

There are many factors that go into deciding whether you
should incorporate your dental practice.
Deciding to start or buy your own dental practice is a big step -
especially if you’re doing so in the middle of a global pandemic.
Each dental practice owner is uniquely positioned and
incorporating may not be right for everyone.
Read on to learn more about the advantages of incorporating your dental
practice to find out whether it’s the right move for you of you’d be
better off as a sole practitioner or partnership.
There are three main advantages to incorporating your dental practice.
·
Asset Protection
·
Tax Benefits
·
Credit Shielding
Incorporating your dental practice means having limited
liability and not having to worry about your personal assets being seized during
most business-related lawsuits and liabilities. This does not protect you from any
malpractice lawsuits, however.
An example of this would be if an employee of yours is
driving on a company errand (i.e. you directed them to drive somewhere to drop
off, pick up or meet with a client, for instance) and they ran over a
pedestrian while being negligent. As a
sole proprietor, your personal assets would be on the line, while incorporation
means that your personal assets would be protected in this instance.
As a sole practitioner, you would be held personally liable
for all general debts and liabilities of your dental practice, including any
vendor contracts, real estate and property.
If you own your own home, this means that your home could be seized from
you along with any other property such as cars, personal bank accounts, etc.
Should you decide to incorporate your dental practice, there
are several tax benefits that you’d be eligible for. Of course, these benefits may vary based on
your own unique situation. In addition
to some of these tax benefits (mostly geared towards health insurance), by
incorporating your dental practice, you’re also drastically reducing the
chances of being audited.
Disclaimer: For a comprehensive understanding of
potential tax benefits, you should consult with your accountant.
One of the biggest benefits to incorporating your dental
practice is that you’ll be able to shield any loans under the incorporation
umbrella. Let me break that down a bit
more here. When you incorporate, the
business becomes a separate legal entity from its owners, which shields the
owners from any personal liability for business debts and obligations. This means that when you buy a house, a car
or other big purchase, the loans you've taken out for your business expenses
won't show on your credit report.
Dental B-School
has this advice to share with you “Buy your practice first and then buy your
home. Don't do it the other way
around. You can hide the loan for the
practice inside the corporation, but there's no way to hide the loan for your
home. This could result in the bank
loaning you less money for your practice.”
Before signing your lease, before
even sitting down to negotiate your lease, you should incorporate your dental
practice if that’s the direction you have decided to go. Whether you decide to remain as a sole
practitioner, a partnership or to incorporate your dental practice, look at the
advantages and disadvantages of each and ensure your finances are in good
shape.
Regardless of the path you choose, Dental B-School is here
to help you as you continue through your journey. To learn more, check out our free
resource section or contact
us to schedule your strategy session.
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Wouldn't it be a good idea to create a course?