You can use an S-corp as a dentist to lower your taxes by paying yourself a reasonable W-2 salary, taking the rest of your profit as distributions that are not hit with self-employment tax, and then layering smart retirement, health, and business deductions on top of that. That is the core idea. Everything else is detail.
If you only remember one thing, let it be this:
The main tax benefit of an S-corp is splitting your income into salary (subject to payroll taxes) and profit distributions (not subject to self-employment tax).
That is where most of the savings come from. Now, the rest of this guide just fills in the gaps for you as a woman dentist who owns, or plans to own, a practice.
By the way, if you want a deeper, technical breakdown at some point, the topic is often called dentist S-Corp tax optimization. But let me walk you through it in plain language first.
How an S-corp actually saves tax for a dentist
Imagine your practice brings in good collections, your overhead is under control, and after everything is paid, you have 350,000 dollars of profit from your work. That is your net income before you pay yourself.
Without an S-corp, if you are a sole proprietor or a single-member LLC, that entire 350,000 is subject to income tax and self-employment tax.
With an S-corp, you split that 350,000 into two pieces:
- W-2 salary you pay yourself
- Owner distributions you pay yourself as the shareholder
Only the salary is subject to Social Security and Medicare payroll taxes. The distributions avoid those specific taxes.
Very simple example:
| No S-corp | With S-corp | |
|---|---|---|
| Net practice profit | 350,000 | 350,000 |
| W-2 salary to you | 0 | 200,000 |
| Distributions | 0 | 150,000 |
| Income subject to Social Security + Medicare tax | 350,000 | 200,000 |
That difference of 150,000 that moved from “subject to payroll tax” to “not subject” can save tens of thousands each year. And that is before you stack on retirement plans, HSA, accountable plans, and so on.
Of course, there is a catch. The IRS requires your salary to be “reasonable” for your role, location, and kind of work. Which brings us to the question almost every woman dentist I talk to asks first.
What is a “reasonable” salary for a woman dentist owner?
Short answer: it is not a fixed number. It is a range, and that can feel frustrating.
For a dentist who owns a small or midsize practice, a common salary range I see is somewhere between 35% and 60% of what you would pay an associate to do the clinical work you do.
But that is just a starting point, not a law.
Things that affect your reasonable salary:
- How much clinical work you personally do vs hygienists and associates
- What local associate dentists earn near you
- Your years of experience and any advanced training
- Time you spend managing the practice as an owner
- How much free cash flow the practice actually has
There is also a quieter piece that is not talked about enough for women: schedule choices.
If you are working 3 clinical days a week to be home with young kids, or you step back for maternity leave for a few months, your workload is not the same as a full-time associate grinding 5 days a week. That can affect a reasonable salary calculation.
You do not have to match some theoretical full-time male associate to have a defensible salary. Your actual hours, responsibilities, and role matter.
The IRS does not ask if you are a woman, but your real life does. It is fine if your salary reflects that.
That said, you cannot just pick the smallest number and assume you are safe. If the practice makes 600,000 in profit, and you are paying yourself a 60,000 salary while you work full time, that is very hard to defend.
There is a balance between tax savings and audit risk. And sometimes people lean too far toward tax savings, especially when a friend at a study club brags about “never paying payroll tax again.” That is not realistic.
I would rather see you with a slightly higher salary and still sleeping at night.
When an S-corp actually makes sense for a dental practice
Not every dentist should rush into an S-corp. Some do it too early and end up with extra admin costs that eat up most of the benefit.
A few simple guidelines that are usually reasonable for dentists:
- If your net profit from the practice is under 120,000 dollars, an S-corp may not help much.
- Between 150,000 and 300,000, it often starts to make sense.
- Over 300,000, it is very often worth a hard look.
Again, these are rough thresholds. They depend on your state tax, payroll costs, and how aggressive or conservative you want to be.
A woman dentist might also be thinking of:
- Upcoming maternity leave
- Cutting back clinical days for family reasons
- Bringing on an associate or partner
These life shifts can move the numbers quickly. For example, if you plan to cut profit in half next year while kids are small, doing a big S-corp change this year might not be worth the hassle.
On the other hand, if your kids are older, you are ramping back up, and your collections are growing, it can be a perfect time to set up the structure in a thoughtful way.
