With a mix of salaried dentists, hourly hygienists, admin staff, and state-specific labor laws, your dental practice’s payroll process can benefit from the occasional check-up. Given shifting regulations and the need to balance employee satisfaction with business profitability, it’s easy to see why many practices need to take a closer look at how payroll is managed.
What you’ll learn
What you’ll learn
Key takeaways
- Dental payroll differs from standard payroll because you must account for varying staff roles and pay structures under health-specific regulations
- Any payroll error can cost your dental practice time and money that could be better spent on patient care and business expansion
- The right payroll solution can alleviate administrative burden and simplify payroll management
This article covers common payroll pitfalls and offers tips for staying compliant and efficient — so you can spend less time on admin work and more time focused on patient care and growing your practice.
What makes payroll for dental offices different from other industries?
Simply put, there’s more to payroll processing than simply writing and distributing paychecks. Between managing multiple pay structures and health-specific rules, dental payroll presents challenges that other industries don’t face. Some of the things you need to sink your teeth into are below.
Multiple pay structures
Dental teams often include a mix of salaried dentists, hourly hygienists, part-time assistants, and sometimes commission-based specialists. Each role comes with different pay rules and deduction requirements, which makes payroll more complex — and increases the risk of errors if everything isn’t tracked carefully.
Pro tip from a tax professional
“When a dental practice is managing multiple pay structures, consistency is key. Using a single system to track hours, wages, and commissions helps reduce errors and keeps payroll compliant.”
— Tom Brock, CFA, CPA
For example, hourly hygienists and assistants may qualify for overtime pay, while salaried dentists may be paid on a production or commission basis. Without clear tracking across roles, it’s easy for discrepancies to creep in — especially as schedules and workloads change.
Variable schedules
Staff hours often fluctuate with patient demand and rotating shifts, making accurate time tracking and payment computations more challenging.
Healthcare-related compliance
Dental offices must follow general labor laws and healthcare-specific regulations, which often makes it necessary to keep up with compliance monitoring and can complicate the administration of benefits and leave policies.
Common payroll challenges dental offices should plan for
Even with the best intentions, some practices run into payroll issues that can affect compliance and team morale. Some of the more common issues to avoid are:
- Failing to update pay rates after raises or new hires causes underpayment or back-pay issues.
- Overlooking non-cash rewards leads to underreported bonuses and gifts, resulting in tax compliance issues.
- Poor recordkeeping increases the risk of errors and disputes.
- Miscalculating or filing taxes incorrectly can result in costly penalties and fines.
With these potential mishaps in mind, let’s take a closer look at how dental practices can effectively manage payroll processes, even with a diverse mix of staff members and pay structures.
How to manage diverse employees: from dentists to hygienists to admin staff
Every role in your dental office has unique payroll needs. Dentists, for instance, may be salaried or paid on production, while hygienists and dental assistants are often hourly employees who qualify for overtime pay. Admin staff may have fixed schedules, but usually handle variable tasks that impact their compensation or bonuses.
To manage different pay types, carefully track the hours and benefits of each role. Use payroll software for small businesses to help manage these variations accurately. A solid tool automates tax calculations for all pay types, thereby simplifying compliance and strengthening trust across your team.
Accurate gross pay calculations: tracking hours, bonuses, and commissions
With 62% of American employees living paycheck to paycheck, even a single mishap can erode trust and create compliance issues. In fact, more than half of the workforce (53%) would consider leaving if their employee repeatedly made payroll mistakes.
To maintain accurate gross pay calculations across a diverse team, use accounting and time-tracking integrations that enable you to accomplish the following tasks:
- Track hours for hourly employees and sync the data with pay rates so you can correctly calculate overtime pay and regular wages.
- Automatically record fixed salaries for dentists and senior staff to keep payment consistent across pay periods.
- Apply commission rules for commission-based employees or a treatment-based pay structure without manual tracking.
- Record bonuses, tips, and commissions to prevent missed or inflated payments.
With pay calculations covered, let’s look at the tax responsibilities nearly every dental office needs to stay on top of.
See how Gans Dental uses OnPay to put everything into perspective.
Tips to handle deductions and taxes for dental office payroll
Every dental office must calculate and withhold the correct amount of federal and local taxes, as well as employee-specific deductions. Follow the tips below to keep your payroll process compliant.
