Business Formation for Dental Practices in Los Angeles

Unlike many businesses, dentists in California have limited options for entity formation. General LLCs, Professional Limited Liability Companies (PLLCs), and most forms of partnerships are not available to licensed dental professionals under state law.

Some dentists consider operating as a sole proprietorship or general partnership because they are easy to set up. The problem is that these structures leave you personally liable for business debts, contracts, and lawsuits. For most dental professionals, that risk is far too high.

That’s why the Professional Corporation (PC) has become the standard entity for California dentists. A PC provides liability protection, allows for tax planning opportunities, and offers a reliable framework for practice expansion.

Restructuring later is often expensive and disruptive, so choosing the right entity from the start is key.

A Professional Corporation is the only entity dentists in California can use to legally practice while protecting themselves from business liabilities.

Benefits of forming a PC:

• Liability protection: While you remain responsible for your own professional conduct, a PC shields your personal assets from business debts and obligations.
• Ownership flexibility: PCs can issue shares, making it easier to structure ownership for multiple dentists or investors.
• Tax planning: PCs may elect S-Corporation status, which can reduce self-employment taxes and provide flexibility in how income is distributed.
• Scalability: A PC makes it easier to add associates, bring on partners, or position your practice for a future sale.

Challenges to consider:

• Corporate formalities: Ongoing compliance is required, including shareholder meetings and proper recordkeeping.
• Profit distribution: Income is generally tied to share ownership, which can limit flexibility in some compensation arrangements.

Despite these obligations, PCs remain the best entity choice for most dental practices in California.

In other states, licensed professionals often form PLLCs to combine liability protection with simplified management. However, in California, dentists cannot form an LLC or PLLC for professional services. State law prohibits both domestic and foreign LLCs from practicing dentistry or other licensed professions. This restriction is why the PC remains the gold standard for California dentists.

Entity formation is just the first step. When you’re starting or acquiring a dental practice, we also guide you through:

• Ownership planning: Will you practice solo or form a group practice with partners?
• Tax strategy: Structuring income and distributions to reduce your overall tax burden.
• Growth potential: Setting up your entity to support expansion or a future sale.
• Risk management: Protecting against malpractice exposure, lease obligations, vendor contracts, and employment issues.

We help you look beyond the start-up stage so your entity continues to serve you well years down the road.