As a self-employed business owner, the prospect of welcoming a new addition to your family brings both joy and a unique set of financial considerations. We understand the challenges you face in balancing your thriving online business with your growing family. Let’s explore how you can effectively plan for this exciting chapter while ensuring your business continues to flourish.
Assess Your Current Financial Situation
Begin by taking a comprehensive look at your current financial landscape. Review your Profit & Loss for the last 12 months. It’s crucial to know exactly where you stand currently in order to make a successful plan for the future. This assessment will provide a clear picture of where you stand financially and give you an idea of how you will develop a plan for your leave. This is forming the foundation for your future planning.
Develop a Comprehensive Budget
With a clear understanding of your current finances, it’s time to plan for the next 12(ish) months.
INCOME
- Is it growing or remaining constant?
- Where is your income coming from? Look at your different offers – are they one on one, group programs, retainer services, digital products/passive?
- What does this income require from you? For example, 1-1 clients likely require calls, which means set times in front of the computer. This might be hard when you’re juggling a newborn.
- Consider if you want your income to remain the same or shift during your planned maternity leave.
- If you want it to stay the same, do you have the infrastructure/team in place to cover the income stream during your maternity leave? Do you need to hire and train an employee?
- If you want to shift the revenue breakdown to favor other revenue streams, how are you going to do that?
EXPENSES
- Could you cut back any expenses?
- Do you need to increase expenses (team member wages, paid ads if you want to focus on digital products, etc)?
Once you have a budget in place, that will help you determine how to financially prepare for your leave.
Plan + Fund Your Maternity Leave
As a self-employed individual, funding your maternity leave is crucial, especially with a baby on the way.
- Determine how long you want to take for a maternity leave.
- Using the budget you put together in step 2, decide if your desired maternity leave is feasible as your business currently is. If not, create a list of the steps you need to take to set your business up for your leave. This will be long and comprehensive – but don’t stress about it too much, you can create a plan to tackle it one step at a time!
- If you determine that you need to start a maternity fund savings account, figure out how much you’ll need to save per month leading up the your baby’s due date. *HOT TIP* Use a High Yield Savings Account to save even more!
- Once you’ve created your plan, review it monthly yo assure that you are on track. Make adjustments where you need to – remember, it’s not set in stone!
- If you need to bring on team members or train current team members to take over responsibilities, do this EARLY! This will alleviate stress closer to your due date and you’ll know everyone is ready.
Review and Adjust Personal Insurance Coverage
Ensure your insurance policies are adequate for your changing needs:
- Health insurance: Confirm it provides appropriate coverage for pregnancy and newborn care
- Life and disability insurance: Consider increasing coverage to protect your family and business
Understand Tax Implications and Benefits
With your new baby coming, we encourage you to explore:
- Self-employment tax considerations
- Potential tax credits and deductions available to parents
- Consider meeting with your CPA to discuss your options so that you know you are maximizing your writeoffs.
Consider Your Post-Leave Plan
*This is SO HARD to determine before having your baby, so know that it will fluctate, and if you’re anything like me, your plans will change multiple times, but it’s a good idea to consider what you plan to do when your leave is over.
- Think about your ideal schedule. Do you want to have childcare? Only work when baby sleeps?
- If you opt for childcare, what will that look like? Explore various options such as in-home care, daycare centers, family assistance, or staggered schedules if you and your husband are both self-employed (This is what works for our household and we love it!).
- Begin budgeting for childcare expenses, which may be higher than initially anticipated.
- Evaluate the possibility of hiring additional help or outsourcing certain tasks, both in and out of your business.
Plan for Long-Term Financial Goals
While focusing on immediate needs, don’t lose sight of the future:
- Consider starting a college savings plan
- Set long-term financial goals for both your family and business
Seek Professional Guidance
Don’t hesitate to seek advice from professionals who understand the unique intersection of self-employment and family planning. At 1428 Financial, we specialize in helping business owners like you navigate these exciting transitions.
Financial planning for a baby as a self-employed business owner is a multifaceted process that requires careful consideration and strategic planning. By taking a proactive approach, you can ensure that both your family and your business are set up for success.
Are you ready to align your finances with your growing family and thriving business? Let’s work together to create a personalized financial strategy that supports your unique goals and circumstances. With the right planning and support, you can confidently embrace this new chapter in your personal and professional life.
The content in this blog post is provided for general informational purposes only and should not be considered professional tax or legal advice. The author is not a Certified Public Accountant, and no assurances can be made regarding the outcomes or consequences of tax returns, IRS actions, or any financial decisions based on this information. Readers are strongly advised to consult with a qualified tax professional or legal advisor for personalized guidance specific to their individual circumstances. The author expressly disclaims any liability for decisions made based on the information presented in this blog post.
