Tax Services for Healthcare & Dental Practices

For dental practice owners in Florida earning above $200,000 in net income, the S-corp election almost always saves money compared to operating as a standard LLC. But the two structures are not mutually exclusive — in fact, the most common setup we recommend is an LLC that elects to be taxed as an S-corp, which gives you the liability protection of the LLC and the tax benefits of S-corp treatment. Let me explain how this works and when each structure makes sense.

First, let me clarify the distinction between entity type and tax classification, because this is where a lot of people get confused. An LLC is a legal entity created under state law. It provides liability protection — your personal assets are generally shielded from the debts and lawsuits of the business. An S-corp is a tax election made with the IRS (Form 2553) that changes how your business income is taxed. You can have an LLC that is taxed as a sole proprietorship (the default for single-member LLCs), as a partnership (the default for multi-member LLCs), as a C-corp, or as an S-corp. The entity type (LLC) and the tax classification (S-corp) are separate decisions.

When your LLC is taxed as a sole proprietorship (the default), all of your net business income is subject to self-employment tax at 15.3% on the first $168,600 and 2.9% above that (for 2024). If your dental practice nets $450,000, you are paying approximately $35,000 in self-employment tax. That is a significant hit, and it comes on top of your federal income tax at rates up to 37%.

When your LLC elects S-corp tax treatment, the self-employment tax picture changes dramatically. You pay yourself a reasonable salary — say $200,000 for a general dentist in Miami — and only that salary is subject to payroll taxes (FICA). The remaining $250,000 passes through as an S-corp distribution, which is not subject to Social Security or Medicare tax. The payroll tax savings on that $250,000 is approximately $12,250 (2.9% Medicare plus 0.9% Additional Medicare Tax on amounts above $200,000). Over 10 years, that is $122,500 in savings — and that is just one year’s income level. As your practice income grows, the savings grow with it.

In Florida specifically, there is no state income tax, so the tax picture is simpler than in states like California or New York. There is no state S-corp tax, no franchise tax on S-corps, and no state-level complications with the S-corp election. Florida does have a corporate income tax for C-corporations (5.5% on income above $50,000), but S-corps are generally exempt from this tax because they are pass-through entities. The Florida Department of Revenue requires S-corps to file Form F-1120 if they have federal taxable income, but if the S-corp has properly elected pass-through treatment at the federal level, there is typically no Florida corporate tax due.

The S-corp election does come with additional compliance requirements. You need to run payroll for yourself (and any other shareholder-employees), which means W-2s, quarterly payroll tax filings (Form 941), annual FUTA filings (Form 940), and Florida reemployment tax filings. You also need to file an annual S-corp return (Form 1120-S) in addition to your personal Form 1040. The payroll processing and additional filing obligations have a cost — typically $2,000 to $5,000 per year for payroll service and additional tax preparation fees — but the payroll tax savings typically dwarf these costs by a factor of 5 to 10.

There are a few situations where staying as a plain LLC (taxed as a sole proprietorship) might make sense. If your practice is brand new and you are not yet earning significant income — say less than $100,000 in net profit — the payroll tax savings from the S-corp may not justify the additional compliance costs. The breakeven point where S-corp savings start outweighing the costs is generally around $80,000 to $100,000 in net income, though this varies depending on your specific situation.

Another consideration is the reasonable compensation requirement. The IRS requires S-corp shareholders who perform services for the corporation to pay themselves a reasonable salary. If you are the sole dentist in a practice earning $450,000, you cannot pay yourself $50,000 and take the rest as a distribution. The IRS will look at what comparable dentists in the Miami market earn as employees and expect your salary to be in that range. For general dentists in South Florida, reasonable salary typically falls between $170,000 and $260,000 based on BLS data and dental industry surveys. Setting the salary too low invites an audit and potential reclassification of your distributions as wages, which would eliminate the payroll tax savings and add penalties and interest on top.