Step-by-step path: from dentist to S-corp owner
I want to keep this practical. Here is a basic sequence that I see work well for many women practice owners.
1. Figure out your true profit first
Before you pick any structure, you need to know your real numbers. Not what your software says after random owner expenses.
Clean up your profit and loss so that:
- Personal expenses are separated from business ones
- Owner perks are visible: car, cell phone, family health insurance, travel that is half vacation
- Major one-time costs are flagged: construction, big equipment, a rebrand
Some dentists are surprised. They think they make 200,000, but after adjustments it is really 320,000. Or the opposite: they feel busy, but once staff, supplies, and debt payments settle, the practice barely breaks even.
Having this clear for at least one full year, ideally two, gives you a better foundation for S-corp planning.
2. Decide whether to elect S-corp or not
There are two main routes:
- Your practice is an LLC or PLLC: you can elect to have it taxed as an S-corp.
- Your practice is a professional corporation: you can choose S-corp tax status if your state allows it.
The tax election is made with the IRS, not with your state dental board. This is where a CPA familiar with dentists earns their fee, because timing and paperwork matter.
You can also sometimes make a late S-corp election for a prior year, which can save tax retroactively, but that is a separate project.
3. Set your salary range with real data
This part is half science, half judgment.
Your advisor will often look at:
- Surveys for associate dentist pay in your region
- Your hours per week and vacation schedule
- Mix of procedures: surgeries and implants vs mostly hygiene checks
- How much management work you do vs an office manager
They will usually propose a salary range, not one exact answer, such as:
For a dentist-owner in your city, working 4 days a week, doing your mix of procedures, a reasonable salary band might be 180,000 to 230,000 per year.
Now you make a choice within that range, based on:
- How conservative you want to be
- How much you value payroll tax savings vs simplicity
- Future plans: adding an associate, reducing clinical work, retirement timeline
Sometimes I see women choose the higher end because they want a larger W-2 income for mortgage approvals, childcare costs, or personal comfort. Others lean toward the lower end to free up cash flow for practice growth.
Both approaches can be reasonable if they sit inside a defensible range.
4. Build the payroll and bookkeeping infrastructure
An S-corp is not just a tax form. It changes how money flows.
You now have to:
- Run regular payroll for yourself
- Withhold and remit payroll taxes
- File quarterly and annual payroll reports
- Track distributions clearly, separate from salary
This is where cost creeps in. You might need:
- Payroll software
- A bookkeeper or office manager with training
- A CPA who actually understands dental practices
If your admin support is weak right now, you may want to fix that first. Women dentists often try to take too much of this on themselves. Late at night. After kids are in bed. That usually ends in stress.
There is no trophy for doing your own payroll to save 60 dollars a month.
Top tax moves that pair well with an S-corp
The S-corp is like the frame of the house. You still need to fill it with smart planning.
Here are some key strategies that pair well with S-corp status for dentists.
1. Retirement plans designed around your life, not someone else’s
With a strong profit and S-corp, you have more choices:
- Solo 401(k) if it is mainly you and maybe your spouse
- Traditional 401(k) with matching if you have staff
- Cash balance plan once your income gets higher and you are closer to retirement
Many women dentists are behind on retirement because of:
- Student loans
- Taking time out for kids
- Buying into a practice later
An S-corp can help you shift more money into tax-deferred accounts by aligning your salary with plan limits. For example, 401(k) employer contributions are usually a percentage of W-2 wages, not distributions.
So if your salary is too low, you handicap your own retirement funding. If it is reasonably high, you might be able to:
- Defer 23,000 as an employee deferral (or more if over 50)
- Have your practice add a profit sharing contribution
- Layer in a cash balance plan and push total retirement savings above 100,000 per year
You will not do all of that in year one. But it is helpful to see where things can go.
2. Accountable plan for home office, phone, and minor mixed expenses
This is one of those boring tactics that quietly works very well with an S-corp.
An accountable plan is a written policy that lets the practice reimburse you for business use of:
- Home office or administrative workspace
- Personal cell phone
- Internet service
- Certain travel or continuing education expenses paid personally
The practice gets a deduction. You receive the reimbursement tax free.
