Quick answer: To start a dental practice, decide between a startup and buying an existing office, then line up financing, form a PC or PLLC, register for Virginia payroll taxes and set up your books before you spend a dollar. Most new owners should plan for several hundred thousand dollars or more in startup costs and keep enough working capital to cover the months before collections catch up.
Opening your own office is exciting, and the clinical plan usually comes together quickly. The financial plan deserves the same care. Here is what new owners should have in place before the first patient walks in.
Startup or buy an existing practice?
A startup lets you choose the location, layout and equipment, but it starts with no patients and no revenue. Buying an existing practice brings patients and cash flow from day one, at a higher upfront price. If you are weighing both, see our buying a dental practice checklist.
What a dental startup costs
Startup costs commonly run from several hundred thousand dollars to over a million, depending on the number of operatories, the buildout and the equipment you choose. Plan for each of these:
| Cost | What it covers |
|---|---|
| Buildout | Construction, plumbing, electrical and cabinetry for the space |
| Equipment and technology | Chairs, imaging, sterilization, computers and software |
| Supplies | Your first months of clinical and office supplies |
| Launch marketing | Website, signage and new patient campaigns |
| Working capital | Payroll, rent and loan payments before collections catch up |
Plan for the cash flow gap
Most new practices spend months paying staff and rent before collections catch up. Insurance credentialing can take several months, and claims are paid weeks after the visit. Build enough working capital into your loan to cover that gap, and track it monthly.
Financing your startup
- Many lenders offer loans built specifically for dental startups, often covering buildout, equipment and working capital in one package
- Equipment financing can spread out the cost of chairs and imaging
- Lenders will ask for a business plan with projected production, collections and expenses, so have your numbers ready
Entity and tax setup in Virginia
- Form your practice entity. In Virginia, dentists generally use a professional corporation (PC) or professional limited liability company (PLLC)
- Get your EIN and decide whether an S corp election makes sense
- Register for Virginia withholding and unemployment tax before your first payroll
- Get your local business license and file business property returns with your county
Practices in Loudoun or Fairfax County can find the local details in our guides to Loudoun County and Fairfax County business taxes.
Set up your books from day one
- Open separate business bank and credit card accounts before you spend anything
- Track every startup cost, since up to $5,000 of startup costs can generally be deducted in the first year and the rest over 15 years
- Record equipment with its cost and the date it was placed in service so you can claim depreciation
- Use a dental chart of accounts from the start
Tip: Our dental bookkeeping checklist shows how to keep the books once you open.
Your first year financial checklist
- Set a monthly budget and compare it to actual results
- Track collections, not just production
- Watch your working capital each month
- Make quarterly estimated tax payments
- Review your numbers against common dental KPIs and overhead benchmarks
Starting a Dental Practice FAQs
How long does it take a new dental practice to become profitable?
It varies with location, payer mix and how fast you build a patient base. Many startups take a year or more to reach steady profitability, which is why lenders build working capital into dental startup loans.
Should a new dental practice be a PC or a PLLC in Virginia?
Both are available to licensed dentists in Virginia, and both protect personal assets from many business debts. The bigger tax question is usually whether to elect S corp status, which either entity can do.
Can I deduct dental startup costs before I open?
Yes, within limits. Up to $5,000 of startup costs can generally be deducted in the first year, reduced once total startup costs pass $50,000, and the rest is deducted over 15 years. Equipment is handled separately through depreciation.
Is it cheaper to buy a dental practice or start one?
A startup usually costs less upfront, but it begins with no patients or revenue. An existing practice costs more to buy but brings patients and cash flow from the first day, so compare total cost against expected collections.
When should I bring in an accountant for a new dental practice?
Ideally before you sign a lease or loan. An accountant can help with projections for your lender, the choice of entity and a chart of accounts so your books are clean from the start.
Start with the right team
We help new dentists set up their entity, books and payroll and plan taxes for the first year. Learn more about our dental practice accounting and business formation services.
This article is general information and not tax advice for your situation. Tax rules change, so talk with a qualified professional before making decisions.