For dentists who own the building where they practice, there is an additional planning opportunity. You can hold the real estate in a separate LLC (taxed as a sole proprietorship or partnership) and have the practice’s S-corp pay rent to the real estate LLC. The rent is deductible by the practice and is not subject to self-employment tax when received by the real estate LLC (because rental income is generally passive income). This effectively moves income out of the S-corp and into a structure where it is not subject to payroll taxes at all.

The bottom line: most Miami-area dental practices earning above $200,000 should operate as an LLC with an S-corp tax election. The payroll tax savings, combined with the flexibility to set up retirement plans and take advantage of the solo 401(k) and cash balance plan contributions, make it the most tax-efficient structure for the majority of practice owners. We recommend running the numbers with your tax advisor before making the election, and we are happy to do that analysis as part of our tax planning engagement.

We walk every new dental practice client through this analysis as part of our initial consultation, and the majority of practices earning above the $200,000 threshold elect S-corp status once they see the projected savings side by side with the additional compliance costs.

Yes, continuing education costs and professional licensing fees are fully deductible business expenses for dental practice owners, and in Florida the deductions work the same way they do in every other state because these are federal deductions — Florida has no state income tax, so you are only dealing with the federal return. But there is more to this than just writing off a course registration fee. The CE and licensing deduction category is broader than most dentists realize, and tracking everything properly can add up to significant savings over time.

The Florida Board of Dentistry requires licensed dentists to complete a minimum of 30 continuing education hours every biennium (two-year renewal cycle). Dental hygienists need 24 hours. The courses need to be approved by the Board or by an ADA CERP-recognized provider. The cost of these required CE courses — registration fees, tuition, materials — is fully deductible as a business expense on Schedule C (for sole proprietors) or as a corporate expense on Form 1120-S (for S-corps). There is no dollar cap on the deduction, and the full amount is deductible in the year you pay it, regardless of when you actually attend the course.

But CE expenses go well beyond the registration fee. If you travel to a CE course — say you attend the Greater New York Dental Meeting in Manhattan, the Chicago Dental Society Midwinter Meeting, or the Florida Dental Convention in Orlando — the travel costs are also deductible. This includes airfare or mileage (70 cents per mile for 2024 if you drive), hotel costs for the nights you are attending the conference, 50% of your meal costs while traveling, baggage fees, parking, rental cars, and incidental expenses like tips and local transportation. For a multi-day conference in another city, the travel costs can easily exceed the registration fee.

There is a rule about combining CE travel with personal vacation that you need to understand. If you fly to a three-day dental conference in San Diego and then stay an extra four days to vacation, you can deduct the conference registration, the airfare (because the primary purpose of the trip was business), and the hotel and meals for the three business days. You cannot deduct the hotel and meals for the four vacation days. If the primary purpose of the trip is personal (say you plan a two-week vacation and happen to attend a one-day CE course), the airfare becomes non-deductible, and you can only deduct the direct costs of the CE course itself. The IRS looks at the ratio of business days to personal days and the overall purpose of the trip to determine what is deductible.

For international CE trips — dental missions, international conferences, CE cruises — the rules are stricter. Under IRC Section 274(h), there are specific requirements for deducting convention expenses outside of North America, including a reasonableness test for the location and documentation requirements. CE cruises are subject to additional limitations under Section 274(h)(2), with deductions capped at $2,000 per year for conventions on cruise ships. The cruise ship must be registered in the U.S. and all ports of call must be in the U.S. or its possessions.

Beyond CE courses, your Florida dental license renewal fee is deductible. Your DEA registration fee is deductible. Specialty board certification and recertification fees are deductible. Memberships in professional organizations — the ADA, the Florida Dental Association, your local dental society, any specialty organizations — are all deductible. Subscriptions to dental journals and publications (Journal of the American Dental Association, dental trade magazines, online clinical resources) are deductible. Exam preparation materials and fees for board exams or specialty exams are deductible.

