Dentists & Dental Practices, CPA & Tax Services

Why Dallas Dental Practices Need a CPA Who Understands Dentistry

Running a dental practice in Dallas means managing clinical care and a complex financial operation at the same time. Between six-figure equipment purchases, associate compensation structures, practice acquisitions, and Texas-specific compliance requirements, general-purpose tax preparers routinely miss deductions and strategies that are specific to dentistry. The result is thousands of dollars left on the table every year.

At AG Freideman, we work with dentists and dental practice owners across Dallas, Plano, Frisco, McKinney, and the surrounding DFW area. Al Freideman is a licensed CPA with over 30 years of experience, and he handles every dental client personally. No hand-offs to junior staff, no revolving door of associates. When your return is filed, Al reviewed it. That is why we have 52 five-star Google reviews and zero negative reviews.

If you own or are acquiring a dental practice in the Dallas-Fort Worth area, call us at (972) 893-3481 or book your free consultation to see how much you could save with a CPA who actually understands your industry.

S-Corp vs. PLLC: Which Entity Structure Saves Dentists the Most?

Choosing the right entity structure is one of the highest-impact tax decisions a dental practice owner makes, and the wrong choice can cost you $15,000 or more per year in unnecessary self-employment taxes. Most Texas dentists should seriously evaluate electing S-Corp status for their Professional Limited Liability Company (PLLC), but the math only works when your compensation split is set correctly.

Here is how it breaks down. Texas requires licensed professionals like dentists to form a PLLC rather than a standard LLC. By default, a single-member PLLC is taxed as a sole proprietorship, meaning all net income is subject to the 15.3% self-employment tax (Social Security at 12.4% on income up to $168,600 in 2026, plus Medicare at 2.9% on all earnings). For a dentist netting $400,000, that is a substantial hit.

When you elect S-Corp taxation with the IRS (Form 2553), you split your income into two buckets: a reasonable W-2 salary (which is subject to payroll taxes) and distributions (which are not). The IRS requires that the salary be “reasonable” for your role. For a general dentist in Dallas, that typically falls between $150,000 and $200,000 depending on specialty and practice size. The remaining profit flows through as distributions, saving you 15.3% on that portion.

We help Dallas dental practice owners determine the right entity structure, file the S-Corp election, set up payroll for owner compensation, and ensure the salary-to-distribution ratio holds up to IRS scrutiny. This is not a one-size-fits-all decision. It depends on your revenue, number of owners, debt structure, and long-term plans for the practice.

Section 179 and Bonus Depreciation for Dental Equipment in 2026

Dental practices are equipment-intensive businesses, and the tax code offers powerful tools to accelerate deductions on those purchases. In 2026, Section 179 allows you to deduct up to $1,250,000 of qualifying equipment in the year you place it in service, rather than spreading the cost over 5 to 7 years through standard depreciation. This applies to chairs, imaging systems (CBCT, digital X-ray), CAD/CAM units, sterilization equipment, and office build-outs.

Bonus depreciation is still available in 2026, but it has stepped down to 60% under the Tax Cuts and Jobs Act phase-out schedule (it was 80% in 2023 and 100% before that). This means you can deduct 60% of the cost of qualifying assets in year one, with the remainder depreciated over the asset’s useful life. For a $200,000 CBCT scanner, that is a $120,000 first-year deduction through bonus depreciation alone.

The strategic question is whether to use Section 179, bonus depreciation, or a combination. The answer depends on your taxable income for the year, whether you expect income to rise or fall in future years, and how the deduction interacts with your Texas Franchise Tax calculation. We work with dental clients to time major equipment purchases for maximum tax benefit rather than simply buying at year-end and hoping the numbers work out.

Associate vs. Owner Compensation: Getting the Structure Right

How you compensate associate dentists has direct tax consequences for your practice, and misclassifying an associate as an independent contractor is one of the most common (and costly) mistakes dental practice owners make. The IRS has increased enforcement on worker classification, and dental practices are a frequent audit target because the industry has historically relied on 1099 arrangements that do not hold up under scrutiny.

