You might be thinking about owning a dental practice or maybe just want to know how your pay compares. You think the pay now days is so good as an associate, or the DSO is taking care of other things, that the pay would have to be absolutely incredible to make the jump. Whatever the case may be, there’s one burning question: How much does a practice owner dentist really make? Let’s talk numbers, perks, and the lesser known benefits of going out on your own. Many people who don’t own a business don’t understand the other benefits. I know I sure didn’t until I started my own business.
Show Me The Money
Might as well start with what you came here for. Most dentists in private practice typically bring home anywhere from $150,000 to $300,000 per year. Not a bad gig right? Of course there are always outliers with the story about some guy who is raking it in, especially the surgeons, orthodontists, or multi practice owners. But what I’m focusing on is the doctor who wants to be their own boss and provide a great life for their family, not necessarily take over the dental world. To understand the numbers better, there are definitely things that change someone from making a couple hundred thousand a year to the ones doing much more.
Location, Location, Location
Let’s say you open your dream practice in Beverly Hills. Big money? Possibly. Big expenses? For sure. Think astronomical rent, higher wages to keep your staff happy, and keeping up with the Southern Californian lifestyle. But on the flip side, you can charge more. If you set up shop in a more rural area, you might not be charging So Cal prices for a crown, but you also won’t be paying So Cal rent. Unfortunately you may not have your favorite celebrity as a patient, you could be the go to dentist for everyone in a large area. Talk about community influencer!
Years 1-5 of the Grind or the Veteran Cashing In
Your first few years you’re probably building your patient base, figuring out how to run a business without losing your marbles, and just generally trying not to panic every time a new expense comes around. But once you’ve got some years under your belt, things start to move along much more smoothly. Your patients love you, you’ve got efficiency down to a science, and suddenly that $150,000 is creeping closer to $300,000 or more. It’s all about the long game, particularly when you consider the loans associated with all of this. Would you rather work for someone for 40 years, or have a difficult 3 years starting your own?
Learn to Earn, but the Riches are in the Niches
Want to bump up that income without working more hours? Consider specializing! Orthodontists and oral surgeons often make $400,000+ per year. Why? Because they’re doing some of the advanced work that nobody else wants to or can do. When you’re the go to person for braces or surgery, you can charge more and patients pay it because you’ve got the skills they need.
Building the Business Acumen
You might be the next Kobe with a drill, but if you want to take home a big paycheck, you also need to be a master at managing your practice. Streamlined operations, efficient staff, and smart marketing all adds up to bigger profits. Got a ton of expenses? Time to make some moves that won’t hurt your business. Don’t go firing people or cutting pay, it’s more like hey go renegotiate with your supplier or buy a used piece of equipment. The more you manage the business side, the more money goes in your personal bank account.
The Real Kicker is the Add Backs and Tax Breaks
Here’s where things get really fun. Add backs are basically a fancy term nobody talks about until you’re speaking with brokers who want to show what you’re actually making. These are expenses that are technically for the business, but guess what? They’re also personally benefitting you. You don’t get these at the big DSO or working for Dr. Smiths privte practice. It’s literally like having your cake and eating it too, except the cake is a new car or a trip to somewhere nice.
Here are a few things you could run through the business:
- Car: You’re commuting between multiple offices or attending conferences, right? Why not lease that shiny new car under the business?
- Travel: Attending dental conferences in warm tropical cities? Yep, that’s a business expense.
- Health Insurance: Need to cover your own health insurance? Write it off through the practice.
- Meals and Entertainment: That business lunch where you schmoozed a potential referral source. That’s totally a business necessity.
The magic of add backs is that they lower your taxable income, meaning you pay less in taxes while still enjoying the benefits of driving a nice car or traveling on the business’s dime. Most people are paying taxes before their expenses, where as a business owner you’re paying a lot of taxes after expenses. On paper this makes a huge difference when talking to your salaried buddies.
Building up Equity for a Golden Parachute
While that annual salary is great, don’t forget about the equity you’re building in your practice. This isn’t just a career you went to school for, it’s an investment too. Every year you’re building the value of your practice, and when you’re ready to retire or move on, you can sell it for a potentially huge payout. We’re talking hundreds of thousands, or even in the millions, depending on your location and patient base. The longer you run your practice successfully, the bigger that payday will be down the road.
The Best Part though is Control Over Your Life
Owning your own practice isn’t just about making loads of money. Sure that’s nice, but it’s also about freedom. You get to control your schedule. Want to work four days a week and take long weekends? Done. Want to hire an associate so you can kick back and enjoy more personal time while still bringing in cash? Totally doable.
Owning a practice gives you the flexibility to live the kind of life you want. Want to build an empire? Go for it. Prefer a smaller practice that lets you balance work and personal life? That’s your decision too. Nobody to report to is worth way more than you could ever imagine.
The Beauty of Deductions for Tax Advantages
Let’s not forget about the tax advantages that come with owning a practice. From deducting office expenses to writing off equipment and retirement contributions, owning a practice is full of financial perks that employees just don’t get.
You can also take advantage of things like:
- Depreciation on Equipment: That fancy new dental chair you just bought? You can deduct its value over time. Sometimes with the right code, you could accelerate it!
- Retirement Savings: As the boss, you can set up your own retirement plans with higher contribution limits than you’d get as an employee. This means more money going into your retirement tax free.
Is It Worth It?
In short, absolutely yes. Owning a dental practice isn’t just about the salary, it’s about the freedom, the perks, and the long term payoff. There’s definitely work involved, but the rewards are significant when you look at everything involved. You’re not just building a career, you’re building a business and a lifestyle that suits you.
So when you’re ready to take the leap into chasing career dreams, owning a private practice could be your ticket to not only a great salary but a life on your terms. Copper Dental Transitions helps dentists do this everyday, so feel free to reach out if you want a sidekick along the way. We’ve done it ourselves too so know the excitement and fear this decision can bring.
Kyle Womeldorff
480-690-5200
info@dentalbroker.com