If you take courses that improve your skills in your current profession — for example, a general dentist taking implant placement courses, an orthodontist learning about aligner technology, or a practice owner taking a business management or leadership course — those are deductible because they maintain or improve skills in your existing trade or business. However, courses that qualify you for a new profession are not deductible. The classic example: if a general dentist goes back to school for a residency program to become an oral surgeon, those educational costs are not deductible as business expenses because the education qualifies the person for a new trade or business. The line between “improving skills in your current profession”. And “qualifying for a new profession”. Can be blurry with dental specialty training, so discuss any major educational investments with your tax preparer before assuming the deduction is available.

For S-corp practice owners, the CE and licensing costs should be paid by the corporation and deducted on the corporate return. If you pay them personally, you can either have the corporation reimburse you under an accountable plan (which keeps the deduction at the corporate level) or you can claim them as an unreimbursed employee expense — but unreimbursed employee expenses are not deductible on the federal return under current law (the TCJA suspended the miscellaneous itemized deduction through 2025). So make sure the corporation is paying for your CE and licensing costs, or at minimum reimbursing you through a documented accountable plan.

One more thing: if you hire staff members and pay for their CE or licensing costs — say you send your hygienists to CE courses or pay for their license renewals — those costs are deductible as employee business expenses of the practice. They benefit you by keeping your team current and maintaining their licenses, and they are fully deductible. For practices that invest heavily in team training and development, these costs can add up to $5,000 to $15,000 per year across the entire staff.

Bottom line: CE and licensing costs are one of the cleanest, most straightforward deductions available to dental practice owners. There is no income phase-out, no cap on the amount you can deduct, and no complicated calculations required. Just track everything, pay through the practice (not personally), and make sure your preparer claims the full deduction every year. Over a 30-year career, the cumulative tax savings from properly deducting CE and licensing costs can easily exceed $50,000.

Florida’s sales tax rules for dental practices are fairly straightforward compared to some other states, but there are areas where the line between taxable and non-taxable gets blurry, and getting it wrong can result in back taxes and penalties from the Florida Department of Revenue. The short version: dental services themselves are not subject to Florida sales tax, but tangible personal property sold to patients and certain other transactions may be taxable.

Florida imposes a 6% state sales tax on the retail sale of tangible personal property, plus a local discretionary surtax that varies by county (Miami-Dade County adds 1%, for a total of 7% in most of Miami-Dade). However, professional services — including medical and dental services — are generally exempt from Florida sales tax. When you charge a patient for an exam, cleaning, filling, crown, root canal, extraction, or any other dental procedure, there is no sales tax on that charge. The service is exempt regardless of whether the patient pays out of pocket or through insurance.

Where it gets more complicated is when your practice sells tangible goods to patients outside of the context of a dental procedure. If you sell electric toothbrushes, whitening kits, night guards, orthodontic retainers, or other dental products as standalone retail sales (not as part of a treatment), those sales may be subject to Florida sales tax. The key distinction is whether the item is sold as part of a professional service or as a separate retail transaction. A night guard fabricated as part of a TMJ treatment plan and included in the treatment fee is generally not subject to sales tax because it is part of the professional service. A night guard sold over the counter to a patient who walks in and buys one without a clinical exam might be treated as a taxable retail sale.

In practice, most dental offices do not make enough standalone retail sales for this to be a significant issue. But if your practice has a retail component — say you sell a line of branded oral care products, high-end toothbrushes, or take-home whitening systems as separate purchases — you may need to collect sales tax on those transactions and remit it to the Florida Department of Revenue. You would need to register for a Florida sales tax permit (also called a resale certificate), collect the appropriate rate at the time of sale, and file periodic sales tax returns (monthly, quarterly, or annually depending on your volume).

