Why North Carolina dentists work with The Walls Law Group

Twenty years of NC business and estate practice

Jason Walls has been practicing NC business and estate planning law since August 2005, with the entirety of his practice focused on closely-held businesses and the families that own them. NC Bar #34274. 20+ years of NC-specific entity formation work means familiarity with NC Secretary of State filings, Chapter 55B Professional Corporation Act mechanics, Chapter 57D Professional Limited Liability Company provisions, and the NC State Board of Dental Examiners rules at 21 NCAC 16 that determine what is and is not permitted for NC dental practice ownership. NC dental practice law is not generic business law with a dental label on it. It is its own regulatory ecosystem, and the answers to ownership, succession, and sale questions are not the same as they are for a non-professional business.

Tax depth that high-income dental practices benefit from

Dental practice ownership generates the kind of pass-through income where federal and NC state tax structuring decisions move real money. S-corporation election for a NC dental PLLC, reasonable-compensation analysis for the dentist-owner, IRC § 199A qualified business income deduction qualification (dentistry is a Specified Service Trade or Business with income-phaseout rules under § 199A(d)(2), so structuring around the threshold matters), the One Big Beautiful Bill Act § 168(k) permanent 100% bonus depreciation for equipment placed in service after January 19, 2025, and the OBBBA $15M permanent estate tax exemption are all live planning issues for a NC dental practice owner generating $400K to $1.5M of practice income. We work these issues into the entity structure and the estate plan at the front end rather than trying to fix them on the back end of a sale or a death.

Integrated business and estate planning under one roof

Dentist owners need a practice entity, a buy-sell agreement, a will, a revocable trust, healthcare and financial powers of attorney, and a coordinated plan for what happens to the practice on death, disability, retirement, or sale. Most NC firms handle one practice area or another. We handle both, drafted together so they actually function as a system. The most common error we see in dentist estate planning is a will or trust that purports to leave "my interest in ABC Dental, PLLC" to a non-dentist spouse, when the buy-sell agreement requires automatic redemption on death (because non-dentists cannot continue to hold equity in a NC dental practice under 21 NCAC 16F .0102, which requires all owners of a NC dental PC or PLLC to be licensed to practice dentistry in NC). Integrated drafting catches this at the source rather than at the funeral.

How North Carolina regulates dental practice ownership

SHORT ANSWER: North Carolina regulates dental practice ownership and management through the Professional Corporation Act at Chapter 55B, the Professional Limited Liability Company provisions at Chapter 57D Article 2, the NC Dental Practice Act at Chapter 90 Article 2, NC State Board of Dental Examiners administrative rules at 21 NCAC Chapter 16, and controlling case law from Affordable Care, Inc. v. NC State Bd. of Dental Examiners, 153 N.C.App. 527, 571 S.E.2d 52 (2002). Per 21 NCAC 16F .0102, NCSBDE only certifies a professional dental entity when all proposed owners of shares or membership interests are licensed to practice dentistry in NC. The 1/3 non-licensee-employee allowance under N.C. Gen. Stat. § 55B-6 applies only to enumerated technical professions (architects, landscape architects, engineers and surveyors, geologists, and soil scientists), not to dentistry.

Business corporations and lay individuals cannot own NC dental practices. NCSBDE regulates management arrangements between dental practices and Dental Management Companies under 21 NCAC 16X .0101, with active review of management contracts to confirm that fees are not tied to practice revenue and do not constitute de facto non-dentist control.

The three pillars of the dental Corporate Practice doctrine

NC's Corporate Practice of Dentistry doctrine is grounded in three sources: the statutory framework, the NCSBDE administrative rules, and controlling case law. The statutory framework is the NC Dental Practice Act at Chapter 90, Article 2 (§ 90-22 through § 90-48.16), combined with the Professional Corporation Act at Chapter 55B and the Professional Limited Liability Company provisions at Chapter 57D Article 2. The administrative rules are at 21 NCAC Chapter 16, with the management arrangements rule at 21 NCAC 16X .0101 being the most operationally important for transaction planning.

The controlling NC case is Affordable Care, Inc. v. NC State Bd. of Dental Examiners, 153 N.C.App. 527, 571 S.E.2d 52 (2002). The NC Court of Appeals upheld NCSBDE's authority to enforce the corporate practice of dentistry rules against constitutional and administrative challenges by Affordable Care and other dental management organization plaintiffs. The case remains good law and is regularly cited in NCSBDE enforcement actions and in dental MSO/DMC structure planning.

