One of the most common questions dentists ask when they start thinking about ownership is a simple one: Is owning a dental practice actually profitable? The answer isn’t found in flashy numbers or extreme success stories. It comes from understanding a few core financial ideas that apply to almost every dental office. Once those are clear, the economics of ownership tend to feel far more practical and approachable than many expect.
Everything starts with revenue. Revenue is simply the total money coming into the practice from all sources. That includes insurance payments, patient cash payments, and any product sales if the office offers them. On its own, revenue doesn’t tell you whether a practice is healthy or struggling, but it sets the stage for understanding the rest of the financial picture. For example, imagine a practice producing $3.5 million per year. That number sounds impressive, but what really matters is what happens to that money next.
This is where overhead often gets misunderstood. In dentistry, overhead usually refers to the recurring costs required to keep the office running day to day. Think staff wages, payroll taxes, rent, utilities, dental supplies, lab fees, insurance, and administrative expenses. Overhead is not the same as total expenses. It typically does not include doctor salary, owner distributions, loan payments, or one-time purchases like major equipment. Many general practices aim for overhead around 50%, which gives a useful benchmark for efficiency.
Operating expenses are broader than overhead and include everything required to operate the business. That means overhead plus items like marketing, software subscriptions, equipment repairs, professional services, and occasional larger costs. Understanding the difference between overhead and total expenses helps avoid confusion when evaluating performance. Overhead tells you how efficiently the practice runs on a daily basis, while total expenses show the full financial reality.
Profit is what remains after operating expenses are paid. Using the $3.5 million example with 50 percent overhead, about $1.75 million goes toward running the clinic. If the owner pays themselves a salary of $200,000, that salary is an expense, but it is not part of overhead. After that salary, the practice would still have $1.55 million in profit before taxes. Profit is not just “extra money.” It represents flexibility. It can be reinvested, saved, used to build reserves, or distributed depending on the owner’s goals.
Distributions are how owners take money out of the business beyond their salary. This is an important distinction because distributions do not reduce profit on paper. They simply move money from the business to the owner. For example, if an owner takes a $500,000 distribution, the practice still generates the same profit, but now has less cash sitting in the business. Many dentists confuse distributions with expenses, when in reality they are part of ownership, not operations.
When the pieces are viewed together, dental practice finances become much easier to understand. Revenue fuels the practice, overhead reflects operational efficiency, expenses capture the full cost of running the business, and profit creates options. For many dentists, the real surprise is not how complicated the math is, but how stable and powerful a well-run practice can be once the fundamentals are understood.