Category Archives: Financial Planning

Many dentists face a pivotal question early in their careers: Should I buy my own dental practice or continue working as an associate? While both paths have their merits, the long-term financial rewards of ownership often outweigh the short-term convenience of employment.

In this article, we’ll break down the key financial benefits of dental practice ownership compared to working for someone else — and why now might be the right time to take the leap.

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Higher Income Potential

📊 Associates Earn Steady Salaries…

Associate dentists typically earn a fixed percentage of collections or production, often ranging between 25%–35%, depending on the contract and office overhead. In high-production offices, this can be a solid income — but there’s a cap.

🚀 Practice Owners Build Real Wealth

As a practice owner, your earnings are not limited to a percentage. Instead, you benefit from:

• All net profit after expenses.

• Control over fees, services, and patient flow.

• Strategic investments that grow your bottom line.

Example:

• Associate: Earns $180,000/year with no equity.

• Owner: Generates $1.1M in revenue with 60% overhead = $440,000 in net income.

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Equity and Business Value Accumulation

Associates trade time for money — and once you stop working, the income stops too. Practice owners, however, build a saleable asset.

🏢 The Value of Practice Equity

Dental practices typically sell for 50%–85% of collections. That means if your practice collects $1M annually, it could sell for $500,000–$850,000 (or more) when you retire or exit.

This practice equity is wealth you won’t get as an employee.

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Tax Advantages for Business Owners

Owning a dental practice unlocks a range of tax-saving strategies not available to associates.

💰 Common Tax Deductions for Owners:

• Equipment and technology purchases.

• Continuing education and travel.

• Business-related meals and mileage.

• Retirement contributions through SEP-IRA, Solo 401(k), or defined benefit plans.

• Depreciation on real estate or leasehold improvements.

These deductions can significantly reduce your taxable income — something salaried associates miss out on.

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Control Over Your Career and Schedule

While not strictly financial, autonomy has real economic value.

As an associate, your income and hours are controlled by someone else. But as an owner, you can:

• Choose your work schedule.

• Build a team and culture that reflects your values.

• Expand into new services or specialties that increase profitability.

More control = more opportunity to grow income and reduce burnout.

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Long-Term Wealth Through Real Estate Ownership

Many dental practice owners eventually buy the building that houses their practice — unlocking another layer of wealth.

🏠 Benefits of Owning Your Office Space:

• Build equity in commercial real estate over time.

• Receive rental income from the practice (which you own).

• Enjoy tax advantages like depreciation and expense write-offs.

• Retain the building as a separate investment asset after practice sale.

Owning both your practice and your property is a powerful path to long-term financial security.

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Greater Financial Stability in the Long Run

While associates may enjoy predictable paychecks, their income can be vulnerable to:

• Practice downsizing.

• Production slowdowns.

• Corporate consolidation or ownership changes.

As an owner, your income is tied to the success of a business you control, giving you more influence over your financial destiny.

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Financial Comparison: Associate vs. Owner Over 10 Years

Metric	Associate Dentist	Practice Owner
Average Annual Income	$180,000	$400,000
Total Earnings (10 years)	$1.8M	$4M
Business Equity Gained	$0	$700,000 (sale value)
Tax Advantages	Limited	Extensive
Real Estate Equity	$0	$400,000+ (if property owned)

Note: Figures are illustrative and will vary based on location, efficiency, and ownership decisions.

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Is Ownership Right for You?

Dental practice ownership isn’t without challenges — it requires responsibility, leadership, and a willingness to learn business skills. But for those willing to take the step, the financial upside is often substantial.

Working with an experienced dental practice broker can help you:

• Evaluate if you’re financially ready.

• Find the right practice in your preferred location.

• Avoid costly mistakes during the transition.

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While associateship can be a great starting point, practice ownership remains the best path to long-term financial freedom in dentistry. From higher income and equity to tax savings and control, owning your own practice allows you to reap the full rewards of your training and hard work.

Ready to take the next step?

Contact American Practice Consultants for a confidential consultation and explore current dental practices for sale in New Jersey and Eastern Pennsylvania.