From the desk of STAC Bizness Solutions CEO, Shawna Aho

Running a dental practice comes with plenty of moving parts: patient care, staffing, inventory, scheduling, overhead, and the never-ending push to balance quality care with business growth. With so much on your plate, it’s easy to see why taxes can slip into the “I’ll deal with it later” corner of your brain. But the truth is, tax season rarely rewards procrastination. In fact, it’s often the reason so many practice owners experience unanticipated tax bills, unnecessary penalties, or missed opportunities to keep more of their hard-earned money.

Avoiding tax surprises doesn’t require becoming a tax expert. It simply requires knowing what to watch for, planning ahead, and surrounding yourself with the right people who can guide you throughout the year.

Below are the most common reasons dental practice owners get blindsided at tax time and what you can do now to stay ahead of them.

1. Not Understanding Your Practice’s True Financial Picture

One of the biggest contributors to tax surprises is an incomplete or outdated financial view. Many practices rely on bank balances or rough mental math to get a sense of how things are going. But your tax liability is based on profit, not how much is sitting in checking.
A practice can bring in strong collections and still be on track for a significant tax bill if expenses were lower than expected or if the owner compensation strategy wasn’t aligned with actual profitability.
A few places where owners often misjudge their numbers include:

• Overestimating expenses – thinking write-offs will reduce taxes more than they do
• Underestimating net profit, especially during a growth year
• Failing to factor in equipment purchases or improvements correctly
• Unexpected revenue spikes – a busy season, added hygienists, higher production from new technology

The solution isn’t complicated, but it is intentional: you need updated financials throughout the year. When your bookkeeping, payroll, and reporting are current and accurate, you can see, month by month, what your year-end picture is likely to look like. That visibility gives you time to adjust spending, owner compensation, and tax planning.

2. Not Setting Aside Money for Quarterly Taxes

If your practice is profitable, the IRS expects quarterly estimated payments. Many practice owners know this in theory, but life gets busy and those quarterly deadlines sneak up faster than anyone expects. Missing or under-paying estimates is one of the most common ways dentists face avoidable penalties and interest.

Even if your practice pays taxes through payroll, your personal return may still require quarterly payments, especially if your distributions or practice profits are high.
A simple fix is to treat quarterly taxes like any other recurring expense. Set aside a percentage of your profits each month (typically 20% to 30% for most practices) into a separate tax account. When quarterly time arrives, the funds are already there, and you avoid scrambling or tapping into operating cash.

Better yet, work with an advisor who evaluates your quarterly estimates a few times throughout the year. That way, any major swings in production, staffing, insurance reimbursements, or equipment purchases will be considered before the IRS sends you a penalty notice.

3. Not Planning for Major Purchases or Practice Investments

Dental practices often make large investments: digital scanners, lasers, chairs, CBCT units, software, and buildouts. These purchases can have major tax benefits… but only when planned properly.

Many owners assume they can simply “write off” a new piece of equipment at tax time, but the timing, financing structure, and Section 179 rules matter. Depending on your situation, writing off a major purchase all at once may not even be the best long-term move.

Poor planning in this area often results in:

• Buying too late in the year
• Missing out on accelerated depreciation
• Overusing Section 179 in a year where it wasn’t optimal
• Triggering a bigger tax bill in future years due to misaligned depreciation schedules

The best approach is to speak with a tax advisor before you purchase. They can help you model the tax impact, choose the right timing, and understand how the purchase affects cash flow and your future tax picture.

4. Forgetting About Personal Income Factors

Your personal financial life and your dental practice are connected much more than most business owners realize. Many tax surprises stem from personal events that weren’t considered in the practice’s tax strategy, such as:

• Spouse income changes
• Investment gains
• Rental property income
• Retirement plan distributions
• Roth conversions
• College tuition payments
• Health insurance changes

Any of these can move you into a higher tax bracket or trigger additional taxes, such as the Net Investment Income Tax or AMT. And when your personal income changes, your estimated taxes often need to change too.

A coordinated tax plan looks at your practice, your household income, and your financial goals together, not as separate parts. That’s where working with someone who understands both dental businesses and personal tax strategy makes a huge difference.

5. Not Having a Smart Retirement and Compensation Strategy

Dentists have powerful retirement planning tools at their disposal: Solo 401(k)s, Safe Harbor 401(k)s, Profit Sharing plans, Cash Balance plans, and more. But these strategies only help when they’re used intentionally and early enough in the year.

A surprising number of practice owners learn at tax time that they could have saved thousands in taxes by contributing to a retirement plan, but missed the deadline or didn’t set up the right structure.

The most common issues include:

• Not maximizing 401(k) opportunities
• Not knowing whether the practice is a good fit for a Cash Balance plan
• Paying themselves too much or too little W-2 wages
• Not understanding how distributions affect taxes
• Missing opportunities for deductible retirement contributions

A well-designed retirement plan doesn’t just help you save for the future. It’s one of the most effective tax tools available to practice owners. But timing is everything. Many strategies must be set up early in the year, not at tax time.

6. Assuming Tax Planning Only Happens in the Fall

This is one of the biggest misconceptions among dental practice owners. Real tax planning isn’t something you do once a year. It’s something you do all year long.

Quarterly check-ins can reveal:

• If your profit trend is ahead or behind expectations
• Whether estimated taxes need adjusting
• How owner compensation should be structured
• If equipment purchases make sense now or later
• Whether retirement contributions should be increased
• If there are opportunities to reduce taxable income before year-end

Waiting until October or November limits your options. By then, most of the year is already written. The earlier you plan, the more control you have over the tax outcome.

The Real Key to Avoiding Tax Surprises: A Proactive Partner

Most dental practice owners don’t want to spend their days thinking about taxes, and they don’t have to. What they do need is a partner who keeps an eye on things year-round and helps connect the dots between their practice finances, personal income, and long-term goals.

That’s where STAC Bizness Solutions makes a meaningful difference.

Our team works closely with dental practices to ensure:

• Your books and financials are always up-to-date
• You understand your profitability long before tax time
• Quarterly tax estimates are accurate and timely
• Retirement strategy and owner compensation are optimized
• Equipment purchases are planned with both cash flow and taxes in mind
• You stay ahead of potential tax liabilities
• And most importantly… you avoid expensive, stressful surprises

We don’t show up once a year. We’re with you throughout the year, helping you make smart, proactive decisions.

If you want to avoid tax surprises and feel confident about your financial picture, STAC Bizness Solutions is here to help you plan ahead, make informed choices, and keep more of what you earn without the stress. Just give us a call for a complementary strategy session at (844) 424-9637.

Until next time…

Shawna