How Dentists Set Up an LLC and Elect S-Corporation Status

If you are a dentist earning meaningful income, you should not be operating as a sole proprietor.

Whether you are a practice owner, a 1099 associate, doing Invisalign, implants, or high-production procedures, or running consulting or dental software, setting up an LLC and electing S-Corporation status is one of the most common and effective structures for dentists.

Why dentists should set up an S-Corporation

An S-Corporation is not a separate type of company. It is a tax election that you apply to an LLC. The main reason dentists choose S-Corp status is tax efficiency.

The core benefit

Without an S-Corp, all your profit is subject to self-employment tax. With an S-Corp:

• You pay yourself a reasonable salary
• You take remaining profit as distributions
• Distributions are not subject to self-employment tax

For dentists with strong income, this can save thousands of dollars per year.

When an S-Corp makes sense for dentists

S-Corp status is usually worth it if:

• You are consistently profitable
• You earn roughly $150,000+ per year
• You have predictable monthly income

If you are just starting out or barely profitable, focus on increasing production first.

Additional advantages

• Cleaner separation between personal and business income
• A more professional structure for lenders and partners
• Easier to scale into multiple income streams
• Better long-term tax planning flexibility

Step 1: Form your LLC

An LLC (Limited Liability Company) protects your personal assets from business liability. You can file directly with your state or use an online service such as LegalZoom or BetterLegal.

Typical cost is around a $299 service fee plus your state filing fee, and it takes about 5 to 10 minutes to complete.

Registered agent

You will be asked if you want a registered agent for around $100 to $150 per year. Recommended: yes. This keeps your home address private and ensures important legal documents are handled correctly.

Get your EIN

Make sure you request an EIN when filing. Your EIN is your business Tax ID and is required for opening bank accounts, payroll, contracts, and tax filings. You will receive your EIN confirmation letter after approval, so save it.

Step 2: Open a business bank account

Do not mix personal and business money. Bring your EIN confirmation letter, Articles of Organization, and government ID.

Open a business checking account and, optionally, a business credit card. All business income should flow into this account, and all business expenses should come out of it.

Step 3: Elect S-Corporation status

By default, an LLC is taxed as a sole proprietorship. To elect S-Corp status, download IRS Form 2553 and fill out Part 1 only. Most dentists can leave Parts 2 through 4 blank.

Important: the form must be filed within 75 days of forming your LLC. Missing this deadline usually means waiting until the next tax year.

Responsibilities after your S-Corp election

Once your S-Corp election is active, you must run payroll for yourself, file quarterly payroll taxes, and file an annual S-Corporation tax return. Work with a CPA who understands dental practices.

Quick summary

1. Form an LLC
2. Obtain an EIN
3. Open a business bank account
4. File Form 2553 within 75 days
5. Set up payroll and work with a CPA

This structure protects your assets and can significantly reduce taxes when done correctly. For high-earning dentists, ignoring it is often a costly mistake.

This article is for general educational purposes and is not legal, tax, or financial advice. Consult a licensed CPA or attorney about your specific situation.

The fastest way to grow the income this structure protects is to close more high-value cases. See how SmileViz helps dentists boost case acceptance chairside, or book a free demo.