The final months of the year tend to fly by in a dental practice. Patient schedules are full, hygiene production ramps up, and many owners are focused on finishing the year strong rather than slowing down to review the numbers. Yet the period before December 31 is one of the most valuable windows for financial planning. Decisions made now can directly reduce your tax bill and set your practice up for a smoother year ahead.
A year-end financial checklist for dentists is not just about compliance. It is about timing income and expenses, making smart investment decisions, and ensuring your practice structure still supports your long term goals. This checklist walks through the key financial areas every dentist should review before the year closes.
Review Practice Income And Production Trends
Before making any tax or planning decisions, it is important to understand how your year actually unfolded. Many dentists rely on gut feel rather than data, especially when the practice feels busy. A year-end review helps confirm whether production, collections, and profitability aligned with expectations.
Look at your year-to-date production by provider, hygiene versus doctor production, and overall collections rate. If collections lag behind production, this may indicate insurance delays or billing inefficiencies that should be addressed before the new year. Understanding these trends helps your CPA project taxable income more accurately and avoid surprises at filing time.
If your income increased significantly compared to last year, that is often a signal to revisit estimated taxes, retirement contributions, and tax-saving strategies before December 31.
Time, Equipment And Technology Purchases Strategically
Dental practices are equipment-intensive by nature. Chairs, imaging systems, scanners, software, and office technology all represent major investments. From a tax perspective, the timing of these purchases matters.
Section 179 allows many types of dental equipment to be fully expensed in the year it is placed in service, rather than depreciated over several years. This can include items such as operatory chairs, CBCT machines, intraoral scanners, computers, and practice management software. If you have been planning an upgrade anyway, completing the purchase and placing the equipment in service before year end may lower your current year taxable income.
Bonus depreciation is gradually phasing down, which makes advance planning more important than it was in prior years. Not every purchase makes sense solely for tax reasons, but reviewing upcoming needs with your CPA helps ensure the timing supports both your practice and your tax position.
Evaluate Retirement Plan Contributions
Retirement plans remain one of the most powerful tax planning tools available to dentists. Contributions reduce taxable income while building long-term financial security, which is especially important in a physically demanding profession.
If you are an associate or employee dentist, confirm that you have maximized your 401(k) or other employer-sponsored plan contributions. Many dentists realize late in the year that they can increase contributions to reduce their tax bill, particularly if bonuses or production were higher than expected.
Practice owners often have additional opportunities. Safe harbor 401(k) plans, profit sharing plans, and cash balance plans allow for significantly higher contributions, but they require careful coordination with payroll and practice profits. Year end is the time to confirm whether contributions are on track and whether adjustments should be made before December 31.
Consider Prepaying Deductible Practice Expenses
Many dental practices operate on a cash basis, which means expenses are deductible when paid rather than when incurred. This creates an opportunity to manage timing without changing spending behavior.
Prepaying certain expenses before year-end can reduce taxable income for the current year. Common examples include malpractice insurance, software subscriptions, equipment maintenance plans, lab minimums, continuing education, and consulting or accounting fees. The key is to focus on expenses you know the practice will incur in the near future anyway.
Your CPA can help you identify which prepayments qualify and ensure they are recorded correctly so the deduction is preserved.
Reconcile Continuing Education And Licensing Costs
Dentistry requires ongoing education, and those costs add up quickly. Continuing education courses, state license renewals, DEA registration, professional association dues, and study materials are all typically deductible when they relate to your practice.
Before year-end, gather receipts for courses and conferences attended throughout the year and confirm they have been captured in your books. If you already know you will be attending a course early next year, registering and paying before December 31 may allow you to deduct the cost this year.
These expenses are often overlooked, yet they represent legitimate deductions that reduce your taxable income while supporting your professional growth.
Review Payroll, Owner Compensation, And Bonuses
Year-end is a natural checkpoint for reviewing how money flows out of your practice. This is especially important if your practice is structured as an S Corporation.
Owner dentists must be paid a reasonable salary, and the balance between W2 wages and distributions affects payroll taxes and overall tax efficiency. Reviewing this before the year closes allows time to make adjustments if compensation is out of alignment.
If you plan to issue year-end bonuses to staff, deciding whether they are paid in December or January affects which tax year the expense falls into. The same applies to owner bonuses or additional payroll runs. A short payroll review now can prevent compliance issues and help manage cash flow.
Dentists with additional income streams such as consulting, teaching, speaking, or ownership in multiple practices should also review estimated tax payments to avoid underpayment penalties.
Review Practice Debt And Interest Deductions
Most dental practices carry some form of debt, whether from practice acquisition, build-out, equipment financing, or refinancing. Interest on business loans is generally deductible, but only if it is recorded accurately.
If you purchased or refinanced equipment or real estate this year, review loan statements and amortization schedules to ensure interest and principal are categorized correctly. Errors here can distort your profit and affect your tax return.
For dentists planning a refinance or acquisition in the coming year, understanding your current debt structure helps with planning and lender conversations.
Revisit Practice Structure And Long Term Plans
Year-end planning is not only about taxes. It is also an opportunity to step back and ask whether your practice structure still fits your goals.
If you are considering buying a practice, adding a partner, or preparing for a future sale, your year-end financials matter. Clean books, accurate compensation, and documented systems improve both valuation and lender confidence.
Even if a transition is years away, aligning your tax strategy with long-term ownership plans helps avoid costly restructuring later.
Prepare For The Year Ahead With Virjee Consulting
The end of the year is one of the few times dentists can meaningfully influence their tax outcome before it is locked in. With thoughtful planning, you can reduce taxes, strengthen cash flow, and start the new year with clarity.
At Virjee Consulting, we work exclusively with dentists across the country, helping them navigate tax planning, practice ownership decisions, and long-term financial strategy. Our goal is to make the financial side of dentistry feel manageable and aligned with the life you are building.
If you would like help reviewing your year-end checklist or planning for the year ahead, schedule a conversation with our team.
We are here to help you make confident, informed decisions.
