Transitioning from dental associate to practice owner often feels like a natural progression, but whether you’re planning to build your own from scratch or purchase an existing practice, there are many questions you’ll need to find answers for.
From how much money you should borrow and what kind of entity structure to choose, to knowing whether you’ll be able to pay yourself in the first year, working with a firm experienced in dental accounting Miami can help you answer all of these questions and more.
You can also refer to this brief, 5-step strategy:
- Know your numbers before you start shopping
Until your schedule starts to fill up and you’ve established yourself as a dental practitioner, you’ll likely need to finance all of your equipment, buildout, marketing, and many months of overheads. Set a budget for a minimum of $500,000 to get yourself set up with the basics, and talk to your accountant about using tools and depreciation schemes to make the most of your deductions and plan confidently for the future.
- Secure the right financing
When securing financing, carefully consider the structure of the loan, the length of its term, whether working capital is built-in, and how much flexibility there is for prepayments. Just because the average lender loves dentists, doesn’t mean you should leap straight into the first offer you’re presented with. Your accountant can help you compare lenders and find a loan that’s structured around a realistic business plan.
- Select the right business entity
The type of entity you choose to form affects everything from how you pay yourself, through to how you’re taxed, and how much liability protection you have; warranting careful consideration.
An experienced dental accountant can help you choose the most tax-efficient entity for your circumstances and needs.
- Give your compensation strategy enough thought
This element of practice ownership is often overlooked, and yet it can cause the most stress.
A dental accountant will likely help you with the following:
- When your practice begins to generate revenue that’s consistent, they’ll use payroll to set you up with reasonable owner compensation.
- If cashflow is a little tight in the beginning, money may be informally drawn, but they’ll put a plan in place to transition you to payroll and distributions at the earliest.
- They’ll ensure that how you pay yourself is in alignment with your tax strategy. This will include estimating quarterly taxes, and tracking your income in terms of how much is taxed as salary vs. distributions.
- Put a supportive team in place from the outset
Practice ownership may seem simple, but with so many mistakes just waiting to be made, it’s far better from both a financial and emotional standpoint, to have a solid support system in place early on. This will help you share the burden and ensure you get everything right.
A solid team should ideally consist of accountants for dental practises in Miami, a dental attorney, and a lender with specific knowledge of the dental industry. You may also want to consider working with a practice consultant if you’re starting out from scratch; they can help you with patient acquisition and office design, among others.
Making a confident transition from dental associate to practice owner is perfectly viable, provided you follow the 5-step strategy outlined above. Working with specialist dental accounting services can bring clarity to the numbers, and ensure that you’re ready financially, for what’s coming next.