The Future Of Dentistry Is Cr*p...

[ImaDentt2014]

Thank you for this post. Do you mind explaining what's in bold a little more? I didn't really understand. 

 

I'm glad to know I didn't waste 500$ on taking the DAT this november  

 

With incorporating your dental practice, income taxes on your corporation are 10-15.5%, then you take a $65,000 salary and save for retirement within your dental Corp.

 

A corporation is a separate legal entity, that has income tax like a person does. Apple can be a corporation, with 50,000 employees, and shareholders own apple's company through stock. Dentists can form a corporation, where the revenue is dental work, instead of selling iphones (in the case of apple). The dental pay is paid to the corporation. The corporation can then pay the dentist whatever the shareholders decide (and the shareholder is the dentist), and any money left in the corpation (ie. not paid out) is taxed only at small business tax, rather than personal income tax levels. Personal income tax at the 100-200k yearly mark is ~50%, whereas small corporation tax is ~11%.

 

You net pay much less in taxes, bec the corp pays 11% on any money remaining inside the corp, and the dentist's perosnal pay is taxed less than the 50%, becuase they have a lower reported income. 

 

Example:

 

Associate bills $170k in a year. 

 

No corporation: Associate pays ~50% tax, and keeps $85k

 

With corporation: Associate pays themselves 70k from the corparation as personal salary or dividends. The income tax on 70k income is 27.75% (compared to 50% if 170k salary), so they keep $50,750 personally. Now, they paid themselves a salary of 70k from the corp, so there corp has 100k in income to report for the year. The corp pays 11% tax (because that's the small business corp tax rate if income is less than $500,000), and the corp keeps $89,000. 

 

So by incorporating, you've kept 51k+89k = 140k out of the 170k you made (I did these calcs on the fly on my phone, so possible I missed / screwed something up, but you get the idea).

 

Money you keep in your corp can be dividended to parents (lower income tax) invested in stocks etc. 

[member_225]

With incorporating your dental practice, income taxes on your corporation are 10-15.5%, then you take a $65,000 salary and save for retirement within your dental Corp.

 

A corporation is a separate legal entity, that has income tax like a person does. Apple can be a corporation, with 50,000 employees, and shareholders own apple's company through stock. Dentists can form a corporation, where the revenue is dental work, instead of selling iphones (in the case of apple). The dental pay is paid to the corporation. The corporation can then pay the dentist whatever the shareholders decide (and the shareholder is the dentist), and any money left in the corpation (ie. not paid out) is taxed only at small business tax, rather than personal income tax levels. Personal income tax at the 100-200k yearly mark is ~50%, whereas small corporation tax is ~11%.

 

You net pay much less in taxes, bec the corp pays 11% on any money remaining inside the corp, and the dentist's perosnal pay is taxed less than the 50%, becuase they have a lower reported income. 

 

Example:

 

Associate bills $170k in a year. 

 

No corporation: Associate pays ~50% tax, and keeps $85k

 

With corporation: Associate pays themselves 70k from the corparation as personal salary or dividends. The income tax on 70k income is 27.75% (compared to 50% if 170k salary), so they keep $50,750 personally. Now, they paid themselves a salary of 70k from the corp, so there corp has 100k in income to report for the year. The corp pays 11% tax (because that's the small business corp tax rate if income is less than $500,000), and the corp keeps $89,000. 

 

So by incorporating, you've kept 51k+89k = 140k out of the 170k you made (I did these calcs on the fly on my phone, so possible I missed / screwed something up, but you get the idea).

 

Money you keep in your corp can be dividended to parents (lower income tax) invested in stocks etc. 

 

Oh I understand, what a big difference that makes! I was very surprised to see how much they tax personal income once it reaches a high amount....they literally take half of what you make it's crazy!

[DDSER]

.

[ImaDentt2014]

Oh I understand, what a big difference that makes! I was very surprised to see how much they tax personal income once it reaches a high amount....they literally take half of what you make it's crazy!

It does make a huge difference, and it's a unique advantage to being a professional. Your investment banker friends can't incorporate themselves, and they'll pay half of their income to taxes. As dentists, we can legally and ethically reduce our tax burden immensely, huge perk to the job. 

[Ostracized]

Incorporating is a good perk but it requires a lot of careful thought and advanced planning. It can turn out poorly otherwise. I'm incorporated but sometimes I wish I hadn't bothered. When you consider the yearly accounting and regulatory costs associated with incorporating, you really need to be making at least $120K to make it worth your while. And you need to be willing to live on less than $65K of your income for a long time. Otherwise you may as well forget it and use your RRSP instead to reduce your income (you can't practically use both).

