Why Experienced Dental Practice Owners Still Need Proactive Advisors

Many experienced dental practice owners reach a point where they feel like they have seen it all.

They have survived recessions, COVID shutdown, staffing shortages, insurance reimbursement pressure, equipment upgrades, tax law changes, practice expansions, and countless operational challenges. After years or decades in practice ownership, it is understandable why many dentists begin to feel there is “nothing new under the sun.”

But in reality, the business side of dentistry continues to evolve constantly.

The financial, tax, and operational environment surrounding dental practices today looks very different than it did even five years ago.

Insurance reimbursement pressure continues to change profitability dynamics. Wage expectations and staffing models have shifted dramatically. Technology investments are larger and more frequent. Tax laws continue to evolve. Cybersecurity and internal control risks are increasing. Multi-location ownership structures are becoming more common.

Financing environments change. Retirement and succession planning strategies evolve.

Even highly successful practice owners can miss planning opportunities or emerging risks simply because they are focused on patient care and day-to-day operations.

One of the most valuable things an experienced advisor provides is perspective.

After working with many dental practices, patterns begin to emerge. Some practices consistently maintain strong profitability despite industry pressure. Others struggle with collections, staffing inefficiencies, hygiene profitability, weak internal controls, or cash flow problems despite high production levels.

Sometimes the issue is not a lack of effort. It is simply a lack of visibility into what is changing around the practice.

This is particularly true with tax planning.

Many dentists assume their CPA is “handling the taxes,” when in reality the CPA may only be preparing historical tax returns after year end with little proactive planning occurring during the year.

Meanwhile, substantial planning opportunities may exist involving:

• entity structure

• compensation strategy

• retirement planning

• Qualified Business Income deduction

• SALT Parity Act and PTET state elections

• employer tax credits and incentives

• equipment timing

• real estate ownership

• succession and transition planning

• shareholder basis management

• estimated tax strategy

• cash flow planning

The same is true operationally.

A dentist who has owned a practice for 20 years may not immediately recognize how staffing structures, insurance participation, overhead percentages, technology adoption, hygiene models, and practice valuation expectations have changed relative to other practices in today’s environment.

That does not mean experienced owners are doing something wrong. In many cases, it simply means the environment continues to evolve.

The most successful long-term practice owners are often the ones who remain open to learning, benchmarking, adapting, and periodically reviewing their practice with fresh eyes.

At T. S. Allen & Associates, we work with dental practice owners throughout multiple stages of practice ownership, from growth and expansion through succession planning and eventual practice transition. One of the most valuable things proactive advisory relationships can provide is ongoing perspective as the business side of dentistry continues to change.

We provide these articles as general information and not individualized tax advice.  They do not constitute a client relationship with you, and any information provided here should be applied at your own risk.