Welcome to Dental Unscripted

Welcome to Dental Unscripted, a podcast brand that meets doctors wherever they are at in their professional journey. We talk about starting a practice, buying a practice, and running a practice. We cover a lot of ground on this channel!

Blog By:
Dental Unscripted

Setting up a business entity for a dental practice costs about $500 when your attorney handles it, and could cost you somewhere north of $10,000 when it goes wrong. That's not hyperbole. We just want to make sure everyone doesn't take it too lightly. Of course you can file your own LLC. But what if you check the wrong box, skipped a local registration or designation, or even try recycled an old entity from their associateship!  We cover all these pit falls in this episode and usually its not a big deal unless your on a timeline and it causes a few days to a week of delays.

On a recent episode of Dental Unscripted, we sat down with Atty. Tyler Jones from Helsell Fetterman, a dental-specific attorney who handles entity formation for startups and acquisitions nationwide. He helps us break down the stuff that trips people up. So here's what you actually need to know.

Your Entity and Your Tax Status Are Two Different Things

This is the single biggest point of confusion we hear. A dentist will call Tyler and say, "I need to form my S-Corporation." But an S-Corp isn't an entity. It's a tax election.

Think of it this way: the entity is the box, and the tax election is the status you put inside the box. Your LLC or PLLC is the legal structure you file with the state. The S-Corp election is a separate filing you make with the IRS — via Form 2553 — that changes how your income gets taxed. Your entity name doesn't change. Your state filing doesn't change. Only how the IRS treats your money changes.

Paula Quinn, my co-host, had this exact experience: she was an LLC for about a year, then her CPA switched her to S-Corp status. As Tyler explained on the show, her entity never changed, her tax classification did. And the CPA waited because the timing of that election matters. Do it too early,  before you're taking a real salary and generating consistent revenue — and you create payroll compliance costs that eat into your startup cash flow for no benefit.

The red flag: if a CPA recommends an immediate S-Corp election for a dentist buying a smaller practice, that's often a sign they're running an outdated playbook. Tax law changes in recent years have made it smarter for a lot of owners to stay as a disregarded LLC for the first year or two and grow into the S-Corp election. Talk to someone who knows dental — not a generalist.

LLC vs. PLLC: It Depends on Your State

A PLLC is a Professional Limited Liability Company. In practical terms, it's the same thing as an LLC, same liability protection, same tax treatment. The only difference is that some states require licensed professionals (dentists, doctors, architects) to use the PLLC designation.

In Florida and Arizona, you can practice under a standard LLC, they don't care. In Washington, you need a PLLC. Oregon doesn't even have the PLLC concept. Tyler keeps a chart by his desk because every state is different.

He told a great story on the episode: dentists in Washington will come in proud, saying "I already formed my own LLC." And Tyler has to say, "That's great — but you need to switch it to a PLLC to be compliant." It's not a big deal to fix. But it's one more unnecessary delay in a process where timing already matters.

Don't Recycling Your Associate LLC

A lot of associates have an LLC from their 1099 days. When they go to buy a practice, their first instinct is to reuse it. Tyler's advice: don't.

An old entity carries what he calls legacy baggage. Maybe the S-Corp election lapsed because you stopped filing returns. Maybe it's been dormant for two years. Maybe there are old tax filings running through it. None of these are necessarily deal-killers — but every single one of them prompts questions from the bank's underwriting team. And in a market where brokers want deals closing 30 to 60 days after LOI, extra questions are extra weeks.

A fresh entity gives the bank a clean file. No history, no baggage, no follow-up questions. The underwriting moves faster. Your credentialing starts on clean footing. And you're not spending hours digging up old operating agreements or SS-4 forms you haven't thought about in three years.

The cost of a new entity: roughly $500. The cost of the delays from reusing an old one: unpredictable — and always more.

When to Actually Form Your Entity

Startups: once you've found a space and you're getting serious about LOIs or lease negotiations. Your landlord needs the entity for the lease. Your bank needs it for the loan. Your insurer needs it for liability coverage. The whole formation process takes a few days to a week, so you're not looking at a long lead time — just don't wait until the week before signing.

Acquisitions: form it immediately after the LOI. Tyler was direct about this on the show: "You may need to bite the bullet and form the entity because you're going to need it for your bank loan, for credentialing, for opening up bank accounts, for setting up payroll. A lot of those things — the timelines on them do not run concurrently." Waiting for due diligence to finish before forming your entity is the single most common timing mistake on acquisitions.

If the deal falls through, you're out $500 and a few hours of attorney time. If the deal closes and your entity isn't ready, you're scrambling — and every week of delay is a week without revenue.

The Bottom Line

Nobody is making a living forming entities. Tyler said it himself, it's form-driven work, about an hour of paralegal time. But it's the legal foundation that your lease, loan, credentialing, payroll, and insurance all sit on top of. Get it right, and every downstream process runs smoother. Try to save $500 by doing it yourself, and there's a good chance you'll spend ten times that cleaning up the mess a week before closing.

Ask your attorney if entity formation is included in their package. If it's not, ask what it costs to add it. Then move on to the things that actually require your attention.

Visit our website for more great insights on starting up, buying, or running a successful dental practice!
https://nxlevelconsultants.com/resources/dental-podcast/

This article is based on a recent episode of Dental Unscripted, the podcast from NX Level Consultants where Mike Dinsio and Paula Quinn break down the practice ownership journey one episode at a time. Tyler Jones of Helsel Fetterman joined as guest. Listen to the full episode wherever you get your podcasts.