 

I started out making more than $120K by a decent margin but my income has been slipping towards that number and might eventually go below. Furthermore, when you are a new grad you think $65K is plenty to live on but when your life changes (marriage, kids, mortgage, not to mention TFSA investing) it quickly runs out.

 

The main issue is that once you put the money in the corp it is very hard to get out without paying a lot of taxes. If you need that money later due to a change of circumstances, you might find that your 'tax saving plan' has turned into a huge tax increase compared to just earning your income normally. If you later find that your corp is costing you more than it is saving you, you may be stuck paying the costs forever because to dissolve the corp could mean a $6-figure tax bill.

 

If you don't incorporate, you will possibly pay more taxes upfront, but at least all of the money that's left over is yours to use as you see fit.

 

Also - Trudeau has it in for professional corps. He has said so personally and sooner or later they are going to be restricted or removed.

[ImaDentt2014]

- 

[Mighty Molar]

and you can use your corporation / aka clinic, to trade stock as well. however, that will cause come complication when you sell the business, especially with the 800K no tax (per person, per lifetime) rule for selling business

[member_225]

Incorporating is a good perk but it requires a lot of careful thought and advanced planning. It can turn out poorly otherwise. I'm incorporated but sometimes I wish I hadn't bothered. When you consider the yearly accounting and regulatory costs associated with incorporating, you really need to be making at least $120K to make it worth your while. And you need to be willing to live on less than $65K of your income for a long time. Otherwise you may as well forget it and use your RRSP instead to reduce your income (you can't practically use both).

 

I started out making more than $120K by a decent margin but my income has been slipping towards that number and might eventually go below. Furthermore, when you are a new grad you think $65K is plenty to live on but when your life changes (marriage, kids, mortgage, not to mention TFSA investing) it quickly runs out.

 

The main issue is that once you put the money in the corp it is very hard to get out without paying a lot of taxes. If you need that money later due to a change of circumstances, you might find that your 'tax saving plan' has turned into a huge tax increase compared to just earning your income normally. If you later find that your corp is costing you more than it is saving you, you may be stuck paying the costs forever because to dissolve the corp could mean a $6-figure tax bill.

 

If you don't incorporate, you will possibly pay more taxes upfront, but at least all of the money that's left over is yours to use as you see fit.

 

Also - Trudeau has it in for professional corps. He has said so personally and sooner or later they are going to be restricted or removed.

 

See, this is what I meant when I started this thread. Your income should go up as you go because you're gaining more experience and faster procedures...this is what I'm scared of...

[Mighty Molar]

See, this is what I meant when I started this thread. Your income should go up as you go because you're gaining more experience and faster procedures...this is what I'm scared of...

 

There is always competition, regardless of the field/profession. You could relate to the law of Natural selection in Biology 101

[member_225]

There is always competition, regardless of the field/profession. You could relate to the law of Natural selection in Biology 101

 

I'm sure Ostracized has adapted to his environment and his salary should continue to go up 

[Mighty Molar]

I'm sure Ostracized has adapted to his environment and his salary should continue to go up 

 

just out of curiosity, at which phase you are at for this application cycle?

[member_225]

just out of curiosity, at which phase you are at for this application cycle?

 

I'm still early in undergrad, going into my second year. 

[member_225]

Yeah, at my first job right out of school I billed about $3500 a day (that's including lab though) and made $17K my first full month working 4 days a week.

 

That said, competition and saturation took their toll in other ways, even if not financially. I ended up having to leave and take a huge pay cut to work the way that I want to. I also cut down my hours because, well, I wanted to eventually anyway and I didn't want to work 2 part time jobs and my current clinic only has need for 3 days a week.

 

Income really isn't the main issue if you're an associate. You will get your percentage whether the clinic makes money or not. I remember making 10K one month, meanwhile my clinic ended up losing money that month because I took time off (I was the only dentist and we had high overhead).

 

Yea, you definitely do get your percentage as an associate but it's also very important to stay busy. You might get 40% no matter what but that can be 40% off of 800$ a day or 40% off of 3500 like you mentioned. This is where saturation take it's toll, and also has other disadvantages like you mentioned (having to take pay cuts, lower hours, etc). 

[Clapton]

See, this is what I meant when I started this thread. Your income should go up as you go because you're gaining more experience and faster procedures...this is what I'm scared of...

 

 

We don't actually know why his income is going down, maybe he just decided to work less hours. 

 

 

Btw, about the tuition tax credits, can you use all your credits at once, or there is a maximum amount of credits you can use each year ?

[member_225]

*sigh*

Yes, of course, but that point has been done to death. We're just sharing our stories of how it hasn't been all that hard for us to make money when that's been our priority.

