Dental Practice Purchase –Before you buy

Deciding where to buy, how to go about it, and what kind of dental practice to purchase is a very important step in the career of a dentist. There are many essential decisions to make and key factors to examine as you search for the perfect dental practice that meets all of your needs.

Take your Time

Dentists must not rush into a purchase, and need to manage their expectations, understanding that the process will take some time. There is no need to hurry through important steps and be impatient. Buying the right dental practice for you matters more than closing a deal quickly when the first opportunity presents itself.

Find the Best Location

Where do you want to live? Being a practice owner is a big commitment, and being a part of the local community is a big part of that. Dentists who involve themselves in community events and organizations are usually successful as they are meeting people and networking all the while. A short to medium commute is an important consideration. No one wants to face a long round-trip commute year after year.

What sort of community is the right fit for you and your family? Do you like the suburbs, or do you want to live in more of a rural community? These choices will dictate how many competitors will be in close proximity. Other issues are whether or not your spouse needs to find work, and the quality of the school system in the area.

Choose the Ideal Practice for you

Take special care in determining the size and type of dental practice that matches your preferences and needs. Do you want to practice general dentistry or do you prefer an expensive practice that focuses on cosmetic dentistry? Does working a full five-day schedule with a large list of clients appeal to you? Or do you want a smaller practice, with a slower pace, that will allow you to work fewer hours? Naturally, these decisions will affect your finances and may dictate your level of day-to-day stress too.

Get the Proposed Business Appraised

Get a CPA or CVA to perform a business appraisal on the proposed business purchase. They can find out how much other dentists have paid for similar practices. This is going to give you a leg up in negotiating you purchase.

Assemble a Team of Professionals

Trying to save money by being completely self-sufficient is a poor decision when you plan on purchasing a dental practice. There are many areas where you’ll need and benefit greatly from the expertise of others. In the long-run, investing in advisors will save you a lot of trouble. Here are a few people you’ll need:

  • A CPA/accountant who has experience advising many dental practices and other small businesses on how to stay compliant and reduce their tax burden. You will want a CPA who can do more than just prepare your tax returns. You’ll want an accountant that can advise you on the best entity structure for your small business (S corporation, C corporation, limited liability company (LLC), professional limited liability company (PLLC), sole proprietor).
  • A Bookkeeper that is already well-versed in a small business accounting system—like Quickbooks. A certified Quickbooks Advisor means they are certified by the manufacturer of Quickbooks (Intuit Corporation) as competent with the Quickbooks program.
  • An attorney to review all documents related to the sale and to legally protect your interests in the future.
  • A consultant for your new dental practice could prove valuable in the long run, helping you save money and avoid headaches.
  • Establish a relationship with a bank early on. Getting prequalified, and ready to finance, puts you in the know in terms of how much you can afford and how to put in a good offer.
  • Your insurance needs will increase ten-fold once you’re a business owner. An insurance agent will evaluate risk and assess the value of your business to see how much coverage you’ll be needing.
  • It never hurts to seek advice from a mentor or business confidant of some kind—perhaps a veteran dentist who once went through the same process you’re going through now.
  • A marketing expert—preferably someone with knowledge of internet marketing.

Purchasing your first dental practice is a huge step in the career of any DDS. Be prepared and fully understand the process you face on your way to becoming a business owner.

Tax CPA John Huddleston received his Masters in Tax Law in 1999 from the University of Washington School of Law. He obtained his Law Degree in 1989 from the same institution, where he was a member of the Washington Law Review Executive Board. He graduated from Washington State University in 1986 with an Accounting/Finance degree.

About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has owned his own small business, Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.