The Complete Solo Dentist Practice Startup Checklist

Starting a solo dental practice is a major step, and taxes are often the most overlooked part of the launch. This checklist walks you through the essential tax and business setup tasks, so you can avoid penalties and keep more of what you earn. Follow it in order, and you will have a solid foundation before you see your first patient.

1. Choose Your Business Structure

Your business structure determines how you pay taxes and your personal liability. For solo dentists, the most common options are:

• Sole Proprietorship: Simplest, but you are personally liable for all debts and lawsuits. Taxes are filed on Schedule C.
• Single-Member LLC: Offers liability protection without double taxation. You still file Schedule C, but you are separate from the business for legal purposes.
• S Corporation: Can save on self-employment taxes, but requires payroll and more paperwork. Best if your net income exceeds $80,000.

Action this week: Consult a CPA or tax attorney to pick the structure. Filing fees range from $0 (sole prop) to $100-$500 for an LLC, plus annual state fees of $50-$800.

2. Get Your Tax IDs and Licenses

You need the right numbers and permits before you can pay taxes or hire staff.

• EIN (Employer Identification Number): Free from the IRS at IRS.gov. Required for opening a business bank account and hiring employees.
• State Tax ID: For state income tax or sales tax, if applicable. Check your state’s revenue department.
• Dental License: Active and current in your state. Renewal fees range from $100-$500 per year.
• Business License: Local city or county permit, often $50-$200 annually.
• DEA Registration: Required if you prescribe controlled substances. Cost is $888 for 3 years.

Action this week: Apply for your EIN online (10 minutes). Then check your state and local requirements.

3. Set Up Accounting and Bookkeeping

Clean books from day one save you thousands in tax prep and prevent missed deductions.

• Open a business bank account: Separate personal and business finances. Look for no-fee accounts at local credit unions or online banks.
• Choose accounting software: QuickBooks Online ($30-$100/month) or Xero ($13-$65/month). Both integrate with dental practice management software.
• Track every expense: Use a dedicated business credit card for all purchases. Categories include supplies, equipment, rent, marketing, and continuing education.
• Hire a bookkeeper or use a service: Expect to pay $200-$500/month for a part-time bookkeeper, or use software with automatic categorization.

Action this week: Open your bank account and set up accounting software. Enter your startup costs so far.

4. Estimate and Plan for Quarterly Taxes

As a solo owner, you pay taxes quarterly, not once a year. Missing a payment triggers penalties.

• Federal estimated taxes: Due April 15, June 15, September 15, and January 15. Use Form 1040-ES.
• Self-employment tax: Covers Social Security and Medicare, at 15.3% of net income. This is in addition to income tax.
• State estimated taxes: Most states require quarterly payments as well.

How to estimate: Use your projected net income (revenue minus expenses). A safe rule: set aside 25%-35% of net income for federal and state taxes combined.

Action this week: Calculate your projected income for the year. Open a separate savings account and transfer a percentage of every deposit into it.

5. Understand Deductions Specific to Dentists

You can reduce your taxable income with deductions unique to your practice.

• Equipment and depreciation: Dental chairs, X-ray machines, and computers can be expensed under Section 179, up to $1,220,000 in 2026.
• Clinical supplies: Gloves, masks, anesthetics, and materials are fully deductible.
• Continuing education: Courses, travel, and lodging are deductible if they maintain or improve skills.
• Practice insurance: Malpractice, business owner’s policy, and disability insurance premiums are deductible.
• Home office: If you have a dedicated space for admin work, you can deduct a portion of rent or mortgage interest.
• Vehicle use: Track mileage for business trips to labs, supply stores, or networking events.

Action this week: Start a log of all business expenses. Keep receipts and categorize them in your software.

6. Set Up Payroll (If You Hire Staff)

Even if you start solo, you may hire a hygienist or front desk later. Payroll has its own tax obligations.

• Register with your state: For unemployment insurance and withholding.
• Use a payroll service: Gusto ($39+/month) or ADP ($50-$100/month) handle federal, state, and local taxes automatically.
• File quarterly payroll taxes: Form 941 for federal, plus state equivalents.

Action this week: If you plan to hire within 6 months, set up payroll now to avoid back taxes. Otherwise, note this for later.

7. Keep Records for the IRS

Good recordkeeping is your defense in an audit. The IRS requires you to keep records for at least 3 years, but for equipment and real estate, keep them longer.

• Bank statements and receipts: Store digitally using cloud backup like Dropbox or Google Drive.
• Mileage logs: Use an app like MileIQ ($5.99/month) to track automatically.
• Contracts and leases: Keep copies of all agreements.

Action this week: Create a folder system (physical or digital) for each tax year. Scan all paper receipts.

8. Work with a Dental-Specific CPA

A general CPA may miss deductions unique to dentistry. A specialist knows the industry’s benchmarks and tax strategies.

• What to look for: Experience with dental practices, familiarity with your state, and proactive advice.
• Cost: Expect $1,500-$3,000 for annual tax preparation and quarterly advice, depending on complexity.

Action this week: Interview 2-3 CPAs. Ask about their dental clients and how they handle equipment depreciation.

FAQ

Q: When do I need to start paying quarterly taxes? A: In your first year, you must pay estimated taxes if you expect to owe more than $1,000. Start in the quarter you open your doors. Use Form 1040-ES to calculate.

Q: Can I deduct the cost of my dental license and DEA registration? A: Yes, both are ordinary and necessary business expenses. Deduct them in the year you pay them.

Q: What if I miss a quarterly tax payment? A: The IRS charges a penalty based on the amount owed and time late. File as soon as possible and pay to minimize penalties.

Q: Should I incorporate as an S Corp from the start? A: Not always. If your net income is under $80,000, the extra payroll costs may outweigh the tax savings. Reassess after your first full year.

Related guides

• 7 Mistakes Solo Dentist Practices Make in Their First Year
• 7 Questions to Ask Before Buying a Solo Dentist Practice

The bottom line

Launching a solo dental practice requires careful tax planning from day one. By following this checklist, you will have your structure, IDs, accounting, and tax system in place before you treat your first patient. The key is to act now, not later. Set aside time this week to complete the first three steps, and you will save yourself stress and money come tax season.