 

My point is that there are other disadvantages to the current market other than money for associates, like being pressured to do unethical things for example.

 

I understand.

[Mighty Molar]

it's not too late for you (since you are in your 2nd year undergrad) to change your career path to med or law, or something else, if you feel that dentistry won't bring you much satisfaction

[member_225]

it's not too late for you (since you are in your 2nd year undergrad) to change your career path to med or law, or something else, if you feel that dentistry won't bring you much satisfaction

 

I definitely still have time to think about what I want to do but I really like dentistry, I'm just trying to figure out if it's worth it financially. 

[Pauls]

I definitely still have time to think about what I want to do but I really like dentistry, I'm just trying to figure out if it's worth it financially. 

 

 

you need to understand that DDS degree is not a license to print money. The real learning starts AFTER you graduate and you need to really work hard and take a lot of CEs in order to succeed. My brother is a DDS and he is well off financially after 4 years of having his start-up and his friend who gradated the same year as him is really struggling with the practice that he has purchased in Richmondhill. Both have DDS and both graduated at the same time, one is very successful and one is not. 

[WomboCombo]

Yeah, Pauls is 100% correct. It isn't a license, it provides the opportunity to. How you are as a business person, as a likeable person, as a clinician, how flexible you are in where you work, when and how many hours you work, and etc. will play a huge role towards compensation. 

[cleanup]

Finances are a real concern.

 

But if they're bothering you this much, let me tell you that there are much, much easier ways to have a lucrative career. 

 

Let me reiterate a few points that are at this point bloody horse carcasses.

 

No one can predict your income. It will depend on too many things to mention here. But it is relative. Let's say you could earn very little, and let's define very little as at or below $100,000 annually. Let's define a lot as at or above $200,000 annually, in your first year of practice.

 

Even if you're on the high end of this made-up scale (you're making "a lot" of money), how are you getting there? To generate $200k of income, given a 40% share of collections, you need the following:

 

You have to produce about $41000 in billings per month, or $10250 per week. If you work full-time (4-5 days) that's about $2000-2500 per day.

 

This is excluding lab fees. If your billings of $2000-2500 per day include lab fees, you will see your share shrink dramatically. A typical lab fee for a crown (which you might bill about $1000-1100 for) is between $300-500. Lab fees for removable prosthetics are usually less, but nevertheless, you're not receiving all 40% of that $2000-2500. If you want to produce $41000 a month AFTER lab fees, you either have to be doing nearly entirely restorative, endodontic, surgical dentistry, or you need to actually be producing more like $45000+ a month with your prostho work factored in, which means your billings should actually average $2250-2800 a month. That is a dramatic jump depending on how fast you are. An extra $250-300 in billings could just be a filling or two, but that filling or two could take you an extra hour a day.

 

So let's assume you're working typical full-time 7-8 hour days. $2800 in 8 hours is billing $350 an hour. No problem right? Once again that's just a couple fillings per hour!

 

This is assuming a few more things. 1. You're fully booked. If you have gaps in your schedule, suddenly to stay on track you need to be billing more like $400-500 an hour when you're actually seeing patients. 2. You're seeing patients that actually bill the full fee, ie. no ODSP, OW, Healthy Smiles, other government benefit programs. These patients aren't any different in the amount of time they take to work on (in fact one could argue they take longer because they often have poorer oral hygiene and worse states of oral health), but they are drastically different in how you're compensated. I did an enormous MOB today that took about an hour and 3 carpules of composite. I made about $35. So that hour, I made less than the hygienist in the chair next door, and I took on a hell of a lot more professional liability as well. A lot of dental clinics (arguably, the grand majority) will see these patients. How many you see will once again cut into your bottom line. In fact, it's probably even worse for the principal. After paying me, paying the assitant, paying for the cost of the materials (exceptionally high, trust me), as well as the opportunity cost of having that chair with a government assistance patient in it vs. an insurance or fee-for-service patient, I guarantee you social assistance patients essentially generate close to zero income for the practice. 

 

Let's tack on a few more assumptions we'll have to make: your billings are consistent month-to-month. This isn't true in the least. Summer months are slow. Holidays are slow. Patients cancel, don't show up, leave you hanging. You will have slow days, weeks, months. You will struggle to keep your numbers consistent, because that's natural.

 

Now the non-numerical side of the equation: dentistry is tiring and stressful. Let's say everything I just mentioned is A-okay. You're busy. You're booked. You see very few disability, social assistance patients. You have a nice, fulltime, well-rounded schedule.