For a woman dentist who does admin work from home after kids go to sleep, or during slower clinic seasons, this often reflects reality. You truly are working from home.
The main thing is to keep basic documentation. A simple written policy and occasional logs. Not pages of legal phrases.
3. Health insurance timing and the Section 199A deduction
With an S-corp, health insurance for you and your family interacts with payroll in a special way. The practice can pay or reimburse premiums, and then those premiums get added to your W-2 in a coded way, and then you can claim a self-employed health insurance deduction.
The result is usually:
- Your practice deducts the cost
- You do not pay payroll tax on those premiums
- You get a reduction of taxable income on your personal return
It is a bit technical, but the effect is usually favorable when done correctly.
The Section 199A deduction also plays into this. Dental practices classified as a “specified service trade or business” have income limits on that 20 percent deduction on pass-through income. An S-corp structure affects:
- How much of your income shows up as wages
- How much shows up as qualified business income
Which can change your 199A deduction. This is one of those places where you cannot just copy your colleague’s numbers. You need someone to run it with your family income, spouse income, and filing status.
Women dentists married to high earners, such as physicians or engineers, sometimes lose part of the 199A deduction because of combined income. That can make S-corp planning a little more intricate.
4. Car, travel, and continuing education
People get very emotionally tied to whether the car is in the practice, in the S-corp, or personal.
Honestly, the tax difference is often smaller than people think. What matters more is clean tracking.
You can:
- Have the practice reimburse business miles using IRS mileage rates
- Or have the practice own or lease the car and track personal use
For many women dentists juggling school drop-offs and errands, the mileage method can be simpler. Your life is not a neat split between “business” and “personal.” A quick log or tracking app is often good enough.
Travel and CE also play a role. A trip to a course in another city can be 100 percent deductible if it is clearly business related. If it is really a family vacation with a half-day course attached, only part of it is.
I have seen female practice owners get harshly judged by older male advisors for combining family and CE travel. That annoys me. You can do both. You just need honest documentation. The tax rules do not say you cannot be a mother at a CE event.
Comparing S-corp vs no S-corp for a woman dentist
Let us look at a simple comparison. Assume:
- Net income from the practice before owner pay: 300,000
- Married filing jointly, ignoring state tax to keep this simple
- Salary in S-corp case: 185,000
| Sole proprietor / LLC | S-corp | |
|---|---|---|
| Net business income | 300,000 | 300,000 |
| W-2 salary | 0 | 185,000 |
| Distributions | 0 | 115,000 |
| Income subject to Social Security / Medicare | 300,000 | 185,000 |
| Approx payroll / SE tax on owner | About 42,000 | About 30,000 |
| Rough savings before extra costs | About 12,000 per year |
Then you subtract:
- Extra payroll costs
- Extra tax prep
- Bookkeeping support
Maybe that cuts your net savings to something like 7,000 to 9,000 in a year. Multiply that by the next 10 or 15 years and it still matters.
There is no magic here. Just a series of small shifts that, over a long working life, add up.
Common mistakes women practice owners make with S-corps
I will be blunt. Some of these are very common, and they hurt more women than men, simply because women are more likely to be pulled in many directions and have less time for their own finances.
1. Salary set once, then never revisited
You might set a salary in year one when you work 3 days a week. Later you move up to 4 and a half days, add more complex cases, double your collections, but your salary never changes.
Now your W-2 pay is out of line with your actual work. That can look bad if the practice is ever examined.
Review your salary at least every couple of years. Life changes. Your pay should reflect that.
2. Distributions whenever there is cash
Owners sometimes pull money out of the practice account whenever the balance looks “high.” No pattern. No tracking.
Then the CPA has to guess what was salary, what was distribution, and what was just reimbursements.
For S-corps, it works better to:
- Pay salary on a set schedule (biweekly or monthly)
- Plan distributions quarterly, based on real profit and reserves
- Keep reimbursements under the accountable plan separate
It takes a bit more discipline, yes. But it makes your books easier to read and defend.
3. No emergency fund in the corporation
Some dentists distribute every cent of profit. Then when collections drop, or an associate leaves, or the sterilizer dies, they have to inject personal cash back in.
You do not have to strip the S-corp dry.