- Apply the correct tax rate for your state and locality to avoid tax underpayment or overpayment.
- Automatically deduct health insurance, student loan repayments, and retirement benefits for dental practices.
- Update pre-tax and post-tax deductions when benefits or employee statuses change to prevent paycheck discrepancies and compliance issues.
- Use software that updates tax tables and automates year-end reporting.
IRS tax compliance for dental office employees
Dental offices must follow standard IRS payroll tax requirements while navigating a mix of salaried, hourly, and sometimes commission-based employees. That process starts with a foundational step, says Tom Brock, CPA, CFA, and frequent OnPay contributor.
“Staying compliant starts with properly classifying workers as employees or independent contractors and ensuring wages are reported accurately.”
— Tom Brock, CFA, CPA
From there, dental practices have many of the same payroll tax responsibilities as other businesses with employees on staff. For employee payroll, dental offices are generally responsible for:
- Withholding and remitting federal income tax from employee wages
- Withholding and remitting Social Security and Medicare taxes (FICA) from employee wages
- Paying the employer portion of FICA taxes
- Paying federal unemployment tax (FUTA), when applicable
Tom also notes that compliance goes beyond base wages and salaries.
“Offices must also report taxable compensation correctly, including bonuses, commissions, and certain non-cash rewards, such as gift cards. Accurate recordkeeping and timely payroll tax filings help reduce the risk of IRS penalties and audits.”
— Tom Brock, CFA, CPA
IRS regulations and reporting requirements are always changing. Using payroll systems that automate tax calculations and filings can greatly simplify compliance efforts.
Compliance and recordkeeping: what every dental office must know
While your focus is on keeping patients healthy, your dental practice still needs to comply with payroll laws to avoid penalties and legal issues. Be diligent, and adhere to the following rules-of-thumb:
- Pay attention to all the labor laws your dental practice is subject to so your pay rates and employee classifications meet all legal standards.
- Track and store payroll records for at least three years to help resolve disputes and meet audit requirements.
- Stay current with state minimum wage changes to avoid payback liabilities.
- Use digital payroll systems like OnPay, which has built-in audit trails, to simplify recordkeeping and provide proof of compliance when required.
Did you know?
In an OnPay 2025 survey of more than 1,000 small businesses, more than one-third reported offering dental benefits as part of their employee benefits programs.
Main employee benefits in dental offices
Employee benefits play a huge role in keeping your dental team engaged and satisfied. A 2023 MetLife study found that 60% of workers feel more cared for (and have a greater sense of loyalty) due to employee benefits, while 59% report that benefits increase their work engagement.
Managing benefits, however, requires some extra effort to avoid inaccurate tracking and serious payroll issues. Here are common employee benefits and how to track them:
| Employee benefit | How to track it |
| Paid time off (PTO) | Use your payroll system to automatically update accrued and used hours each pay period. |
| Bonuses and non-cash rewards | Record all cash and non-cash incentives, such as gift cards, in payroll records to meet tax reporting rules. |
| Health and dental coverage | Integrate benefit data with your dental practice’s payroll software to calculate deductions and employer contributions accurately. |
Beyond wages and compliance, employee benefits are another way to support your team — just be prepared for a little extra diligence.
Delivers for dental practices
“I’ve owned my business for over 15 years, and after trying several payroll providers, I can confidently recommend OnPay. It’s simple to use, effective, and delivers real value at a fair price. I’ve been with OnPay for many years now and don’t plan to change — their service just keeps getting better.”
— Cesar Montalvan, MP Dental Associates DDS PC
When payroll is handled accurately and consistently, it becomes one less thing dental practices have to worry about. The right payroll approach helps practices stay organized, compliant, and focused on what matters most.
Payroll that keeps your practice moving forward
From hiring hygienists to recruiting top dental practitioners, running a practice means prioritizing patient care and ensuring paychecks are accurate and timely. Managing payroll in-house gives dental practices more control, but it also requires constant attention to changing tax and labor laws. Outsourcing payroll can reduce administrative work and improve accuracy—freeing up your team to focus more on patient care.
OnPay supports dental offices by automating payroll, filing taxes, and simplifying benefits and compliance in a holistic fashion. From onboarding to ongoing payroll management, OnPay keeps everything running smoothly. Try OnPay’s payroll software for dentists to see how easy payroll can be.
Take a tour to see how easy payroll can be.
Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.