 

Are you fast? Are you efficient? Can you do this without burning out? Do you like interacting with patients? How do you deal with complications and when things go wrong? When patients are upset? When staff are upset? When patients are nervous, anxious, don't trust you, or think you hurt them?

 

After an 8-10 hour day of seeing patients, I am completely spent. I am fortunate enough to be busy to the point where I don't eat lunch or dinner some days, but when I get home, I just pass out, and I do it again tomorrow. This is not simply due to being busy, or the physical nature of the job; it's also due to the stress, and to the constant expectation of you to be operating at 100%. You cannot (and I stress cannot) let your staff, patients or the public know that you're tired, that you're stressed, that you want to go home, that you need a break. You're the doctor, you're the professional, and you need to be speaking, presenting and acting well in order to give your patients the best care. This, above all else, is tiring.

 

Quite simply, if you're expecting 'easy money' from this career, it's not going to happen. I can guarantee you even if you're on the high-end of first-year associate income, there exist much, much easier ways to do it, that don't stress you out ("That screaming kid was crying so much the nitrous wasn't working! I had to turn them away!"), exhaust your body ("My neck feels awful! Gotta keep going though", keep you up at night ("I hope that patient's okay. She was in a lot of pain."), or demand that you work hours that fit the public rather than your prerogative ("It's the weekend and I wish I was with my girlfriend, but I've got to go in to work"). 

 

I'm not trying to be all doom-and-gloom, but the pessimism, for lack of a better phrase, does not come from nowhere. This is not an easy job, and the economic landscape is only making it worse. I can guarantee that if making a good income is your primary goal, you should do something else.

 

The last thing I wanted to mention is that the trend in dentistry these days is a heavy shift in treatment-planning focus. You didn't have to be doing a lot in order to make a good income back in the day. The landscape has changed. People are aggressive, they over-treat, they utilize this method, that tactic to "sell" more dentistry to the patient. It is sometimes beneficial. It is often borderline quackery or unethical. These things wouldn't be happening if the economic future of our profession wasn't in jeopardy. Yes, people will always need dental work, but we have more and more people doing it, and each of them is trying to do more and more of it themselves. I don't want to be around when the final straw breaks the camel's back.

[salang]

I always hear all these dentists talk about how there's a much much much easier way to live a 5x better life financially than being a dentist. Mind sharing what that is cause I'm not bright enough to figure that out..

[cleanup]

I always hear all these dentists talk about how there's a much much much easier way to live a 5x better life financially than being a dentist. Mind sharing what that is cause I'm not bright enough to figure that out..

 

Medicine. Finance. Entrepreneurship.

 

None of those are easy careers, but the first is much more stable, the second is much more lucrative, and the third provides you a lot more autonomy. Oh, and they all have the same financial potential as dentistry, if not more.

[Mighty Molar]

Medicine. Finance. Entrepreneurship.

 

None of those are easy careers, but the first is much more stable, the second is much more lucrative, and the third provides you a lot more autonomy. Oh, and they all have the same financial potential as dentistry, if not more.

 

I think you talk about dentistry from the clinical side but miss out the business side of the field. A dentist can focus on the clinical side and earn an income based on associate percentage; or he could "upgrade" into a CEO running the clinic (or multiple clinic) in a corporation model As an old saying "Where there is a will, there is a way"

 

I am pretty happy (and comfortable) with my associate dentist position at the moment, but an associate position does not satisfy my entrepreneur spirit.

[guacamole]

Finances are a real concern.

 

But if they're bothering you this much, let me tell you that there are much, much easier ways to have a lucrative career. 

 

Let me reiterate a few points that are at this point bloody horse carcasses.

 

No one can predict your income. It will depend on too many things to mention here. But it is relative. Let's say you could earn very little, and let's define very little as at or below $100,000 annually. Let's define a lot as at or above $200,000 annually, in your first year of practice.

 

Even if you're on the high end of this made-up scale (you're making "a lot" of money), how are you getting there? To generate $200k of income, given a 40% share of collections, you need the following:

 

You have to produce about $41000 in billings per month, or $10250 per week. If you work full-time (4-5 days) that's about $2000-2500 per day.

 

This is excluding lab fees. If your billings of $2000-2500 per day include lab fees, you will see your share shrink dramatically. A typical lab fee for a crown (which you might bill about $1000-1100 for) is between $300-500. Lab fees for removable prosthetics are usually less, but nevertheless, you're not receiving all 40% of that $2000-2500. If you want to produce $41000 a month AFTER lab fees, you either have to be doing nearly entirely restorative, endodontic, surgical dentistry, or you need to actually be producing more like $45000+ a month with your prostho work factored in, which means your billings should actually average $2250-2800 a month. That is a dramatic jump depending on how fast you are. An extra $250-300 in billings could just be a filling or two, but that filling or two could take you an extra hour a day.

