Setting up your dental practice entity

Your practice needs a legal entity before it signs a lease, hires staff or opens a bank account. The choice is narrower than for most businesses, because states limit how dentistry can be practiced.

This page is general education, not legal or tax advice. Entity rules are state law, and your facts matter.

The entity: professional corporation or PLLC

Dentists generally practice through a professional entity. The two common ones are a professional corporation (PC) and a professional limited liability company (PLLC). LegalZoom notes that only licensed professionals can own a PLLC, and PC ownership is limited in similar ways.

The rules vary a lot by state. LegalZoom’s list of places that allow PLLCs names 28 states plus D.C., and California isn’t on it.

California is the clearest example. State law defines a “dental corporation” as one authorized to practice dentistry under the Moscone-Knox Professional Corporation Act. The agency that oversees it is the Dental Board of California (Business and Professions Code section 1800). California’s LLC law says an LLC can’t render professional services in the state (Corporations Code section 17701.04). There’s no PLLC option there.

Other states allow a dental PLLC but add a step. LegalZoom notes that some states require written approval from your licensing board before you can form one. Check three things with your state dental board and secretary of state:

1. Which entity types may practice dentistry.
2. Whether the board must approve or register the entity before or after you file.
3. Who may own shares or membership interests.

A plain LLC can still be useful for something that isn’t dentistry. Some owners hold the building or equipment in a separate entity and lease it to the practice. Ask your attorney whether that fits your state and your deal.

The tax election: S corporation or not

The entity is a state-law choice. How it’s taxed is a separate federal choice.

Many practice owners elect S corporation status. An S corporation passes income through to the owners’ personal returns, so there’s no corporate-level income tax on it. The draw is how owner pay is split.

Per the IRS, an S corporation must pay a shareholder-employee “reasonable compensation” as wages before taking non-wage distributions. Wages carry Social Security and Medicare tax; distributions don’t. The IRS can reclassify distributions as wages if your salary is too low for the work you do.

A dentist who produces most of the practice’s revenue will usually need a substantial W-2 salary. The savings come from profit beyond that salary. A CPA who works with dentists can tell you whether the savings beat the added payroll and filing costs.

The filing: Form 2553. The IRS says it’s due no more than 2 months and 15 days after the start of the tax year the election should take effect. An LLC that timely files Form 2553 doesn’t also need Form 8832. Late-election relief exists, but plan to file on time.

EIN, bank account and licensing

Get an EIN. You need one to hire employees or operate a corporation. The IRS doesn’t charge for it: “You never have to pay a fee for an EIN.” It warns about websites that charge for one. Apply at irs.gov once the entity is formed.

Open a business bank account in the entity’s name. Keep practice money and personal money separate from day one. It makes bookkeeping possible and protects the entity’s separateness.

Licensing and registrations. Your personal dental license doesn’t transfer to an address or an entity automatically. Depending on your state, the entity itself may need a permit or registration with the dental board. Ask each agency what changes with a new address, including controlled-substance registrations and local business licenses. Get the list before you choose an opening date.

Attorney and CPA, or an online formation service?

Situation	Usually the better fit
Buying an existing practice	Dental attorney and CPA
Partnership, buy-in or more than one owner	Dental attorney and CPA
Solo startup in a state that allows a dental PLLC	Formation service can work, with board rules checked first
State that requires a professional corporation (e.g. California)	Attorney, or a service that files that entity type
Holding company for real estate or equipment	Formation service can work, after your attorney approves the structure

When an attorney earns the fee. An acquisition involves an asset purchase agreement, a lease, employment agreements and often a non-compete. A partnership needs a shareholder or operating agreement that covers buyouts, disability and death. Those documents are where mistakes cost the most.

When a formation service is enough. If your state allows a dental PLLC and you’re the only owner, the filing itself is routine. LegalZoom’s LLC filing service supports PLLCs where the state allows them, with plans starting at $0 plus state fees (as of September 2026). LegalZoom says it is not a law firm and doesn’t give legal advice, except through its affiliated law firm.

ZenBusiness, as of September 2026, says it doesn’t currently file PLLCs; it forms standard LLCs and can add an S corp election, but only when it forms the LLC. That makes it a fit for a holding LLC that doesn’t practice dentistry, not for the practice entity itself.

Either way, the service files what you tell it to. It won’t check whether your dental board allows that entity.

What to do next

1. Check your state’s rules. Read your dental board’s page on practice ownership and professional entities. Confirm whether you need a PC or can use a PLLC.
2. Decide who drafts it. Buying or partnering: hire a dental attorney. Simple solo filing your state allows: a service such as LegalZoom can file it. For a separate holding LLC, ZenBusiness is another option.
3. Get your EIN free from the IRS, then open the business bank account.
4. Ask a CPA about the S corp election before the 2-month-and-15-day deadline. Get a reasonable salary figure in writing.
5. Set up payroll and books before your first hire. See payroll for a new dental practice and bookkeeping software for dental offices. Buying? Start with buying a practice with student loans.