- Dental overhead averages62% of collections(ADA 2024). A niche CPA can cut taxes and free cash for hygiene staff.
- Five biggest levers: Section 179 timing, practice buy-in structure, S-corp wages, retirement layering, and AR management.
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Why Dental Finances Are Different
- Capital-intensive equipment cycles every five years.
- Insurance receivables tie up cash 30–60 days.
- Associate-to-partner buy-ins create goodwill vs. asset-allocation puzzles.
- Hygienist wage inflation squeezes margins.
Five Services a Dental CPA Delivers
1. Section 179 & Bonus Depreciation on Equipment
- 80% bonus depreciation drops to 60% in 2025 (IRC 168(k)); timing a CBCT or chair package write-off matters.
- Example: A Dentist wrote off $240K in Year 1, freeing $75K to hire a second hygienist and boost production.
2. Practice Buy-In Structuring
- Seller-financed notes allocate price to goodwill (15-yr amortization) vs. hard assets (bonus depreciation).
- Example: Splitting $900K sale price 60% goodwill / 40% equipment saved the buyer $31K in first-year taxes.
3. Reasonable S-Corp Wages
- IRS looks at ADA total-comp studies; dropping owner W-2 from $300K to $210K saved $18K payroll tax while staying within safe harbor.
- Example: Section 199A deduction preserved an extra $22K.
4. Retirement Plan Layering
- 401(k) Safe Harbor plus cash-balance lets an owner-operator over 50 shelter up to $285K (IRS Notice 2020-62 tables).
- Example: Cash-balance credit formula mirrors hygienist payroll to avoid nondiscrimination testing.
5. AR Management & 13-Week Cash-Flow Forecast
- Dentrix/Open Dental exports feed collections forecasts and insurance-aging dashboards.
- Example: CPA-automated weekly follow-ups cut 60-day receivables by $110K in six months for a pediatric practice.
Frequently Asked Questions
What does a dental CPA cost?
- $5K–$12K per year plusbookkeepingif needed.
- Multi-location groups may pay $25K+ retainer forCFO-level forecasting.
Can I deduct new operatories immediately?
- Yes—179 or bonus depreciation; cost segregation accelerates build-out.
- IRS Form 4562 attaches the election; a cost-seg report supports bonus claims.
Is goodwill on a practice purchase deductible?
- Yes—15-year straight-line amortization (IRC197).
- Accelerating asset portion via bonus lowers first-year tax but raises basis.
Should dentists use cash or accrual accounting?
- Cash until gross receipts exceed $25M; accrual gives truer profit.
- Many stay cash under $10M to defer insurance receivable income.
Red Flags
• “Dental? We treat it like any small biz.”
• Bills hourly with no estimate.
• No AR-aging or insurance-claim tools.
Dentist Readiness Checklist
☐ Equipment replacement schedule built
☐ Buy-in or exit timeline set and valued
☐ AR aging < 30-day insurance average
☐ Cash-balance plan feasibility study done
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Author: Kimi, Co-founder of Sam's List
Kimi writes about what she's learning while building Sam's List and shares honest takeaways from her conversations with accountants and financial advisors across the country. None of this is financial advice—just the stuff most people wish someone told them sooner.
