Starting-A-Business Side of Dentistry…Um…Wow

A girlfriend of mine in the state of New York is in the process of acquiring a practice and we were discussing her current situation today in her long and tedious yet EXCITING process of dental practice acquisition. After hearing about the army of people she has at her disposable – her accountant, her lawyer, brokers, fees, etc I was admittedly very overwhelmed and started to try and find out information (for my own future knowledge) about what I would need to do here in California before I considered working on my own or if I ever buy a practice, etc. So I started to do some research into the great unknown for me – the BUSINESS side of dentistry. In this case – we’ll just start with the STARTING-A-BUSINESS side of dentistry even before we delve into the rest. And let me just say…WOW.


According to a poll I saw in the ADA News (August 1, 2011 volume) in 2009 the most common type of employment among private practitioners was SOLE PROPRIETORS over 60%.) I am an independent contractor in one office, and an employee in another. Independent contractors apparently made up 3.6% of those in private practice in 2009, while an employee status was 10.5%!!!! We are in a very volatile and risky time in the economy – unemployment is extremely high, jobs are scarce – but it also seems that there are just as many businesses thriving. So what do you do?

There is SO much information out there and legal terminology. And so many questions arose while I was JUST STARTING my research.  What is the first step that you have to do? Sole proprietorship vs Corporation. What is the difference between an S corporation or a C corporation and LLC? What about the Professional Corporation title? What are the repercussions tax-wise and long-term financially for me? What about liability?
In my limited research today- so far I have found that if I wanted to start the process today being in California I cannot form a LLC as a dentist (a professional practitioner). So that option would be out. Being a sole proprietor (while doable) is not advised as it doesn’t provide as much of a safety net liability-wise for your business OR your family (we want to keep our home right???). So an S corp or a C corp are the options left being a professional dentist that requires a LICENSE to practice I would be required to have a Professional Corporation. I have to choose a name (not similar to any other), see if it is even available and reserve it if it is available, and then I would have to file an article of incorporation with the state tax board. This might seem easy enough to do and you just pay the fees associated with it – but what about the repercussions of choosing this??? This is just the BEGINNING…

One website Ehow  (www.ehow.com) shows how to form a professional corporation in California http://www.ehow.com/how_6706460_form-california-professional-corporation.html . They also share some tax benefits a professional corporation has. http://www.ehow.com/about_6454661_professional-corporation-tax-advantages.html

If you are in California you can refer to this document for further application for a professional corporation – http://www.sos.ca.gov/business/corp/pdf/articles/corp_artsprof.pdf

I am just starting my journey to find out more – but I’m already admittedly quite overwhelmed. I know that in this case: knowledge DEFINITELY is power. No blind-sides here!!! Patience, advice from others who are well versed in these terms (CPAs knowledgeable in dentist needs, lawyers, other dentists who have gone before) will serve all of us new dentists well in this endeavor should it be in our future!

Image courtesy of superstock.co.uk