Dental CPA vs fractional CFO: which does your practice need?
TL;DR: A dental-specialized CPA handles tax compliance, entity structure, and depreciation strategy. A fractional CFO handles forecasting, hiring economics, location expansion, and exit prep. They solve different problems and most growing dental practices over $2M in revenue end up needing both. Below: scope, cost, and how to sequence the hires.
Option A
Dental CPA
Specialty-trained CPA who focuses on dental and adjacent healthcare practices. Handles tax filing, entity structure (S-corp, PLLC), depreciation strategy on equipment, retirement plan design, and proactive tax planning. Often also coordinates with your bookkeeper.
Option B
Fractional CFO
Strategic finance leader engaged 10 to 20 hours per week. Builds forecasts, models new associate hires, evaluates DSO offers, runs location expansion economics, and prepares the practice for any partner buy-in or exit transaction. Works alongside the CPA and bookkeeper, not instead of them.
| Category | Dental CPA | Fractional CFO |
|---|---|---|
| Annual cost | $3K-$8K/yr for tax filing and basic planning. $1K-$3K/mo retainer for advisory dental CPAs. | $48K-$96K/yr fractional engagement. Equivalent to roughly 25-40% of a full-time CFO loaded cost. |
| Primary scope | Tax compliance, entity structure, depreciation, retirement plans, S-corp reasonable salary review, year-end planning | Financial forecasting, KPI reporting, payer mix and case mix analysis, hiring economics, location expansion, transaction prep |
| Time horizon | Annual cycle plus quarterly check-ins. Heavy lift around year-end and tax filing season. | Monthly and forward-looking. Reviews monthly close, reforecasts quarterly, and ties weekly decisions to the financial model. |
| Specialty knowledge | Deep on dental tax structures, equipment depreciation, associate vs partner taxation, and dental-specific retirement plans (cash balance, 412(e)(3)). | Deep on dental practice economics: hygiene production, fee schedules, payer mix, associate ramp, multi-location overhead allocation, DSO valuation. |
| Decision support | Tax-driven decisions. Should we form a separate equipment-holding entity? Is now the right time to elect S-corp? What is our reasonable comp number? | Operating and capital decisions. Should we hire another associate? Buy or lease the new operatory? Open location two? Sell to the DSO at the offer they made? |
| Reporting | Annual financial statements (compilation or review), tax returns, supporting schedules. Limited operational reporting. | Monthly KPI dashboard, financial forecast, scenario models, board or partner-meeting materials. |
| Coordination with bookkeeper | Reviews bookkeeper output for tax accuracy. Usually quarterly or year-end. | Works with bookkeeper on month-end close timing, chart of accounts structure, and ensures KPI reporting can be built on top of clean books. |
| When you can wait | Almost never. Every practice needs a CPA at minimum for tax filing. Dental-specialized usually pays for itself once you cross $1M in collections. | Until roughly $2M-$3M in revenue. Below that, the strategic complexity may not justify $4K+/mo. Above that, the lack of a CFO function starts costing more than the CFO would. |
| Best for | Every dental practice. The question is whether to use a generalist CPA or a dental specialist (almost always specialist for $1M+ practices). | Dental groups doing $2M+ in collections, growing through associates or locations, considering DSO transactions, or planning partner buy-ins or transitions. |
A dental CPA handles tax. A fractional CFO handles strategy. Most growing practices need both.
These are not competing choices; they are different jobs. Your dental CPA makes sure you are filing correctly, structuring tax-efficiently, and not leaving money on the table at year-end. Your fractional CFO makes sure the next associate hire pencils out, the second location has a real path to break-even, and the DSO offer on your desk is fair. A dental CPA without a CFO function leaves growth decisions to gut feel. A fractional CFO without a tax-savvy CPA can build the right operating plan and lose 5 to 10 percent of the upside to avoidable tax. For most dental practices over $2M in collections, the right setup is a dental-specialized CPA for tax and a healthcare-focused fractional CFO for the operating and capital decisions.
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