The 100% NC-licensed-dentist ownership rule

NC dental PCs and PLLCs are governed by the general Chapter 55B framework, with NCSBDE rules adding dental-specific requirements. The starting point is § 55B-6, which provides that a professional corporation "may issue shares of its capital stock only to a licensee as defined in G.S. 55B-2" and that "a shareholder may voluntarily transfer shares of stock issued to the shareholder only to another licensee." For dental, "licensee" means a dentist licensed by the NC State Board of Dental Examiners under N.C. Gen. Stat. § 55B-2(3) and Chapter 90 Article 2.

§ 55B-6 contains a narrow proviso allowing up to one-third non-licensee-employee ownership, but the statute expressly limits that proviso to professional corporations "rendering services as defined in Chapters 83A, 89A, 89C, 89E, and 89F" of the General Statutes. Those chapters cover architects, landscape architects, engineers and surveyors, geologists, and soil scientists. Dentistry, which is governed by Chapter 90 Article 2, is not included in that enumeration. The statute also contains a separate 49% allowance under § 55B-6(a1), but that allowance is expressly limited to professional corporations rendering services under Chapter 93 (Public Accountancy). Neither carve-out applies to dental practices.

NCSBDE has implemented the § 55B-6 "only to a licensee" rule for dental entities through 21 NCAC 16F .0102, which requires that the Board's certification for entity formation confirm that "all proposed owners of shares of stock in a professional corporation or association or all proposed managers and members of a professional limited liability company are licensed to practice dentistry in North Carolina," and through 21 NCAC 16F .0104, which separates "each shareholder or member" from "each dentist to be employed by the company" in the certificate of registration application. The Board's authority for these rules is grounded in § 55B-4, § 55B-6, and § 90-48.

The practical implication for NC dental practice ownership is that the Board's certification process will not approve a NC dental PC or PLLC unless all proposed owners are NC-licensed dentists. Existing NC dental entities cannot transfer shares or membership interests to a non-dentist without a separate Board certification under 21 NCAC 16F .0102(b) confirming the proposed transferee is NC-licensed. Spouses, family members, non-clinical employees, outside investors, and business corporations cannot hold equity in a NC dental practice through the standard certification process. The DSO/friendly-PC structure is the standard NC architecture for PE-backed dental transactions: the dentist owners retain the dental practice entity, while the separately-owned Dental Service Organization provides non-clinical services under a Management Services Agreement subject to 21 NCAC 16X scrutiny.

Management arrangements with DMCs and DSOs

Let me be very clear with you: the Dental Service Organization (DSO) and Dental Management Company (DMC) model is well-established in NC, but every management arrangement is subject to NCSBDE scrutiny under 21 NCAC 16X .0101. The rule prohibits arrangements that grant a management company direct or indirect control over clinical aspects of the practice, control over the distribution of the practice's revenue stream, control over the hiring and firing of clinical personnel, or input into the clinical practices of the dental entity or its dentists. The rule also prohibits management fee structures that increase or decrease based on the practice's profitability, gross revenues, or net revenues, and prohibits fee structures that are likely, foreseeably, and purposely in excess of the practice's likely profits.

DSO activity in NC has been substantial over the past decade, with both NC-headquartered DSOs and national platforms with NC presence. NC-anchored DSOs include Riccobene Associates Family Dentistry (headquartered in Cary NC, acquired by Comvest Private Equity in November 2024), Flagship Specialty Partners (headquartered in Charlotte NC, oral and facial surgery focus), and Oakpoint (headquartered in Raleigh NC, founded 2019). National platforms with NC presence include MB2 Dental Solutions, Heartland Dental, and Aspen Group. NCSBDE has also been notably active in scrutinizing management arrangements, with Affordable Care, Inc. v. NC State Bd. of Dental Examiners (2002) establishing that the Board's authority to regulate management arrangements under 21 NCAC 16X .0101 is constitutionally sound.

A properly-drafted DSO/friendly-PC management arrangement can be used in NC. NCSBDE has not adopted a per-se prohibition on the structure. But the Management Services Agreement (MSA) terms have to be carefully drafted to preserve clinical autonomy, to fit within the 21 NCAC 16X fee structure rules, and to align the operating reality of the post-closing relationship with the legal architecture.