Overhead of GP

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boyan

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A lot a people have mentioned that the GP has a big overhead. I was just wondering how much is the average (realistic) overhead of a general dentist. Maybe thisisit can help us with some examples if that?s ok.

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Hey Boyan,

It varies from place to place, but the numbers I hear most often falls between the 60% and 70% range for overhead.

HTH!
 
wow thats a lot. Does that include taxes? Its like for every $100,000 you make you are actually left with only 30,000. I cant imagine that I can gross over 400,000 an year, so I can get my income in the range of 120,000 -130,000. Then if I also have to pay taxes on those money I'll be left with some 70,000. Thats how much my both parents make without haveing a doctors degree.
 
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Originally posted by boyan
wow thats a lot. Does that include taxes? Its like for every $100,000 you make you are actually left with only 30,000. I cant imagine that I can gross over 400,000 an year, so I can get my income in the range of 120,000 -130,000. Then if I also have to pay taxes on those money I'll be left with some 70,000. Thats how much my both parents make without haveing a doctors degree.

I've seen practices everywhere from 50% to 90% overhead. It depends on the business acumen of the owner. A reasonable average would be 65%.

$400k is very doable. If you work 200 days/year (4 day week *50) that's only 2 crowns, 2 fillings, and 2 hygiene visits a day.

65% of $400k is $260k, of which Uncle Sam takes about a third. You'll never own a yacht on a dentist's income but you could probably rent one for a week each year.

When you hear people say they make $70k that's likely before taxes so you can't really compare that with your net salary.

JMHO
Rob
 
I just look at the overhead numbers for my office for this calender year, and with 1 day left to see patients this year(and add to the production:clap: :D ) the overhead is at 58.6%, compared to last years 59.1%. :clap:

My partner and I then split the rest 50/50 and then we each pay our share to good 'ol uncle Sam:mad: :eek: That being said, even after uncle Sam gets his cut, according to the ADA numbers, my partner and I are still comfortably "above average":D

Next year though we're expecting the overhead to be in the 70-75% range :eek: , although the extra 1000 sq. ft. we're adding onto the office will have ALOT to do with the jump:D
 
Do not worry about the money. Concentrate on the 4 years ahead of you. Graduate, get an associateship job to get your feet wet, and then buy an existing practice. (I'm against opening from scratch, but that's a different thread). The most important advice given to me was in the final months of my dental school. My adviser told me to: "treat your patients right, explain what you are about to do, do the best you can, and the money will take care of itself." Oh ya, it helps if you don't think you are Gods gift to the whole world. Here is some info:



As others have mentioned, the overhead is somewhere between 50-85% in most GPs offices. Personally, I don't understand anything over 65% but some claim that. I'd open a gas station if it was that bad.

My office, operates some where between 55 and 60%. I watch very carefully how we spend our money. The staff knows that if I have extra money at the end of each month, they get a bonus. So, they watch it too. I used to shop for supplies from an Internet based supplier. This was saving me 20-30%. Now the big guys are actually matching those prices for me. (we have a large account with one of the big suppliers).

Also, do understand that most business owners ( not just dentists) put a lot of their expenses through the business. There a lot of legal loopholes in the tax code that you can take advantage of. I pay a retainer to an accounting firm that specializes in dentistry. My accountant bill is around $6k a year. Worth every penny. I love my accountant
(only the kosher way a man can love another man ;) ).

Don't ever not report income, that is illegal. But you can be creative. The IRS allows for this. For example, my wife's Range Rover is a company car (we have a car for personal use and two for the business). She is an employee of the business. She shops for the office, pays the bills, does the banking, etc. (Stuff you don't want staff doing. You know, personal financial stuff. No need for everyone in the office to know how much is in the bank or what you have on the credit card statement). According to some weird IRS code, I get some extra tax benefits for using this vehicle. It all has to do with the weight of the truck. The liberals are about to change that rule.

Also, do remember that most dentists include auto expense, health insurance, medical out of pocket expense, meals and entertainment, travel cost for CE courses, etc as part of the overhead.
 
400k is very doable. If you work 200 days/year (4 day week *50) that's only 2 crowns, 2 fillings, and 2 hygiene visits a day.

65% of $400k is $260k, of which Uncle Sam takes about a third.

So if you say making 400K is easy with a 65% overhead, that means the dentist makes $140K....isnt that below the ADA average for a dentist's salary?
 
Originally posted by avingupta
So if you say making 400K is easy with a 65% overhead, that means the dentist makes $140K....isnt that below the ADA average for a dentist's salary?

For 2000 the ADA says the average was $166K/yr for GP's.

My point was even fresh out of school you don't have to be a speed demon to produce $2k/day.

Rob
 
Guy, now I feel much better. I don?t want to be super rich or anything like that but I want to have a comfortable lifestyle. By that I understand $200,000 an year before taxes, which seams possible. If I can make this or less but put my home expenses (like car, some utilities and so on) as a business expense that?s fine with me. I want to be able to afford a nice home, drive a nice car to work and pay for my kids college. If I can achieve this by doing what I like I?ll be a happy man.
 
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