Dental Boardroom Podcast

Blog By:
Practice Orbit

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Welcome back to the Dental Boardroom series on financial planning for dental practice owners—Turning Financial Chaos into Financial Freedom.

In the last two episodes, we focused on the tax side of Phase 3: creating a business financial plan to support your Phase 2 personal financial plan for independence. Today, we’re continuing with Phase 3A by diving into a critical subject for S-Corp practice owners: determining your payroll.

As a dentist and business owner, how much should you pay yourself? This episode breaks down:
1. Why payroll decisions are essential for both tax efficiency and retirement planning.
2. The differences between being a sole proprietor, partnership, and S-Corp.
3. How retirement plans (401(k)s, Roth 401(k)s, profit sharing, and defined benefit plans) tie directly into your payroll.
4. Why tax diversification—spreading investments across tax-free, tax-deferred, and taxable accounts—is crucial for long-term wealth building.
5. Practical strategies for optimizing retirement contributions while balancing staff costs.

Whether you’re new to S-Corp payroll planning or you’re refining an existing structure, this episode gives you the insights needed to align your compensation with both your tax strategy and retirement goals.

Key Points                                               
1. Phase 3A focus: Business financial plan ? Determining payroll for S-Corp practice owners.
2. Entity matters: Payroll rules differ for sole proprietors, partnerships, and S-Corps (don’t be a C-Corp!).
3. Retirement plans: Options include 401(k), Roth 401(k), profit share, and defined benefit plans.
4. Roth vs. traditional: Roth provides tax-free growth; traditional defers taxes but offers immediate deduction.                                                                        5. Safe harbor options: 3% automatic or dollar-for-dollar match.
6. Tax diversification: Build wealth across tax-free, tax-deferred, and taxable accounts.
7. Investment allocation matters: Different accounts should hold different types of investments to minimize taxes.
8. Defined benefit plans: A “pension-style” retirement vehicle for higher contributions and tax advantages.
9. Optimizing payroll: The right structure maximizes retirement savings, reduces taxes, and protects future financial independence.

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