On the purchasing side, Florida sales tax applies to many items your practice buys. Office furniture, computer equipment, software, waiting room furniture, and other non-medical tangible property are generally subject to sales tax when you buy them. Dental supplies and equipment may also be subject to sales tax depending on how they are classified. Some states exempt medical and dental supplies from sales tax, but Florida’s exemptions in this area are limited. You should review your supply purchases with your accountant to make sure you are not overpaying sales tax on exempt items or underpaying on items that should be taxed.

One important exemption to know about: Florida does not impose sales tax on purchases for resale. If you buy dental supplies that become part of a taxable retail product you sell to patients, you can buy those supplies tax-free using your resale certificate and then collect sales tax when you sell the finished product to the patient. This is only relevant if you are actually making taxable retail sales, which most dental practices are not.

There is also the question of leasing versus buying equipment. In Florida, the lease or rental of tangible personal property is subject to sales tax. So if you lease a CBCT scanner for $3,500 per month instead of buying it outright, you owe sales tax on each monthly lease payment — that is an additional $245 per month in Miami-Dade County (7%), or $2,940 per year. Over a 5-year lease, you would pay $14,700 in sales tax on the lease payments alone. When you buy the equipment outright, you pay sales tax once on the purchase price. This is worth factoring into your lease-versus-buy analysis, because the cumulative sales tax on lease payments can make leasing significantly more expensive than it appears on the surface.

For practices that have commercial office leases, Florida also imposes sales tax on commercial rent. This is unusual — most states do not tax commercial rent — but Florida charges 2% sales tax on the total rent amount for commercial leases (reduced from a higher rate in recent years). So if your dental office lease is $15,000 per month in Miami, you owe an additional $300 per month in Florida sales tax on the rent, or $3,600 per year. This sales tax on commercial rent is a deductible business expense for federal income tax purposes, but it is still a real cost that adds up.

The commercial rent sales tax is separate from any local option taxes, and it is collected by the landlord and remitted to the Florida Department of Revenue. Make sure your lease agreement addresses who bears the sales tax obligation — in most commercial leases, the tenant pays the sales tax on top of the base rent, but this should be spelled out in the lease terms.

For practices doing business across state lines — for example, a Miami practice that provides teledentistry consultations to patients in other states — the sales tax picture gets more complex. If you are providing services to patients located in other states, you may have sales tax nexus in those states depending on the volume and nature of the transactions. This is an evolving area of tax law, and it is worth discussing with your tax advisor if you have a meaningful teledentistry or out-of-state patient base.

We recommend that Miami dental practice owners review their sales tax obligations annually, especially if they have added new revenue streams like retail product sales, teledentistry, or specialty services that may change their sales tax profile. Our team can help with this review as part of your annual tax planning engagement.

Miami dental practice owners benefit from Florida’s lack of state income tax, which means every federal tax deduction you claim has a direct impact on your bottom line without the complication of state-level adjustments. Here are the most valuable deductions for Miami-based dental practices, ranked roughly by their typical dollar impact.

Retirement plan contributions top the list for established practices. A solo 401(k) allows employee deferrals of $23,000 ($30,500 if over 50) plus employer profit-sharing contributions of up to 25% of W-2 wages. For a dentist paying themselves a $220,000 salary, that is up to $55,000 in employer contributions plus the employee deferral, totaling $78,000 to $85,500 per year. Add a cash balance defined benefit plan and you can shelter an additional $100,000 to $300,000+ depending on your age. At the top federal rate of 37%, putting $200,000 into retirement plans saves you $74,000 in federal taxes in a single year. These contributions are also exempt from payroll taxes because they are employer contributions, which adds another layer of savings.

Equipment purchases are the next major category. Under Section 179, you can deduct up to $1,220,000 in qualifying equipment in the year it is placed in service. CBCT scanners ($100,000-$200,000), CAD/CAM systems ($120,000-$170,000), dental lasers ($30,000-$80,000), digital scanners ($25,000-$45,000), and operatory chairs and equipment ($50,000-$120,000 per operatory) all qualify. Because Florida has no state income tax, there is no state-level depreciation adjustment to worry about — unlike California or New York where federal and state depreciation rules diverge. The full federal deduction flows straight to your bottom line.

