By Drew Hinrichs, CPA, CEO of Engage Advisors
According to the American Dental Association, about 76 percent of all dentists owned their practices in 2019, down from 84 percent in 2005. While a solid majority of dentists still prefer ownership, new graduates today have plenty of options when it comes to deciding whether they want to practice dentistry as a business owner, an associate, or an employee. There is no right or wrong answer – just what fits your personality and life goals.
If you’re trying to decide whether or not owning a practice is the right choice for you, let’s consider the main benefits of each.
Benefit of Not Owning a Practice
Less Responsibility
If you simply want to take care of patients, opting not to own a practice might be the way to go. As an employee or contract worker, you don’t have to deal with all the responsibilities that come with running a business such as managing staff, handling all the financials, or maintaining day-to-day operations. You show up before the morning huddle and leave after your notes are completed. Once you’ve left the office, you don’t need to think about work again until the next morning.
Lots of Options
The field of dentistry is facing a potentially severe workforce shortage, so if you decide to work as an associate or an employee, you will have plenty of options. If you want to relocate to another state, you can do so with confidence that you’ll find work. This is especially valuable if your spouse has a job that requires them to move frequently. If the flexibility to pick up and go sounds good, you might not want to own a practice.
Benefits of Owning a Practice
Control Over Career
If autonomy is important to you, owning a practice is a good fit. When you work for yourself, you choose your schedule, your team, and the type of practice you cultivate. If there’s something in your business you don’t like, you have the power to change it. You never have to deal with managers hassling you about increasing the number of patients you see each day.
You are in charge and answer to no one.
Higher Potential to Build Wealth
As a business owner, you have significantly more paths to accumulate wealth and reduce your tax liabilities than does a non-owner.
Increased earnings potential: income is not just the result of your two hands, but is based on all producers in the office, including associate dentists and hygienists. You also directly benefit from time invested in continuing education and specialized training.
Tax benefits: the tax code offers a multitude of avenues for lowering tax liabilities that include:
- Deductions for things like automobile expenses, home office, and travel for continuing education
- Employing your children as a vehicle to fund their college education
- Employing your spouse as a vehicle to fund their retirement
Build equity: your practice represents a valuable asset that you will eventually be able to sell when it’s time to retire. This can represent a substantial sum and would include business properties you may have purchased along with your practice.
Summary
While owning a practice definitely involves some financial risks and requires you to take on more responsibility, the potential for reward is extremely high. Ownership also allows you to build a practice that matches your personal style and work preferences. By choosing not to own a practice, you sacrifice control over your work environment and schedule, but you free yourself of many obligations tied to ownership. You also have the freedom to relocate or change situations, knowing that your services are in demand. In the end, your decision should come down to what’s important to you and what feels right.
If you’re trying to decide whether or not you want to own a practice, schedule a call with our team at Engage Advisors. We can discuss your options, help you set goals, and we’ll work with you to achieve them.