 

So let's assume you're working typical full-time 7-8 hour days. $2800 in 8 hours is billing $350 an hour. No problem right? Once again that's just a couple fillings per hour!

 

This is assuming a few more things. 1. You're fully booked. If you have gaps in your schedule, suddenly to stay on track you need to be billing more like $400-500 an hour when you're actually seeing patients. 2. You're seeing patients that actually bill the full fee, ie. no ODSP, OW, Healthy Smiles, other government benefit programs. These patients aren't any different in the amount of time they take to work on (in fact one could argue they take longer because they often have poorer oral hygiene and worse states of oral health), but they are drastically different in how you're compensated. I did an enormous MOB today that took about an hour and 3 carpules of composite. I made about $35. So that hour, I made less than the hygienist in the chair next door, and I took on a hell of a lot more professional liability as well. A lot of dental clinics (arguably, the grand majority) will see these patients. How many you see will once again cut into your bottom line.

 

Let's tack on a few more assumptions we'll have to make: your billings are consistent month-to-month. This isn't true in the least. Summer months are slow. Holidays are slow. Patients cancel, don't show up, leave you hanging. You will have slow days, weeks, months. You will struggle to keep your numbers consistent, because that's natural.

 

Now the non-numerical side of the equation: dentistry is tiring and stressful. Let's say everything I just mentioned is A-okay. You're busy. You're booked. You see very few disability, social assistance patients. You have a nice, fulltime, well-rounded schedule.

 

Are you fast? Are you efficient? Can you do this without burning out? Do you like interacting with patients? How do you deal with complications and when things go wrong? When patients are upset? When staff are upset? When patients are nervous, anxious, don't trust you, or think you hurt them?

 

After an 8-10 hour day of seeing patients, I am completely spent. I am fortunate enough to be busy to the point where I don't eat lunch or dinner some days, but when I get home, I just pass out, and I do it again tomorrow. This is not simply due to being busy, or the physical nature of the job; it's also due to the stress, and to the constant expectation of you to be operating at 100%. You cannot (and I stress cannot) let your staff, patients or the public know that you're tired, that you're stressed, that you want to go home, that you need a break. You're the doctor, you're the professional, and you need to be speaking, presenting and acting well in order to give your patients the best care. This, above all else, is tiring.

 

Quite simply, if you're expecting 'easy money' from this career, it's not going to happen. I can guarantee you even if you're on the high-end of first-year associate income, there exist much, much easier ways to do it, that don't stress you out ("That screaming kid was crying so much the nitrous wasn't working! I had to turn them away!"), exhaust your body ("My neck feels awful! Gotta keep going though", keep you up at night ("I hope that patient's okay. She was in a lot of pain."), or demand that you work hours that fit the public rather than your prerogative ("It's the weekend and I wish I was with my girlfriend, but I've got to go in to work"). 

 

I'm not trying to be all doom-and-gloom, but the pessimism, for lack of a better phrase, does not come from nowhere. This is not an easy job, and the economic landscape is only making it worse. I can guarantee that if making a good income is your primary goal, you should do something else.

 

The last thing I wanted to mention is that the trend in dentistry these days is a heavy shift in treatment-planning focus. You didn't have to be doing a lot in order to make a good income back in the day. The landscape has changed. People are aggressive, they over-treat, they utilize this method, that tactic to "sell" more dentistry to the patient. It is sometimes beneficial. It is often borderline quackery or unethical. These things wouldn't be happening if the economic future of our profession wasn't in jeopardy. Yes, people will always need dental work, but we have more and more people doing it, and each of them is trying to do more and more of it themselves. I don't want to be around when the final straw breaks the camel's back.

This so much. Money is one thing, but the problem is much bigger than that. It's not like the sky is falling, but it is only smart to be at least cognizant of the issues, and not just financial ones, that are very real to many people who are actually practicing. Don't

be too quick to dismiss them as individual shortcomings.

[cleanup]

I think you talk about dentistry from the clinical side but miss out the business side of the field. A dentist can focus on the clinical side and earn an income based on associate percentage; or he could "upgrade" into a CEO running the clinic (or multiple clinic) in a corporation model As an old saying "Where there is a will, there is a way"

 

If you think the industry can withstand more and more people adopting this model, you're wrong.

 

There's always going to be tiers to this. Associates, working evenings, weekends, seeing kids & disability folks, slugging it with their bodies to make a living. If everyone tries to become the dental tycoon type, then indeed, we will see that race to the bottom that everyone fears.