If you are a dentist trying to decide whether to stay an associate or become an owner, the money question comes up fast, and it is usually the easiest thing to misunderstand. Both paths can pay well. They just pay in very different ways.
More than that, there are trade-offs with pay for dentists and additional responsibilities that come with the territory of business ownership. Let’s walk through the real differences in how owners and associates get paid, and what to expect in each role, so you can decide what works best for you.
Pay for Associate Dentists
According to the latest DentalPost Annual Salary Survey, the average full-time income of general dentists who are employed associates is $225,929 in 2024.
An associate dentist’s pay is primarily compensated for clinical time. Still, dental compensation models can be surprisingly complex. Instead of just a fixed annual salary, these are the common compensation models:
- Straight salary
- Salary plus commission
- Straight commission
- Net profit
Each model comes with its own nuances. Understanding the contractual terms that govern your pay or deduction is crucial as the difference can be tens of thousands of dollars a year. The American Dental Association walks through common compensation models and what you can expect to see in a contract.
Pay for Dental Practice Owners
Following the same DentalPost Annual Salary Survey, the average full-time income of general dentists who are practice owners or partners is $320,615 in 2024.
Dental practice owners get paid in two ways:
- Compensation as a practicing dentist, which is how much the owner decides to pay himself as a dentist
- Share of the practice’s profits
That means an owner’s income depends on how profitable the practice is. Things that eat into profit include rent, staff wages, laboratory fees, supply costs, lease obligations, and inefficient scheduling. When those items are managed well, owners can benefit handsomely. But when overhead creeps up, owners are also the first ones to feel the heat.
Other Considerations: Taxes, Payroll and Retirement Matters
Beyond the take-home pay, there are other differentiators between being an associate and owning your own dental practice. Tax planning is one of them.
As an associate, you usually have an easier tax situation. Most associates are paid as employees and the employer takes care of payroll taxes and withholdings. That means you do not have to manage payroll compliance or worry about payroll tax filings for the practice. The trade off is you usually have fewer ways to reduce business taxes or use retirement plans that allow very large contributions. Still, associates do have solid options to save for retirement and manage their taxes effectively.
As a practice owner, you have more control over how money flows through the business. That opens up extra ways to save on taxes and build retirement savings. Owners can choose the business type that fits their goals, decide how much of their pay is a salary versus an owner distribution, and set up retirement plans that let them put away more each year than a standard employee plan. Those choices can make a big difference in how much money you keep after taxes.
However, owners have the additional responsibility of running the payroll, the associated taxes, as well as ensuring compliance.
How To Decide If Ownership Makes Sense For You
Buying a practice can be a great move if you do it with both eyes wide open. Ownership makes sense when the share of the practice profits are more than what you would reliably earn as an associate doing the same dentistry work.
But there are trade-offs. Owners take on extra responsibilities like managing staff, handling bills, fixing equipment, and dealing with growth or slow months. Owners also need money up front to buy the practic,e and they carry the risk if revenue drops.
If you value having more control over how the clinic runs and you want the chance to build equity you can sell later, those benefits can outweigh the extra work and risk.
If you prefer predictable pay, fewer headaches and no business liabilities, staying an associate may be a better fit.
Exploring the idea of owning a dental practice?
We have plenty of useful resources to help:
- Starting a Dental Practice – The Cost To Buy vs. Build
- Buying a Dental Practice Checklist
- What’s the Average Cost to Start a Dental Practice
Ready when you are
Whenever you’re ready to buy an existing practice or build one from the ground up, we’re here to help.
At Virjee Consulting, we help dental practice owners and associates navigate issues like due diligence, bank financing and financial projections with confidence. Learn more about how we help when buying a dental practice here.
Have questions?
Our team of dental CPAs and industry experts are just one meeting away. Fill out our contact form below.
Until next time.
