Taxes are one of the largest line items in a practice owner’s financial life, and most of the opportunity is in planning ahead — not in what your CPA can do the following April. Here’s how proactive tax planning works.
Why does proactive tax planning matter so much for dentists?
By the time a return is being prepared, most of the year’s decisions are already locked in. Proactive planning — made before year-end and across multiple years — is where entity structure, retirement contributions, and income timing can be coordinated to reduce lifetime tax, not just this year’s bill.
What are the main tax levers for practice owners?
- Entity structure and reasonable compensation (see S-corp vs sole proprietor).
- Retirement plan design, including cash balance plans, for large deductions.
- Timing of income, bonuses, and major equipment purchases.
- Where you hold investments (asset location) and how gains are realized.
How do planning and tax prep fit together?
Tax-aware financial planning and tax preparation are different jobs. A financial advisor builds tax awareness into decisions across your whole picture; your CPA prepares and files the returns. The best outcomes come when they coordinate rather than work in separate silos.
Frequently asked questions
Through proactive, year-round planning: appropriate entity structure and reasonable compensation, retirement-plan design, income and expense timing, and tax-aware investing — coordinated with your CPA. There are no guarantees, and strategies must fit your situation.
It depends on your income, state, and payroll. An S-corp can reduce certain taxes for some owners but adds complexity and requires reasonable compensation. Model it with your CPA and advisor.
Founder & Financial Planner · Investment Adviser Representative · Series 63 & 65
Ian McGinnis is the founder of Dental Wealth Partners and a fee-only financial planner dedicated to dentists. As an investment adviser representative (Series 63 and 65), he built the firm to give dentists coordinated, fiduciary advice across their practice, taxes, investments, retirement plans, and long-term goals — the whole picture in one strategy. A graduate of Belhaven University, Ian previously worked at Davis Private Wealth, MML Investors Services, and Northwestern Mutual, and is based in the Jackson, Mississippi area. He is the author of The Wealthy Dentist and hosts the Smiles & Cents podcast.
Keep reading
- S-corp vs. sole proprietor for dentists: which is better?How choosing an S-corporation affects a dentist’s taxes, payroll, and paperwork — and when the added complexity is worth it.
- Cash balance plans for dentists, explainedHow high-income dental practice owners can use a cash balance plan to shelter more than a 401(k) allows — and how to tell whether it fits.
- Retirement plans for dental practices, comparedA comparison of 401(k), safe harbor, profit sharing, SEP-IRA, and cash balance plans for dental practice owners — and how to choose.