The Financial Blueprint Every Dentist Needs: Profit, Taxes & Practice Growth

Understand the numbers behind your practice so you can improve cash flow, plan for taxes, and make smarter decisions for the future.

A dental practice can look profitable on paper and still leave its owner wondering where all the money went.

That’s why dental practice financial management needs to go beyond production numbers. Dental Office Rescue host Linda Kane sat down with Caleb Gussner and Jared Duckett of Duckett Ladd to discuss the numbers dental practice owners should understand, from profitability and cash reserves to tax planning and long-term practice value.

Look Beyond Production to Understand Profitability

One of the first financial metrics Caleb looks at is net operating income (NOI). From there, practice owners can investigate what’s driving the result. Is production too low? Are collections falling behind? Has overhead grown too high?

But profitability alone doesn’t tell the whole story. A practice can show a profit while losing cash because of debt payments, owner distributions, taxes, or other expenses.

That’s why Caleb encourages owners to understand not only whether the practice made money, but whether it actually added or lost cash.

Build a Cash Reserve Before You Need It

Unexpected disruptions are part of owning a dental practice.

Duckett Ladd’s general recommendation is to keep approximately 10% of annualized collections in reserve after accounting for taxes, expenses, and owner pay. Based on an analysis Caleb shared from more than 250 practices they work with, that represented only about six weeks of cash burn for 82% of those practices.

“You sleep a whole lot better at night having that cash in the bank.” — Caleb Gussner

The goal is to give the practice breathing room when something doesn’t go according to plan.

Tax Planning Should Start Before Tax Season

Jared described what Duckett Ladd calls the three Ps: preparation, projecting, and planning.

Preparation handles what already happened. Projection estimates where taxes are headed. Planning asks what the practice owner can do differently before the year is over.

One habit Jared recommends is estimating your tax obligation early and regularly moving money into a separate account for taxes.

“It’s not hard to recover from a good start.” — Jared Duckett

He also encourages dental practice owners to work with a CPA who helps them actively plan, not simply prepare a return.

Make Business Decisions for the Business

A new CEREC, CBCT, laser, or other major investment may provide tax advantages, but that doesn’t automatically make it a good purchase.

Caleb recommends starting with return on investment. What can the equipment realistically produce? What profitability could it create? Does the practice have enough cash in reserve? If financed, can cash flow support the payments?

Jared applied the same thinking to real estate. First determine whether the property is a good investment and fits the practice’s long-term plans. Any tax advantages should support a sound business decision, not create one.

Build Practice Value Before You’re Ready to Sell

If selling the practice or bringing in a partner may be part of the future, Caleb recommends thinking about three things now: clean financials, profitability, and transferability.

A future buyer needs financial clarity, but they also need a practice they can realistically step into. The more dependent the business is on specialized production that only the current owner can provide, the more complicated that transition can become.

How This Helps Your Dental Practice

Better financial management isn’t about becoming an accountant. It’s about having enough clarity to make better decisions.

Whether you’re hiring an associate, buying equipment, preparing for taxes, building cash reserves, or planning an eventual transition, your numbers should help guide the way.

Caleb’s closing message brings the conversation together: start with the end in mind. Decide what you want the practice to become, then work backward to identify the steps that can help you get there.

Listen to the Full Conversation

Hear the complete discussion with Linda Kane, Caleb Gussner, and Jared Duckett on the Dental Office Rescue Podcast for more on dental practice profitability, cash flow, taxes, and long-term financial planning.

Connect & Learn More

Linda Kane & Dental Office Rescue
dentalofficerescue.com

Caleb Gussner & Jared Duckett
Duckett Ladd
duckettladd.com