Keeping one or two months of expenses in the practice account is not waste. It is stability. Especially if you are balancing home and work demands.
Women sometimes feel guilty keeping cash “just sitting there.” But practices that run on fumes all the time cause more stress, not less.
4. Doing everything yourself
I see this over and over. A woman dentist will handle HR, ops, clinical leadership, marketing, household tasks, childcare, and then also wants to DIY tax planning to “save money.”
The problem is not intelligence. It is time and cognitive load.
There is nothing wrong with handing off complex tax and payroll work to someone who focuses on it. Your attention might be better used on leadership, systems, and your own health.
How life stages affect S-corp choices for women
The tax code does not say “for women,” but your actual life absolutely matters here.
Early career: high loans, growing practice
In your first 5 to 8 years:
- Student loan payments might crowd out savings
- You may buy a practice or buy in as a partner
- You are still shaping your clinical style
An S-corp can still help, but not at any cost. If your profit is low after debt payments, chasing S-corp savings might be premature.
Sometimes the better move is:
- Get solid bookkeeping
- Clean up personal vs business spending
- Boost collections and case acceptance
Then circle back to an S-corp once your profit is stable.
Growing family years: schedule shifts and cash flow swings
This is often the trickiest period for women owners.
You might:
- Take maternity leave
- Reduce clinical days
- Depend more on associates
All of which change:
- What is a reasonable salary
- How much profit remains for distributions
- Your personal need for cash vs retirement contributions
Some dentists try to keep the same salary year after year, even as hours change. That is where an annual review really helps.
It is also fine to slow down S-corp distributions to build more reserves before or during a leave. That can avoid panic loans later.
Peak earning years: catching up and planning exits
Later, when kids are older and the practice is mature, women often hit a strong income phase. Sometimes in their 40s or 50s, they finally have:
- Higher collections
- Predictable staff
- More freedom in scheduling
Here, an S-corp combined with aggressive retirement contributions and, if suitable, a cash balance plan can help you “catch up” fast.
You might also:
- Prepare the practice for sale in 5 to 10 years
- Transition to fewer clinical days while keeping ownership for a while
Each of these shifts affects your reasonable salary and your S-corp distributions. The plan that worked at 38 might not fit at 52.
Choosing people to help you, without handing over all control
You do not need to become a tax expert, but you also should not blindly sign anything.
For an S-corp structure, you usually want three layers:
- A bookkeeper who keeps your numbers current and clean
- A payroll service that handles compliance
- A tax advisor who understands medical and dental practices
When you talk with a tax advisor, especially as a woman, you might notice:
- Some speak to you as if you are the office manager, not the owner
- Some gloss over your questions with jargon
- Some try to push aggressive schemes with thin explanations
You do not need to accept that. Ask for clear, simple explanations. Ask to see the math. Ask how a plan would need to change if you cut hours or took leave.
If someone makes you feel rushed or small, that is probably not the right advisor, no matter how fancy their credentials are.
Quick questions women dentists often ask about S-corps
Q: Is an S-corp always better for a dentist once income is high?
A: No. It often helps, but not in every case. High state taxes, heavy retirement contributions, low actual profit after debt, or complex ownership structures can all change the outcome. You should have someone run your numbers, not just follow a rule of thumb.
Q: Can I set my own salary super low and hope the IRS never notices?
A: You can, but it is risky. If you are making 400,000 from the practice and pay yourself 60,000 as W-2 while working full time, that is hard to defend. Adjustments and penalties later can wipe out the savings and then some.
Q: What if my income changes a lot year to year?
A: That is normal, especially around maternity leaves, associate changes, or expansions. Your S-corp can still work. Just review your salary periodically and adjust. It does not have to be perfect, but it should reflect reality.
Q: If I plan to sell my practice in a few years, is it still worth setting up an S-corp now?
A: Often yes, if your current profit level supports it and you expect several high-income years before the sale. But the specific sale structure and your state rules matter, so that decision needs tailored advice.
Q: What if I feel overwhelmed by all this?
A: That reaction is honest. You run a clinical schedule, manage a team, possibly run a home, and then the tax code piles on. You do not have to master every line of law. Your job is to understand the big picture, pick people you trust, and stay involved enough to notice when something feels off. That is more than enough.