dental practice to maximize its revenue while simultaneously fully utilizing its staff and equipment. For larger dental practices, this might entail using an online appointment scheduling system that transmits emails, texts, and voice messages regarding appointment sign-ups and appointment reminders. For smaller dental practices, this might entail timely phone call appointment sign-ups and appointment reminders. Regardless of the system used, the more a dental practice communicates with a patient about their scheduled or yet-to-be scheduled appointment, the better. Furthermore, making sure that a patient schedules their next appointment immediately prior to leaving the dental office upon completion of their current appointment, greatly increases the chances that the patient will actually schedule and attend their next appointment.     

Financial Tip #2: Collecting Payment at Time of Service 

The number two financial tip I give to dental practices is to make sure that full payment is collected at the time of service. Payment at the time of service should be a dental practice’s standard policy. Upon completion of the dental services, a staff member should escort the patient to the welcome desk so that the patient’s payment can be immediately processed (i.e., by check, credit card, cash, or other acceptable payment method). Collecting payment after the time of service results in an increased risk of non-payment and the incurrence of significant staff costs in trying to collect such payments. Nevertheless, if payment must be collected after the time of service or a financing arrangement is agreed to with the patient, make sure to get the patient’s commitment to make those expected payments in a signed writing.

 Financial Tip #3: Scheduling Multiple Patients for Appointment Times

The number three financial tip I give to dental practices is to make sure to schedule the most patients that the dental practice can reasonably handle for each appointment time period. Some dental practices can handle only one patient at a time, but the better performing practices schedule multiple patients per dentist for each appointment time period, and then plan for supporting staff as needed. This allows for the dentists and the staff to be utilized at all times, even when some of the patients cancel or do not show for their appointments. While you want to keep your appointments on time, keeping the appointments on time is generally much less important than ensuring full utilization of dentists and staff.

 Tax Tip #1: Being Taxed as an S-Corp. 

The number one tax tip I give to dental practices is to make an election with the IRS to be taxed as an S-Corporation. Even dental practices that are operating as limited liability companies, or as a sole proprietorship, can make an S-Corporation election. Dental practices making this election can minimize their payroll taxes (i.e., which are generally 15.3% of taxable earnings) by paying the employee/owners of the dental practice a reasonable compensation and then distributing all other cash flow to such employee/owners without having to pay any payroll taxes on those distributions.

 Tax Tip #2: Claim All Applicable Tax Credits and Tax Deductions

The number two tax tip I give to dental practices is to make sure to work with their accountant to claim all applicable tax credits and tax deductions. For example, I am aware that some dental practices delay or defer equipment purchases, believing them to be currently too expensive while failing to take advantage of the immediate tax savings resulting from such equipment purchases. Another example is that it often makes good financial and tax sense for the dental practice owners to buy the building their dental practice is utilizing, with such ownership being in a separate legal entity, and then leasing space in that building directly to their dental practice. There are tax efficiencies that result from such arrangements, in addition to not having to pay an unrelated party expensive lease payments. By claiming all applicable tax credits and tax deductions, the take-home pay of the dental practice owners can increase without having to work harder or longer.


The above tips are the most common tips that I discuss with our dental practice customers during the process of us working with them to help make their dental practices be successful. Hopefully, I can discuss these tips and others with you when we meet in the future.

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