Every dentist who starts or restructures a practice eventually faces the same question: what entity should actually own the practice? It's tempting to treat this as a formality to check off before the real work of building a patient base begins. It isn't. The entity and tax election you choose will follow your practice through hiring, financing, a partner buy-in, and eventually a sale — and undoing the wrong choice later is far more expensive than getting it right at the start.

What entities Ohio actually allows

Ohio Administrative Code 4715-13-02 sets out exactly which structures a dentist may practice under: the dentist's own name, a for-profit corporation formed under R.C. Chapter 1701, a professional association formed under R.C. Chapter 1785, a professional partnership formed under R.C. Chapter 1775, or a limited liability company formed under Ohio's LLC statute (now R.C. Chapter 1706, the Ohio Revised Limited Liability Company Act). That list is broader than it's sometimes made out to be — a standard Ohio LLC is a perfectly valid choice for a dental practice. There's no separate “professional LLC” filing required beyond forming an ordinary LLC and following the naming and disclosure rules below.

The naming and disclosure rules that come with any of them

Whichever entity you choose, its name must include the name of the dentist or dentists currently practicing there. The first and last name of every dentist practicing at that location — along with their degree, D.D.S. or D.M.D. — has to be prominently displayed at the practice's main entrance. Only currently practicing, licensed dentists' names may appear in the entity's name or signage; a retired or deceased dentist's name has to come off, even if it's been part of the practice's identity for years. Each location also needs a licensed dentist formally designated as in charge, and that dentist must notify the State Dental Board within ten days of taking on the role.

Why non-dentist ownership still runs into trouble

The entity statute itself doesn't limit LLC membership to licensed dentists the way some states' professional-entity laws do explicitly. But Ohio's definition of “practicing dentistry” is broader than clinical work: under R.C. 4715.01, a non-dentist who owns or controls a dental office and profits from that control beyond a reasonable rental value for the space and equipment can be treated as practicing dentistry without a license. That's the real reason Ohio dental practices are almost always owned entirely by licensed dentists, even though the entity paperwork itself wouldn't technically stop an outside investor from taking a membership interest. A non-dentist ownership or management arrangement can create licensing exposure for everyone involved, not just a compliance footnote to clean up later.

The tax election is a separate decision from the entity itself

Once the entity is formed, the separate question is how it's taxed. A single-owner practice is taxed by default as a sole proprietorship, and every dollar of profit is hit with self-employment tax — 15.3% up to the Social Security wage base, 2.9% for Medicare above it. Electing S-corporation tax treatment changes that math: the owner-dentist takes a reasonable salary, subject to payroll taxes, and can take the remaining profit as a distribution that isn't subject to self-employment tax. For a consistently profitable Ohio practice, that split is usually where the real savings live — which is why an S-corp election tends to be the right default once a practice matures, not because of which entity you formed, but because of what the election does to the tax bill.

The catch is in the word “reasonable.” The IRS expects that salary to reflect fair compensation for the dentistry actually performed. Setting it artificially low specifically to shrink payroll tax exposure is a well-known audit trigger, not a clever strategy, and it's a conversation to have with your accountant before you file the election, not after.

Ohio's Business Income Deduction is the piece that's easy to miss

Ohio allows an owner to deduct the first $250,000 of business income from Ohio taxable income each year — $125,000 if married filing separately — with anything above that taxed at a flat 3%. This deduction applies to pass-through profit regardless of whether the practice is taxed as a sole proprietorship, a partnership, or an S-corp. It's worth understanding how it interacts with an S-corp election specifically: the reasonable salary you set is wages, taxed at Ohio's regular individual rate, while the distribution is business income, eligible for the deduction and the 3% rate. Since those two pieces run on different tax tracks, the reasonable-compensation figure you land on affects more than just your federal payroll tax exposure — it shapes how much of your income lands in the more favorable bucket at the state level too.

A few more Ohio-specific items worth raising with your accountant

●       The elective pass-through entity tax (Form IT 4738) lets the practice pay Ohio income tax at the entity level — a way around the federal $10,000 cap on the state-and-local-tax deduction — but it's an annual, irrevocable election once filed for the year.

●       Ohio's Commercial Activity Tax generally won't touch a single-location practice: for tax years beginning in 2025, the first $6 million of taxable gross receipts is excluded, and practices under that threshold owe nothing and don't need to file. If your practice registered for the CAT years ago when the threshold was lower, confirm that old registration has actually been cancelled.

●       Municipal income tax, collected through RITA, the Central Collection Agency, or a self-administering city depending on where you're located, applies separately to the practice's net profit, to employee wage withholding, and to the owner's own wages — and it's easy to assume the state filing covered it when it didn't.

What actually drives the decision

There's no single “right” entity for every dental practice, and the choice between an LLC, a professional association, a professional partnership, or a corporation usually comes down to governance preferences and administrative formality rather than liability protection, since all of them shield the owner from the practice's general business liabilities — a lease default, an employee's negligence, a vendor dispute — without shielding anyone from their own malpractice. The tax election is where the bigger financial decision actually lives, and it deserves its own conversation with your accountant as the practice grows.

Practical takeaway

Don't let entity selection become an afterthought handled by whoever files your paperwork fastest, and don't assume the entity choice and the tax election are the same decision. Work through both with an attorney who understands Ohio's dental-specific rules, and revisit the tax election again as the practice's profitability changes — what made sense in year one rarely stays optimal once the practice matures.

Sources and further reading

●       Ohio Administrative Code 4715-13-02 — Name under which practice may be conducted

●       Ohio Revised Code § 4715.01 — Definition of practicing dentistry

●       Ohio Revised Code Chapter 1706 — Ohio Revised Limited Liability Company Act

●       Ohio Department of Taxation — Business Income Deduction

●       IRS Instructions for Form 1120-S — S corporation reasonable compensation guidance

If you're forming a new dental practice or want a second opinion on your current entity and tax structure, call our office at 216-644-3359 or schedule a consultation online.