Dental Scratch Start-Up – One Corporate Entity or Two?

I’m in the process of having another office. A scratch.

Should I open it under my current corporation, or should I start it under a different
Maybe in about 3 years, I’d like to sell my current corp. I don’t know. But it’s
just more paper work to start a second corp. Is it worth the hassle?

Any thoughts on what is the right way to go? Pros and cons.

In my opinion, the key to the answer is in your question and that is if you’re contemplating selling EITHER location soon and not the
other, I would suggest you have a different entity. Why?
1. It helps keep things separate in order to better
evaluate the practice.
2. It should limit any potential liability to that
practice that has the problem.
3. If you sell one and not the other, you don’t have
to “open the books” of the one you’re keeping.
Now, if you plan on having both locations for 10-15+
years you could go with one entity initially and then separate them 3-5 years
before you plan to sell one.
Believe me, this comes from experience. When the
potential buyer evaluates the practice, and it’s combined with another
practice, you ask a lot more questions. As the seller, you have a lot more
explaining to do and a lot more convincing to do that supply expense is really
JUST for that office and not the other, that lab expense is JUST for that
office and not the other, etc.
The argument will be “well even with two
entities you can still have the one entity pay the other’s bills” and this
is true; however, at some point you have to give the benefit of the doubt until
proven otherwise in my opinion.

What kinds of savings would there be with only having one entity?

The savings of a second tax return,
bookkeeping, accounting, other state filings maybe.

 I heard that section 179 is scheduled to come back down to $25,000 per
year.  That would be very bad to have two practices under the same

Can you elaborate on any thoughts you have.

Not much more than what I did above unless you
have any other specific questions.

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at

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