I'm a financial planner with 7 tips for taking parental leave as an entrepreneur

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• As a financial planner, I know stepping away from your small business can be a big challenge.
• Make sure everyone who needs to know about your parental leave is informed well in advance.
• Consider short-term disability insurance and look at the options offered by your health insurance.

As a financial planner, my clients have all sorts of concerns as small business owners, from whether they need a business credit card to how to start their business.

Becoming a parent is undeniably one of life's greatest joys. But for small business owners, the thought of stepping away from their business to welcome a new addition is both exciting and intimidating.

There are many questions and concerns swirling in the minds of business owners: How do I ensure my business continues to thrive in my absence? What about my clients? Will they understand?

Navigating parental leave as an entrepreneur demands careful planning and consideration. Let's explore some practical tips to ease the transition and make this journey smoother for both you and your business.

1. Notify your clients well in advance

The key to a successful parental leave as a small-business owner is ensuring that your clients' needs are met in your absence. By providing ample notice, you afford your clients the opportunity to adjust and make necessary arrangements.

Once your leave begins, set up an out-of-office email response with detailed instructions regarding the duration of your absence and how clients can seek assistance in case of emergencies. Depending on the nature and scale of your business, this may entail automating certain processes, delegating tasks to trusted team members, or temporarily pausing certain services.

Many clients will not only understand but also applaud your decision to prioritize family by taking parental leave.

2. Plan how you will cover living expenses during your leave

One of the greatest concerns for small business owners considering extended time off is the fear of financial instability during their absence. To alleviate this worry, careful planning is key.

Establishing a robust business emergency fund is essential in this preparation. This fund serves as a supplement to any state or insurance benefits available. Ideally, it should include not just typical business expenses but also anticipated parental leave costs. Consider maintaining a reserve equivalent to at least three to six months' worth of business expenses. Parking these funds in a FDIC-insured high-yield savings account provides easy access while optimizing returns.

However, it is important to keep your personal and business emergency funds separate. Maintaining separate reserves helps to avoid dipping into personal finances for business-related needs.

3. Consider short-term disability coverage

Short-term disability insurance can be a valuable resource for small business owners preparing for parental leave. This type of coverage provides partial income replacement, typically ranging from 40% to 70%, for a defined period of up to a year.

Short-term disability policies vary in their coverage, with some covering complications during pregnancy or specific delivery scenarios. It's important to carefully review your policy to understand its specific terms and benefits.

When evaluating short-term disability insurance, consider several key factors:

• Coverage period
• Benefit amount
• Waiting period
• Premiums

4. Stay on top of legal obligations and expenses

Even during the anticipation of parental leave, it is essential for small business owners to fulfill their legal obligations. Certain legal tasks come with deadlines that cannot be postponed, requiring proactive planning to ensure continuity in your absence.

Consider delegating responsibilities to trusted team members or setting aside dedicated time to address these tasks before your parental leave begins. Some key legal obligations to prioritize include:

• Renewing your business structure (such as an LLC)
• Renewing your business licenses
• Renewing your professional licenses and certifications
• Making quarterly estimated tax payments

5. Check your health insurance for possible benefits

As you prepare for parental leave, it's important to review your health insurance coverage to ensure it meets the needs of your growing family. Selecting a health insurance policy that provides comprehensive coverage can alleviate financial stress and ensure access to necessary medical care throughout pregnancy and beyond.

When evaluating health insurance options, consider the following factors:

• Deductibles and out-of-pocket expenses
• Coverage for prenatal, childbirth, and postpartum care
• Coverage for your baby's medical expenses

6. Look into state-provided parental or family leave options

It's important to explore state-specific parental or family leave options as you plan for your time away from work. While these benefits vary by location, they can provide valuable support during the transition to parenthood.

Check whether your state offers any form of parental leave and familiarize yourself with the eligibility criteria and application process.

Consider seeking guidance from a legal or benefits expert to ensure you fully understand your rights and obligations under state-provided parental leave programs.

7. Don't hesitate to hire help if needed

Planning for parental leave as a small-business owner can be overwhelming and time-consuming. In such moments, it's important to recognize that seeking outside assistance can alleviate stress and ensure a smoother transition.

Consider assembling a team of qualified professionals, such as attorneys, accountants, or financial advisors, to help navigate this significant life event.

Remember, taking this time off is not just beneficial for your business; it is essential for your well-being and the bond you will create with your family.