Tax, accounting and consulting for dental practices

The three money problems

A dental practice is a clinical business with a payroll, a list of equipment and an owner who is also the main producer. The three problems below follow from that shape. The shape is the same whether the practice runs one chair or five. The numbers change, the decisions do not.

1. The owner and the practice share one wallet

   The dentist owns the practice through a professional entity and also works in it. Pay, distributions, retirement contributions and the personal return move together. If the salary is set low to hold down payroll tax, the distributions can be recharacterized, and the retirement contribution falls with the salary.

   What we do

   We set a salary that fits the work the owner actually does, run it through payroll, and reconcile the K-1, the W-2 and the personal return. The owner's basis, the retirement plan and the estimated payments are tracked from the same set of numbers, so a distribution does not arrive as a surprise in April.

2. Payroll every two weeks, equipment over ten years

   Hygienists, assistants and front desk staff put a payroll on the books. Chairs, imaging units, sterilizers and build-out are capital, and the loan that paid for them is not an expense. A cash basis ledger can show a good month while the practice is behind on equipment, payroll tax and the owner's reserve.

   What we do

   We keep the fixed asset list, the depreciation schedule and the equipment loans in one place, and we take the Section 179 or bonus depreciation election on the return when it helps. Payroll tax deposits, the quarterly 941 and the Texas Workforce Commission report run on their own calendar, separate from the return.

3. The money arrives after the work

   Insurance claims and patient balances land weeks after the chair time. The practice still pays payroll, rent and the lab on time. A tax payment or an equipment purchase that lands in a slow month can force a credit line draw that costs more than the tax saved.

   What we do

   We build the cash plan around the collection cycle, not the bank balance on the day the return is due. Estimated payments are sized from the year to date, the accounts receivable aging is reconciled to the deposits, and the practice keeps a reserve for the months when claims run late.

Deadlines and filings

A calendar year practice with staff and an S corporation election keeps the dates below. A fiscal year or a C corporation changes some of them. The federal dates are fixed. The state and payroll dates depend on how the practice is set up.

Every pay period

Payroll tax deposits

Federal income tax, Social Security and Medicare withheld from wages, deposited on the practice's schedule.

31 January

W-2 and 1099-NEC

Forms for staff and for associate dentists or other non-employees paid over the year.

15 March

S corporation and partnership returns

Form 1120-S or 1065, or a six month extension.

15 April

C corporation and individual returns

Form 1120 or 1040, and the first estimated payment for the owner.

15 May

Texas franchise tax and annual report

The franchise tax report is due, and the LLC or PLLC annual report is due to the state.

15 June

Second quarter estimate

The owner's personal estimated payment for the second quarter.

15 September

Third quarter estimate and extended entity returns

The owner's third estimate, and the extended 1120-S or 1065.

15 October

Extended individual return

The extended 1040, which carries the K-1 from the practice.

15 January

Fourth quarter estimate

The owner's fourth personal estimated payment for the prior year.

15 November

Extended Texas franchise tax

The extended franchise tax report, if the practice filed for one.

The payroll provider, the bookkeeper and the tax preparer should work from one calendar. These are the dates we put on it.

Next step

Tell us how the practice is owned, who is on payroll and what the last return left open.

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