Setting Up a New Dental Practice: Financial and Tax advice and points to consider

AGA Accountants – dental specialist accountants say Opening a new dental practice is a major step, whether you are building from scratch or taking over an existing site. Getting the financial and tax planning right at the start gives the practice a firmer footing for the years ahead, and reduces the chance of surprises once patients start coming through the door. The areas below cover the main financial groundwork to complete before you open.

Financial Due Diligence

Before you commit to a lease, a build project or the purchase of an existing practice, carry out a financial due diligence exercise. This should cover patient numbers, the split between NHS and private income, current supplier and associate contracts, equipment condition and any liabilities tied to the site. If you are buying an established practice, request several years of trading records and ask how those figures were prepared. Due diligence gives you facts to base a decision on, rather than relying on a sales summary alone.

Key Tax Issues to Consider

Setting up a practice raises tax questions from day one. Decide early whether you will trade as a sole trader, a partnership or a limited company, since this affects how profits are taxed and how you draw income from the business. Consider VAT treatment for private dental work, capital allowances on equipment and fit out costs, and how a purchase price is split between goodwill and assets. Pension contributions, NHS pension scheme rules and payroll setup for staff also need attention before opening day. Getting this structure right early can avoid costly changes later on.

Cash Flow Forecasts

A cash flow forecast shows whether the practice can cover its costs during the early months, when patient numbers and income are still building. Include rent, loan repayments, staff wages, equipment finance, dental supplies and any remaining fit out costs. Map out when NHS payments are expected and how private fee income builds over time. A forecast covering at least the first two years gives lenders, and you, a clear view of funding needs and shows where a cash buffer may be required.

Analysing Financial Statements

If you are buying an existing practice, review the profit and loss account and balance sheet in detail. Look at turnover trends, gross margin, wage costs as a share of turnover and the balance between NHS and private income. Check for one off items that will not repeat, such as grants or a short term rise in patient numbers. For a new build practice, apply the same discipline to your projected accounts, testing assumptions against local market data rather than best case estimates.

Speak to a Dental Specialist

Setting up a dental practice involves financial, tax and operational decisions that work best when planned together, not in isolation. Firms such as Samera Dental Accountants specialise in guiding dentists through practice purchases, tax structuring and cash flow planning. Contact our dental specialist accountant and tax advisor today to discuss your plans and put a financial plan in place for your new practice. AGA Accountants can provide thorough advice on accounting for Dental practice and all types of dental professionals. Telephone us on 0203 389 9588 to arrange a free meeting and consultation with our director.

Tip:

Talk to an experienced and qualified accountant to ensure you have the highest chance of your accounting and taxes being handled efficiently. AGA Accountants – Pharmacy specialist – on 0203 389 9588. Offering expert remote and nationwide coverage to all our clients. Contact us for a free meeting and consultation.