If you control when, where, and how an associate dentist works (which most practice owners do), the IRS considers that associate a W-2 employee. Misclassifying them as a 1099 contractor exposes you to back payroll taxes, penalties of up to 100% of unpaid taxes under the Trust Fund Recovery Penalty, and potential state-level penalties from the Texas Workforce Commission.

For owner-dentists in multi-doctor practices structured as S-Corps, compensation planning gets more nuanced. Each owner’s salary must be “reasonable” for their role, and profit distributions must be proportional to ownership unless you have specific provisions in your operating agreement. We help multi-owner dental practices in Dallas design compensation structures that minimize total tax liability while staying fully compliant with IRS guidelines. This connects directly to our bookkeeping services, because clean monthly financials are the foundation for getting these numbers right.

Practice Acquisition Amortization: Maximizing the Tax Benefit When You Buy

Buying an existing dental practice is one of the largest financial transactions most dentists will ever make, and how you allocate the purchase price across asset categories determines your tax deductions for the next 15 years. Many buyers leave significant deductions on the table because their CPA treats the entire purchase as goodwill.

When you acquire a practice, the purchase price must be allocated across tangible assets (equipment, furniture, leasehold improvements), identifiable intangible assets (patient records, non-compete agreements, trade name), and goodwill. Tangible assets can be depreciated over 5 to 7 years (or deducted immediately through Section 179). Non-compete agreements are amortized over their contractual term. Goodwill and other intangibles are amortized over 15 years under IRC Section 197.

The allocation matters because faster write-offs reduce your taxable income sooner. A $1 million practice purchase with $300,000 properly allocated to equipment and $100,000 to a non-compete agreement generates significantly larger near-term deductions than one where $900,000 is lumped into 15-year goodwill. We work with dental practice buyers across Dallas-Fort Worth to structure purchase price allocations that maximize legitimate deductions while withstanding IRS review.

Retirement Plan Design: Cash Balance Plans for High-Earning Dentists

High-earning dentists who max out their 401(k) contributions ($23,500 employee limit in 2026, plus $7,500 catch-up if over 50) often assume they have hit the ceiling on tax-deferred retirement savings. They have not. A cash balance pension plan layered on top of a 401(k) can allow total annual contributions of $150,000 to $350,000 or more, depending on the dentist’s age and plan design.

Cash balance plans are defined benefit plans that work particularly well for established practice owners in their 40s and 50s because contribution limits increase with age. The contributions are fully tax-deductible to the practice, reducing current-year taxable income dollar for dollar. For a 50-year-old dentist earning $500,000 in practice income, a well-designed cash balance plan could shelter an additional $200,000 or more beyond what a 401(k) alone allows.

The catch is that cash balance plans require careful actuarial design and ongoing compliance. They also require you to make contributions for eligible employees, though the employee cost is typically modest relative to the owner’s tax savings. We coordinate with third-party actuaries to design retirement plans that align with your overall tax planning strategy and your practice’s cash flow.

Common Dental Practice Tax Mistakes We Fix

After 30 years of working with business owners, we see the same costly errors in dental practices over and over. Here are the ones we fix most often:

• Failing to elect S-Corp status when it would save five figures in self-employment taxes. Many dentists stay taxed as sole proprietors or default LLCs simply because nobody ran the numbers for them. We calculate the break-even point and file the election when it makes sense.
• Misclassifying associate dentists as 1099 contractors. This is an IRS audit magnet. We review your worker arrangements and restructure them properly before the IRS does it for you (with penalties).
• Taking standard depreciation on equipment that qualifies for Section 179 or bonus depreciation. A $150,000 digital imaging system depreciated over 7 years gives you roughly $21,000 per year. Section 179 gives you the full $150,000 in year one. The difference in cash flow is enormous.
• Lumping an entire practice acquisition into goodwill. Proper purchase price allocation can accelerate hundreds of thousands of dollars in deductions from 15 years down to 5 to 7 years.
• Missing the Texas Franchise Tax No Tax Due threshold or filing deadline. Texas entities with annualized total revenue at or below $2.47 million still must file a Public Information Report and No Tax Due Report by May 15 each year. Missing the deadline triggers penalties even if no tax is owed. We handle your Texas Franchise Tax filing as part of your engagement.