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TOOLS, GUIDES &
INSIGHTS.

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Article

The $40,000 Mistake Most Practice Owners Make Every Year

Suboptimal owner compensation structure is the most common and most fixable financial mistake in veterinary practice ownership. Here's what it looks like and how to fix it.

CFO & FinanceRead →

Checklist

New Graduate Financial Foundation Checklist

The first three years after graduation set the trajectory for everything that follows. Here is what to put in place before the debt defines your options, and the order in which to do it.

Career PlanningView →

Guide

Buying Your First Veterinary Practice: A Financial Guide

A step-by-step guide to the financial side of acquiring your first practice. From pro forma modeling to lender prep to deal structuring, we cover it all so you don't leave money on the table.

Practice OwnershipRead →

Tool

Disability Insurance Needs Calculator

How much disability coverage do you actually need? Enter your income and existing coverage to estimate the right benefit amount for your situation as a veterinarian.

Insurance & ProtectionTry It →

Tool

Life Insurance Needs Calculator

How much life insurance do you actually need? Answer a few questions about your income, debts, and dependents to get a personalized coverage estimate.

Insurance & ProtectionTry It →

Tool

Retirement Readiness Calculator

Are you on track to retire on your terms? Enter your current savings, income, and goals to see your projected retirement number and whether your current contributions will get you there.

Retirement PlanningTry It →

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Article CFO & Finance

The $40,000 Mistake Most Practice Owners Make Every Year

Most veterinary practice owners know they're leaving money somewhere. They just don't know exactly where. The answer, more often than not, is the way their own paycheck is structured.

The issue: Most DVM practice owners pay themselves entirely as W-2 salary, or split salary and distributions without any modeling behind it. Both approaches almost always result in paying $20,000 to $60,000 more in taxes per year than necessary.

Why This Happens

The problem starts with entity structure. An S-Corp owner must pay themselves a "reasonable salary" subject to payroll taxes. Everything beyond that salary can be distributed as profit, which is not subject to self-employment tax. Most owners either don't know this, or know it in theory but haven't actually run the numbers for their practice size and income level.

Factor in the complexity of retirement plan contributions, practice distributions, and personal versus business expenses, and the gap between what you're paying and what you should be paying widens quickly.

What the Numbers Look Like

$20K

Low end for smaller practices with a simple structure

$40K

Typical of most single-owner practices

$60K+

Higher revenue practices, multiple issues

The Fix

Fixing this isn't complicated. It does require someone to actually run the analysis. The right salary-to-distribution split depends on your revenue, your retirement contributions, your entity structure, and what your CPA considers "reasonable compensation" for your specialty and market.

At ProPartners, owner compensation optimization is a standard part of every CFO engagement. It is reviewed annually, modeled against your actual financials, and coordinated with your CPA before year-end so changes take effect before the tax year closes.

This is fixable. If you haven't had a formal compensation analysis run against your practice, there's a good chance you're overpaying. A ProPartners advisor can walk you through what the numbers look like for your specific situation.

Checklist Career Planning

New Graduate Financial Foundation Checklist

Complete these in order. The sequence matters.

The first three years after graduation are the most financially consequential of your career. Not because you're earning the most, but because the habits and decisions you make now compound for decades. Here's what to put in place, and in what order.

STEP 01 Protect Your Income First

Own-occupation disability insurance

The most important coverage you'll ever buy. If you can't practice, you need income. Get this before anything else.

Term life insurance (if you have dependents or co-signed debt)

Cheap when you're young and healthy. Don't wait until you have a reason to need it.

STEP 02 Build Your Cash Foundation

3-month emergency fund in a high-yield savings account

Before investing anything, have cash you can access without touching retirement accounts.

Written monthly cash flow plan (income minus all obligations)

You can't make good decisions about debt and investing if you don't know what you actually have to work with.

STEP 03 Address Your Student Loans

Evaluate PSLF eligibility if you work for a nonprofit or government employer

If you qualify, this changes your entire repayment strategy. Don't skip this step.

Model IDR vs. aggressive payoff vs. refinance scenarios

The right answer depends on your income, loan balance, and career trajectory. Run the numbers before you commit to a path.

Confirm your servicer and repayment plan in writing

Servicer errors are common and expensive. Verify your plan, payment count, and qualifying employer status annually.

STEP 04 Start Investing Even a Little

Open a Roth IRA and contribute what you can

You can contribute up to $7,000/year (2024). The tax-free growth over a 30-year career is significant. Start now.

Enroll in your employer's retirement plan if match is offered

Employer match is an immediate 50–100% return on your contribution. Never leave it on the table.

Not sure where to start? ProPartners works with new graduates at every debt and income level. A free consultation costs nothing and might be the most valuable 30 minutes you spend this year.

Guide Practice Ownership

Buying Your First Veterinary Practice: A Financial Guide

Five steps from your first conversation to closing day.

Buying a veterinary practice is one of the most consequential financial decisions of your career. Done right, it builds generational wealth. Done wrong, it can take years to recover from. This guide covers the five financial steps every buyer needs to work through, in the right order.

