Equipment-heavy practices where section 179, the building, the entity and a defined benefit plan decide the bill.
Dentistry is the most capital-intensive professional practice there is. Chairs, imaging, CAD/CAM and the buildout cost more than most small businesses ever spend on equipment, and a practice at $1M or more of collections is run by an owner earning like a specialist and taxed like a sole proprietor.
The levers are specific. Equipment and technology timed under section 179 and bonus depreciation against the practice’s income. The building owned in a separate entity with a cost segregation study on the buildout. The professional entity and associate compensation structured so the owner’s salary, distributions and the qualified business income phase-out are modeled rather than guessed. And a defined benefit or cash balance plan sized to an owner in their forties or fifties.
We work with the practice manager and the existing CPA, review the equipment schedule and three years of returns, and write the plan with a calendar for the purchases and the plan contributions.
What we typically see: A CAD/CAM system bought in the wrong year. The building leased from someone else. Associates paid in a way nobody modeled. A 401(k) where a cash balance plan belongs.
Each one is modeled against your numbers and written into the blueprint with the documentation it needs.
The equipment was bought whenever the rep called. Timing the last two purchases against the year moved the bill by more than the chairs cost.
Usually, through section 179 or bonus depreciation, within the limits and against the year's income. Whether you should depends on where the rest of the year lands.
Dentistry is a specified service trade, so the deduction phases out above the income thresholds. Structure sometimes preserves part of it below the top of the range.
A separate entity owned by the doctor usually should, with a lease to the practice. It separates the asset from practice liability and creates depreciation the rent funds.
It depends on age, income and the staff census. Contributions well above the 401(k) limit are common for owners in their late forties and up. The actuary sets the number.
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