So many dentists know this call.
It comes from your CPA on April 14th, and it goes something like this: “Hey man, first off, we haven’t talked in a while. Second, you need to get your checkbook, because you need to write a big check to the IRS. And it’s due tomorrow.”
Two things are wrong there, and the money is the second one. The first is “we haven’t talked in a while.”
The Three Ps of Tax Planning for Dentists
When we talk to prospective clients about how a tax service should be run, we come back to three Ps: projection, planning, and preparation.
All three matter, and not every CPA firm is strong at all three.
To be clear about that, there are a lot of good CPA firms out there, and we will never speak badly of another CPA. We’re CPAs ourselves. But most dentists are receiving only one of the three Ps, and it’s preparation.
If you’re not getting that one, sort it out quickly. Returns have to be prepared and taxes have to be paid.
The other two, projection and planning, are what a tax service should actually be built around. Together they produce something like a fourth P: proactivity. That’s what we mean by tax momentum.
Know Your First Ten Plays: Building a Tax Projection
The analogy is football.
A good coach goes into the season knowing what plays they’re going to run. A good NFL coach probably knows the first ten plays of the game before kickoff.
Taxes work the same way.
When we say plays, we mean strategies: what you’re going to do over the course of the year. You need to know those going in, along with roughly how much you’re going to owe.
Building that projection isn’t complicated. You look at what you did last year. You know roughly the size of your practice, what your NOI is, and what your projected liability looks like. Then you head into the first two quarters with the plan in mind.
This is also where tax planning and financial management stop being separate activities. Your tax liability belongs on your dashboard as a number you know at all times, which is why it’s one of the seven numbers every practice owner should track.
As for the plays themselves, we maintain a full guide to tax strategies for dentists, along with a dentist tax deduction checklist.
Halftime: Your Mid-Year Tax Meeting (June or July)
Good coaches can play terribly through two quarters and come out of the locker room a completely different team. Kirby Smart at Georgia is the example we use. It isn’t a speech that does it. The coach watched film.
That’s what a mid-year tax meeting is. Somewhere around June or July, you sit down and look at your own film. How has the year gone so far? Are you on track? Was it a bad first half? What needs to change?
You’re readjusting the projection and doing more planning, rather than simply preparing. Then you come out of the tunnel into the third quarter as a different team.
The Two-Minute Warning: Year-End Tax Planning (November and December)
The second checkpoint comes late in the year.
November and December is the meeting to have with your CPA. Are you on track? Are you behind? Do you need a Hail Mary at the end?
Ideally you don’t. What you want is to reach a position where you can kneel the ball down and run out the clock, with no scrambling and no last-minute moves made purely to chase a deduction.
Here’s the test we use: before you open Christmas presents, you should know roughly what your tax liability is going to be.
Otherwise you may find yourself wondering whether some of those presents need to go back, because nobody planned.
The Rhythm of a Proactive Tax Year
| Going into the year | Know your plays, meaning the strategies you’ll run, and roughly what you’ll owe, built from last year’s results, the size of the practice, and your NOI. Head into the first two quarters with that in mind. |
| Halftime: June or July | Look at the film. How has the year gone? On track or behind? Readjust the projection against what actually happened and do more planning. Come out into the third quarter as a different team. |
| Two-minute warning: November and December | Meet with your CPA. On track, behind, or in need of a Hail Mary? Get to a position where you can kneel the ball down. Know your number before the presents are opened. |
Preparation, Done Properly
When the first two Ps have been handled, preparation is the quiet part of the year. The decisions are already made, and the return documents what happened.
One thing is worth confirming: that the plan was actually executed. Deciding in October to make a contribution is not the same as making it, and good plans sometimes fail in the last few weeks of the year because nobody checked that the decisions turned into transactions.
What Proactive Tax Planning Is Worth
The tax saved is usually the largest part of the return, though it isn’t the whole of it.
There’s cash flow certainty: knowing in July what you’ll owe in April means the money gets set aside deliberately rather than scrambled for. There are better business decisions, because equipment timing, compensation, and entity choices get made with the consequence known rather than discovered afterward. And there’s the absence of the annual surprise, which owners tend to undervalue until they’ve had a year without it.
It compounds, too. The clean books that make a projection possible are the same records that make a practice easier to finance, to value, and eventually to sell, which is why the tax implications of selling a dental practice are far easier to manage when they’ve been considered years ahead.
Frequently Asked Questions
What are the three Ps of tax planning?
Projection, planning, and preparation. Projection means estimating what you’ll owe during the year, built from last year’s results, the size of your practice, and your net operating income. Planning means choosing the strategies you’ll use and acting on them while the year is still open. Preparation is getting the return filed. All three matter, but most practices receive only preparation, which reports the outcome rather than changing it. Together the first two produce a fourth P: proactivity.
How can dentists get ahead of their taxes?
Go into the year with a projection of what you’ll owe and a plan for the strategies you intend to use. Then hold two checkpoints. Around June or July, rebuild the projection from actual year-to-date results and adjust course while two quarters remain. In November or December, confirm you’re on track before the year closes and while decisions can still be executed. The goal is to reach year end with no surprises and nothing left to scramble for.
When should a dentist meet with their CPA about taxes?
At least twice beyond filing the return. A mid-year meeting in June or July to rebuild the projection from actual results while there’s still time to act on it, and a year-end meeting in November or December to confirm you’re on track before the year closes. A useful benchmark: by the time the holidays arrive, you should know roughly what your tax liability will be.
What is the difference between tax planning and tax preparation?
Tax preparation is compiling and filing a return that reports what already happened. It’s necessary, and it cannot change the outcome. Tax planning is projecting what you’ll owe during the year and making decisions that change that number while the year is still open. Many dentists pay for preparation and assume they’re receiving planning. They’re separate services, and they happen at opposite ends of the calendar.
Do dentists need a CPA who specializes in dental practices?
The tax code is the same for everyone; the context is not. A dental-specific CPA knows the overhead structure, equipment cycles, associate compensation models, and transition patterns of dental practices, which makes projections more accurate and the strategies suggested ones that fit how a practice actually runs. See how a dental CPA benefits your practice.
Know the Number Before It’s Due
Tax planning for dentists happens across the year, not on April 14th.
Duckett Ladd runs the three Ps with dental practice owners: projecting the liability from real numbers, planning at halftime while there’s still a second half to play, and preparing a return that holds no surprises.
Take the Dental Practice Quiz to see where your practice stands, or schedule a discovery call.
Disclaimer: Duckett Ladd, LLP does not provide tax, legal, or accounting advice. This content has been prepared for informational purposes only and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Also, tax law is ever-changing, and every effort should be made to seek out the most current information. Make sure to check the date of published content to ensure the most current information.
