You’re newly qualified as a dentist, but can’t decide whether to become an associate or the owner of your own practice.
Understanding the differences between an associate dentist and a general dentist, will likely shape your decision, and while some things are very similar, others are significantly different. Getting to grips with the tax differences between the two roles is made easier with guidance from local accounting services for dentists, but the basic definition of their roles is as follows:
Dentist and practice owner – hires other dentists to work for them, has the potential to earn more money, flexibility in working hours
Associate dentist – works in a practice but hired as an independent contractor or employee, doesn’t manage other employees or office duties, has more restrictions and earns less money, but can take extended time off if necessary
What are the pros and cons of owning your own dental practice?
Owning your own practice gives you a lot more freedom than if you were merely working there as a dentist. You can have other people working for you, and when something needs changing, you can go right ahead and change it. but for all of the positives, there are some negatives worth giving consideration to.
However, you will also have more financial responsibilities and pressures to deal with, including covering all the bills, paying your team and purchasing equipment.
How much could you make as a dental associate?
Most graduates of dental school opt to become an associate, meaning they’ll be an independent contractor or employee, then work their way towards owning their own practice.
It’s difficult to suggest what your salary might be as an associate, as this can vary significantly according by employer and region, but in general, you could be looking at earning between $125,000 and $145,000 per annum. While a dental practice owner might make more than that at around $175,000 a year, they are responsible for covering many more costs, including overheads.
How dental associate salaries work
A flat salary or an hourly rate may be paid to you as an associate dentist, but often, your compensation will be based upon a gross revenue percentage. If you’re awarded 35% of your production, you’ll get $35 for every $100 of dental work carried out on a patient; what money is left will be put towards the running of the practice. Should you wish to earn more than $87,000 a year, for example, you must carry out $250,000 worth of dental treatments and procedures.
Will you be classed as an independent contractor or an employee?
The practice that you join might ask you as an associate, to be classed as an independent contractor or employee for tax purposes. With rules outlining the different types of employment relationships, the IRS take state and federal considerations into account when defining independent contractors and employees, and they are taxed differently.
In the majority of instances, associate dentists are referred to as employees by the practice they work for, because they don’t have any control over supplies and equipment, staffing, and hours of operation. However, if you’re unclear about your status, you should seek guidance from an accounting firm experienced in dental contractors tax planning. They will ensure that you’re being categorized correctly, and paid and taxed appropriately.
Most dentists start their careers as associates, and then, once they’ve built up their practical experience and gained a better understanding of the dental industry as a whole, the goal becomes to own their own practice. Key to navigating the transition successfully however, will be support and guidance from specialist dental accountants.