The Top Financial Terms Every Dental Practice Owner Should Know

June 21, 2023

The Top Financial Terms Every Dental Practice Owner Should Know

Whether you’re acquiring your practice or starting your own dental practice, making the jump to becoming a business owner is a big step in your career as a dental professional. But getting up to speed on the jargon and financial terms used in the business of dentistry can be tough, especially if you’re a first-time owner.

In this blog from the dental accountants at Tooth & Coin, we’ll break down the top financial terms that every dental practice owner should know. Read on, clear up the confusion, and take the first steps toward building a thriving dental practice.

1. Assets

An asset is anything that your business owns that has some kind of economic value. This can be a physical object like the dental equipment in your office, or a more abstract asset, such as the branding and marketing materials created by your business. These are typically broken down into four categories:

  • Current assets – This is the most short-term asset class, and it includes things like cash on hand, inventory items like dental supplies, and the value of your accounts receivable (money you’re owed by patients).

  • Fixed assets – Fixed assets include things x-ray equipment, dental chairs, and other durable goods. If you own the building you’re operating from, this is also a fixed asset. They're called “fixed” assets because their value is not easy to quickly convert into cash.

  • Intangible assets – Some assets are intangible but still valuable. “Goodwill” is one example of an intangible asset that’s often used in dentistry. This consists of a wide variety of intangibles, including the reputation of the practice within the community, the work of the current staff, the current client base that comes to the practice, and lots of other things.

  • Financial assets – Financial assets are non-cash assets like stocks, bonds, and other investments that may be made with cash earned at your dental practice.

2. Liabilities

While assets are something that you own, liabilities are something that you owe to another person or company. There are two primary types of liabilities, as follows:

  • Current liabilities – These are typically defined as debts that must be paid within 12 months. Examples include payroll, payments on company credit cards/lines of credit, or payments owed for dental equipment and supplies.

  • Non-current liabilities – These are liabilities that are not owed for at least 12 months. These could include long-term lease payments, tax debts, and a variety of other types of debts, depending on your financial situation.

3. Income

This one is simple. Your income is the money you make from your dental practice. This also includes money you make from any investments with company cash. Again, this is usually split into two categories:

  • Gross income – This is the total amount of money that you make from your dental practice without any deductions.

  • Net income – Net income is the total amount of money your practice makes minus deductions for taxes, payroll, and expenses, and is usually a more accurate metric of how much money your practice is making.

4. Expenses

Expenses are the costs of running your dental practice. Examples of expenses include payroll obligations to your employees, the cost of dental supplies and office supplies, computers, software, rent/mortgage payments, the purchase or financing of dental equipment like x-ray machines or CEREC machines, and more.

It’s important to accurately track your expenses for many reasons, but the biggest reason is because of taxes. Expenses are usually tax-deductible, so properly categorizing and tracking expenses can help lower your tax bill significantly.

Don’t Go It Alone – Contact Tooth & Coin For Financial Advisory Services

Going from a dental associate to the owner of a dental practice is a big jump. Owning your own practice can be lucrative, and is a great way to bring your own personal vision of dental care to life. But it can be complicated, too. We hope the above definitions have been helpful, but if you’re feeling over your head, Tooth & Coin can help. 

As specialized dental accountants, we serve dentists throughout the U.S. with expert financial advisory services. Whether you’re starting a business or buying a dental practice, our team is here to help. Schedule a consultation with Jonathan VanHorn online or give us a call at 

(877) 265-2121 to get the help you need to start your practice on the right foot.

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