Know What You Can Actually Afford

Before you fall in love with a practice, run your numbers. Most veterinary lenders will finance 80–100% of the purchase price, but your debt-service coverage ratio needs to hold. Lenders pre-qualify you based on the practice's historical cash flow and typically require 1.25x coverage of your annual debt payments.

Rule of thumb: If EBITDA is $400K and the asking price is $1.6M, you're at a 4x multiple. At current rates, that's roughly $110K–$120K/year in debt service. That leaves you $280K+ to work with before your salary. That math needs to work before you go further.

Understand What You're Buying

EBITDA multiples in veterinary medicine typically range from 3x to 6x depending on practice size, growth rate, and transferability. Before making an offer, you need a defensible valuation rather than a guess, and you need to understand what's driving the number.

Is EBITDA trending up, flat, or declining?

How dependent is revenue on the selling doctor?

What is the active client count and retention rate?

Are there deferred equipment replacements or lease issues?

What does the staff look like and will they stay?

Build a Pro Forma Rather Than Just a Budget

A pro forma models your full ownership scenario, factoring in your salary, your debt service, any staff or operational changes, and a realistic growth projection. This isn't a spreadsheet exercise. It's the document your lender will use to make their decision, and it's the document you'll use to hold yourself accountable in year one.

Get the Right Lender in the Room

Not all veterinary practice lenders are equal. Some specialize in this space and understand practice economics. Others apply generic business lending criteria that penalize the debt-heavy, asset-light structure of most vet practices. You want a lender who has closed veterinary deals before. Get introduced to them before you're under contract, not after.

ProPartners note: We maintain active relationships with lenders who specialize in veterinary acquisitions. If you're in the market, we can make the right introductions before you start shopping.

Structure the Deal and the Entity Correctly

Asset purchase vs. stock purchase, entity structure, goodwill allocation, seller financing, and transition agreements all carry real tax and liability consequences that will follow you for years. Get them right before you sign, not after.

Thinking about buying? ProPartners guides buyers through every step of this process from the first financial model all the way through closing day. The consultation is free and there's no obligation.

ProPartners Tool

Life Insurance
Needs Calculator

Most DVMs are underinsured. Find out how much coverage actually makes sense for your situation.

YOUR INFORMATION

Your Age

Annual Income

Existing Life Insurance Coverage (enter 0 if none)

Total Outstanding Debts (student loans, mortgage, practice loans)

Number of Dependents

Years of Income to Replace

SPOUSE / PARTNER (optional)

Spouse Age

Spouse Annual Income

Spouse Existing Life Insurance Coverage (enter 0 if none)

ADDITIONAL FACTORS

Plan to fund children's college education

Adds ~$100,000 per child to your coverage estimate

Emergency fund not yet fully built

Adds 6 months of income to bridge immediate cash needs for your family

I own a veterinary practice

Adds a business continuity buffer sized at roughly one year of practice revenue to cover transition costs

Spouse / partner is a stay-at-home caregiver

Adds childcare and household replacement costs at an estimated $40,000 per year for 10 years

Estate or legacy goals (leave wealth to family or charity)

Adds $250,000 as a baseline legacy/estate buffer

Estimated Coverage Need

This is an estimate for planning purposes only. Your actual needs depend on your specific situation. Talk to a ProPartners advisor for a personalized recommendation.

Fill in your income above to see your estimated coverage need.

ProPartners Tool

Disability Insurance
Needs Calculator

Own-occupation disability is the most overlooked coverage in veterinary medicine. Find out how much you need.

Annual Gross Income

Existing Monthly LTD Coverage (enter 0 if none)

Estimated Monthly Need

This is an estimate for planning purposes only. Talk to a ProPartners advisor for a personalized recommendation.

Enter your income above to see your estimated coverage need.

ProPartners Tool

Retirement Readiness
Calculator

See your projected retirement number and whether you're on track to hit it.

YOUR SITUATION

Current Age

Target Retirement Age

Annual Income

% of Income Needed in Retirement

CURRENT SAVINGS

Retirement Accounts (401k, IRA, etc.)

Annual Contribution

ASSUMPTIONS

Expected Return

Inflation Rate

Years in Retirement

Include estimated Social Security benefit

Adds approximately $2,000 per month at full retirement age based on average DVM income and reduces your required nest egg

Include practice sale proceeds in retirement

This is an important asset but should not be your only plan. Shows how much of your gap it may cover.

Estimated Practice Sale Proceeds

Your Retirement Number

Projected at Retirement

Gap / Surplus

Uses compound annual growth and the 4% safe withdrawal rate. This is an estimate for planning purposes only and does not constitute financial advice.

Fill in your age, income, and savings above to see your retirement projection.

LOOKING FOR SOMETHING SPECIFIC? LET'S TALK.

Our advisors work with veterinarians at every stage. Reach out directly if you have a question that the resources above don't answer.

TOOLS, GUIDES &INSIGHTS.

LOOKING FOR SOMETHING SPECIFIC? LET'S TALK.

TOOLS, GUIDES &
INSIGHTS.