The Benefits of Owning a Dental Practice
Today, dentists have two main options when considering a career path in dentistry: they can work for a corporation as a dental employee or own a dental practice. While the up-front investment required to buy or establish a dental practice may seem intimidating, especially to dentists with high student loan burdens, there are several significant benefits to owning a dental practice.
Buying an Established Dental Practice: Patients and Reputation
Dentists interested in owning their own practice can buy a currently operating dental practice or establish a new practice. Buying a dental practice can smooth the transition to ownership. For example, an operating dental practice likely has hundreds or even thousands of patients, many of whom will continue to visit the practice after it changes owners. And new owners also benefit from a practice’s established reputation and position in the local market.
Establishing a New Dental Practice: Ultimate Control
Some dentists prefer to open a new practice rather than buy into an established practice. While the choice may bring challenges, such as building a patient base, hiring employees, and building a reputation, with this option, the owner has ultimate control in how the practice runs. Procedures, the practice environment, and the customer experience are all in the hands of the owner.
Whether buying a practice or establishing a new one, being an owner brings major tax benefits. Ironically, business owners often pay lower tax rates than employees. That’s because business owners can deduct a number of expenses from their taxes, including accounting fees, insurance, office expenses, and even business-related travel. As Dental Economics points out, dental owners can deduct manufacturing expenses for making dental products on-site, write off equipment purchases, and deduct health insurance premiums. While dental employees pay taxes on all of their income, the owner of a dental practice often has more control over their tax rate.
Dental associates who work for corporations might lose their job at any time, for any reason. If the business is struggling, or if the employee clashes with management, dentists may find themselves unemployed but still on the hook to pay back dental school loans. Business owners, on the other hand, have built-in job security. Similarly, owning a dental practice means making hiring and firing decisions, which means that dentists to choose their colleagues.
Equity and Profits
Last, but certainly not least, ownership brings the benefit of equity. As a profession, dentists earn high wages, but many carry heavy student loan burdens. Early career dentists may worry about the financial investment required to buy or open a dental practice, particularly when paying back student loans. However, the money invested in a dental practice transforms into equity, which pays off for years after the student loans are gone. According to Dental Products Report, in 2015 the average monthly revenue for a dental practice was $121,546.21, a nearly 30% increase from 2008.
Aside from the financial benefits, owning a dental practice can also provide flexibility and a number of other perks. It’s no surprise why the American Dental Association reported that in 2015, 80% of dentists in private practice were owners.