Payroll and employee benefits represent the largest ongoing expense category for most practices and are fully deductible. This includes wages, the employer share of FICA (7.65% on the first $168,600 plus 1.45% on amounts above that), FUTA ($42 per employee per year at the minimum rate), Florida reemployment tax (rates vary by employer experience rating), workers compensation insurance, health insurance premiums, and any other employee benefits. For a practice with 8 employees earning a combined $450,000 in wages, the employer payroll tax cost alone is approximately $35,000 — all deductible.

Rent and occupancy costs for your practice space are fully deductible, including base rent, CAM charges, property insurance allocations, and the Florida 2% sales tax on commercial rent. In the Miami market, dental office space typically runs $25 to $45 per square foot annually depending on the neighborhood and the condition of the build-out. A 2,000-square-foot practice at $35 per square foot is spending $70,000 per year on rent, plus the 2% sales tax adds another $1,400. All of it is deductible.

Dental supplies and lab fees are ongoing deductions that add up to $40,000 to $100,000 per year for most practices. This includes everything from gloves and sterilization supplies to composite materials, impression materials and fees paid to dental labs for crowns, bridges and other prosthetics. These are deducted as cost of goods sold or supplies expense depending on your accounting method.

Marketing and advertising costs are fully deductible — website development and hosting, SEO services, Google Ads and pay-per-click advertising, social media marketing, print advertising, direct mail campaigns and promotional materials. For Miami practices competing in a crowded market, marketing spend can run $2,000 to $10,000 per month or more, and every dollar is deductible.

Professional fees are deductible, including your tax preparer, bookkeeper, practice management consultant, attorney, dental billing service, and insurance broker. Malpractice insurance premiums are deductible. Professional organization memberships (ADA, FDA, local dental society, specialty boards) and continuing education costs (course fees, travel, hotels, 50% of meals) are all deductible as discussed in the CE question above.

Vehicle expenses can be deducted if you use your car for business — driving between practice locations, to CE courses, to the bank, to meet with your accountant. The 2024 standard mileage rate is 70 cents per mile. For Miami-area dentists who commute between multiple offices or spend time driving for business purposes, this can add up to $3,000 to $8,000 per year.

The home office deduction is available if you use a portion of your home regularly and exclusively for practice administration. The simplified method allows $5 per square foot up to 300 square feet ($1,500). The actual expense method can yield more, especially given Miami’s high housing costs — if your home is 2,500 square feet and your home office is 200 square feet, you can deduct 8% of your rent or mortgage interest, utilities and maintenance.

Interest on business loans — practice acquisition loans, equipment financing, lines of credit, business credit cards — is deductible. Student loan interest has a limited above-the-line deduction ($2,500 per year, phased out at higher incomes), but if your practice is paying interest on $300,000 in equipment loans at 7%, that is $21,000 per year in deductible interest.

Finally, the Section 199A Qualified Business Income deduction allows eligible business owners to deduct up to 20% of their qualified business income. Dental practices are specified service trades or businesses (SSTBs), so the deduction phases out above $191,950 for single filers and $383,900 for joint filers (2024 thresholds). If your taxable income falls within the phase-out range, proper tax planning — timing income and deductions, making the most of retirement plan contributions — can help you capture part or all of this deduction in some years.

The biggest mistake we see Miami dental practices make is treating tax deductions as an afterthought — something to figure out in March when the returns are due. The practices that save the most money are the ones that plan their deductions proactively throughout the year. That means making equipment purchase decisions in October or November when you can still project your year-end income accurately, making retirement plan contributions based on updated projections rather than guesses, and keeping your books current so your preparer can identify opportunities before the tax year closes. Our tax planning process starts in the fall for exactly this reason — we want to make the most of every deduction while there is still time to act on the strategies.