For many dentists, their dental practice is one of the most valuable assets they own and selling or purchasing a dental practice is one of the biggest decisions of a dentist’s career. The proceeds of sale of the dental practice will form a significant portion of the selling dentist’s estate and will likely impact their retirement plan. If a dentist determines that he or she wants to sell their practice, it is important to develop and execute a plan, well in advance of the sale, to prepare the business in order to obtain the best price for the practice. Advance planning for the sale of a dental practice ensures that the dentist has enough time to fully consider and evaluate the financial and tax implications of selling a practice and allows the dentist to develop a strategy to ensure a smooth and successful transition.
There are many considerations that should be made with respect to the sale or purchase of a dental practice including any financing requirements of the buyer and how these requirements may impact the timing of the sale. It is not uncommon for one of the conditions of the sale to require the selling dentist to continue practicing as an associate of the practice for a period of time following the closing of the sale in order to help preserve the goodwill of the practice. This may have an impact on the timing of the sale, the transition plan of the selling dentist as well as their potential timing of retirement.
The sale of a dental practice can be achieved in one of two ways: either through the sale of shares held in the professional corporation or the sale of assets. The option to sell shares of a dental practice provides a potential opportunity for the selling dentist to claim a lifetime capital gains exemption on the gain from the sale, provided that certain conditions are met. Early planning for a sale will allow the seller to make sure that the shares of the corporation will qualify for the capital gains exemption, and to engage a specialized legal and accounting team to help them with preparations for the sale. Determining whether to structure the sale as an asset sale or a share sale is usually dependent on the tax implications associated with each option. We routinely assist dentists who are planning to purchase a practice or sell their practice and we work directly with their accountants and tax advisors to identify the most appropriate strategies in order to minimize the tax consequences associated with the sale or purchase, taking into account the needs and goals of our clients.
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Incorporation to Retirement
A multi-disciplinary suite of services tailored to assist dentists
Professional Corporations
Incorporating a dental professional corporation can bring significant advantages. We work directly with tax advisors and accountants to ensure the most appropriate corporate structure is established in order to achieve long term goals.
Estate Planning for Professionals
As you progress in your career, your estate plan may become more complex. Dual Wills may be used to protect certain eligible assets from estate and administration tax.
