The Annual New Dental Practice Review Checklist

2026-08-21

A practical, step-by-step checklist for new dental practices to review taxes, finances, and compliance before year-end. Includes deadlines, deductions, and action items.

Running a new dental practice means wearing many hats, but one hat you can’t ignore is the tax and finance one. This checklist walks you through the key items to review annually, from tax deadlines to deductible expenses, so you can avoid surprises and keep more of what you earn. Whether you’re in your first year or second, these steps are concrete and actionable.

Why an Annual Review Matters

A yearly review isn’t just about filing taxes. It’s about catching errors, optimizing deductions, and planning for growth. For new practices, the first few years are critical for establishing good financial habits. Missing a deadline or overlooking a deduction can cost you thousands. This checklist is designed to be your annual safety net.

1. Confirm Your Business Structure and Tax Deadlines

Your business structure (LLC, S-Corp, sole proprietorship) determines your tax forms and deadlines. If you haven’t reviewed this since opening, now is the time.

LLC or Sole Proprietor: You’ll likely file Schedule C with your personal return. Deadline: April 15, 2026 (or the next business day if it falls on a weekend).
S-Corp or C-Corp: You’ll file Form 1120-S or 1120. S-Corp deadline is March 15, 2026. C-Corp is April 15, 2026.
Estimated Taxes: If you expect to owe more than $1,000, you should be making quarterly estimated payments. Deadlines for 2026: April 15, June 15, September 15, and January 15, 2027.

Action Item: Check your formation documents and confirm your filing status. Mark all relevant deadlines on your calendar.

2. Reconcile Your Books Monthly

If you haven’t been reconciling your bank and credit card statements monthly, start now. This ensures your income and expenses are accurate, which is the foundation of your tax return.

Use accounting software like QuickBooks or Xero. Cost: $30-$80/month.
Reconcile at least monthly: Match every transaction to a receipt or invoice.
Hire a bookkeeper if you’re falling behind. Average cost: $300-$600/month for a small practice.

Action Item: Set a recurring monthly appointment with yourself to reconcile. If you’re behind, block out two hours this week to catch up.

3. Review Your Profit and Loss Statement

Your P&L shows your revenue, expenses, and net profit. Reviewing it quarterly helps you spot trends and adjust before year-end.

Look for large fluctuations: Why did expenses spike in a particular month? Is revenue growing as expected?
Compare to your budget: If you don’t have a budget, create one for next year. Use your P&L as a baseline.
Check your overhead ratio: Aim for overhead (excluding your salary) to be 60-70% of revenue. If it’s higher, investigate.

Action Item: Pull your year-to-date P&L and review it line by line. Identify any categories that seem off.

4. Maximize Deductible Expenses

New practices often miss deductions they’re entitled to. Here are common ones for dental practices:

Equipment and Supplies: Dental chairs, X-ray machines, handpieces, and consumables. Section 179 allows you to deduct the full cost of qualifying equipment (up to $1,160,000 for 2026) in the year you place it in service.
Continuing Education: Courses, conferences, and travel expenses related to your profession.
Home Office: If you have a dedicated space used exclusively for business, you can deduct a portion of rent/mortgage, utilities, and internet. Simplified method: $5 per square foot, up to 300 square feet.
Vehicle: If you use your car for business (e.g., visiting labs or attending meetings), track mileage. The 2026 standard mileage rate is 67 cents per mile.
Retirement Contributions: SEP IRA or Solo 401(k) contributions are deductible. For 2026, you can contribute up to 25% of net earnings (SEP) or $23,000 plus catch-up (Solo 401(k)).

Action Item: List all purchases from the past year and categorize them. If you haven’t tracked mileage, start now for next year.

5. Check Your Payroll and Employment Taxes

If you have employees, you must handle payroll taxes correctly. Mistakes here can trigger penalties.

Form 941: Quarterly payroll tax return. Deadlines: April 30, July 31, October 31, and January 31.
Form 940: Annual federal unemployment tax return. Due January 31, 2027.
W-2s: Provide to employees by January 31, 2027.
State payroll taxes: Check your state’s requirements and deadlines.

Action Item: Verify that your payroll service (or you) is withholding and remitting the correct amounts. Review your last 941.

6. Review Your Retirement Plan

Retirement plans not only secure your future but also reduce your taxable income. If you haven’t set one up, consider it now.

SEP IRA: Easy to set up, contributions up to 25% of net earnings (max $69,000 for 2026). Deadline to contribute is your tax filing deadline (including extensions).
Solo 401(k): Allows higher contributions if you have no employees (other than a spouse). Employee deferral: $23,000, plus employer profit-sharing up to 25% of compensation.
Simple IRA: If you have employees, this is a low-cost option. Employee deferrals and employer match required.

Action Item: If you don’t have a plan, talk to a financial advisor or broker. If you do, confirm your contribution limits and make contributions before the deadline.

7. Plan for Quarterly Estimated Taxes

If you’re a sole proprietor or S-Corp owner, you likely need to pay estimated taxes. Underpaying can result in penalties.

Calculate your estimated tax: Use your prior year’s tax liability or your current year’s projected income.
Use the safe harbor rule: Pay at least 100% of last year’s tax liability (or 110% if your AGI was over $150,000) to avoid penalties.
Set aside funds: Put 25-30% of your net income into a separate savings account for taxes.

Action Item: Calculate your next estimated payment due and schedule it. If you’re not sure, consult a CPA.

8. Organize Your Records

Good recordkeeping saves time and money. You should keep receipts, invoices, and bank statements for at least 7 years.

Digital storage: Use cloud storage like Dropbox or Google Drive. Scan paper receipts.
Categorize expenses: Use consistent categories in your accounting software.
Separate business and personal: Never mix funds. If you do, correct it now.

Action Item: Set up a folder system for 2026 documents. Scan any paper receipts you have.

9. Consult a Professional

A CPA who specializes in dental practices can save you more than they cost. They know industry-specific deductions and can help with tax planning.

Cost: $500-$2,000 for tax preparation and planning, depending on complexity.
Benefits: They can help you choose a business structure, set up retirement plans, and avoid audits.

Action Item: If you don’t have a CPA, ask colleagues for referrals. Schedule a year-end planning meeting.

FAQ

Q: What if I miss a tax deadline? A: File as soon as possible. Penalties and interest accrue, but they’re often less than the cost of ignoring it. You can request a payment plan if you can’t pay in full.

Q: Can I deduct the cost of my dental license and continuing education? A: Yes, license fees and CE courses are deductible as business expenses. Travel and lodging for CE are also deductible if the primary purpose is business.

Q: How much should I set aside for taxes as a new practice owner? A: A common rule is 25-30% of your net income. This covers federal and state income tax plus self-employment tax. Your CPA can give a more precise number.

Q: Should I hire a bookkeeper or do it myself? A: If you’re spending more than 5 hours a month on bookkeeping, it’s worth outsourcing. A bookkeeper costs $300-$600/month and frees you to focus on patients.

The Bottom Line

An annual review is not optional for a new dental practice. It protects your cash flow, reduces your tax bill, and sets you up for long-term success. Use this checklist as a starting point, but tailor it to your specific situation. Schedule time this week to tackle at least two items, and don’t hesitate to bring in a professional. The cost of a CPA is an investment that pays for itself many times over.