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4 Financial Tips to Know When Planning for Maternity Leave as a Business Owner

As of 2020, there were an estimated 12.9 million women-owned businesses in the United States. 5.5 million of those business owners were mothers – which means 42% of all women-owned businesses are owned by moms! So there’s a good chance that you may already be planning for maternity leave as a business owner.


And here’s the good news: you usually get about 40 weeks to prepare for this. It can be hard to focus on setting your business up for maternity leave when you’re tired and sick – literally – in the first trimester, getting ready for baby’s arrival in the second trimester and then dog-tired again in the third trimester. However, using your pregnancy to plan (especially during that high energy second trimester) will make your actual maternity leave and subsequent return to work so much less stressful.

In this blog post, I’m sharing 4 critical financial tips to know so planning for maternity leave as a business owner will be stress-free. I’ve taken maternity leave as a business owner four times now! With our first baby, I got less than two weeks of real maternity leave; but with our fourth baby, I was able to take 8 weeks of interrupted baby bliss. I want YOU to be able to take as much time as you want for your maternity leave but also be prepared for the financial implications.


Your income will be slightly reduced.

Create a plan for how your business will run in your absence, and know that for most entrepreneurs, your income will be slightly reduced. Since 2018, I’d transitioned my clients to retainers, so I could anticipate exactly what my income would look like for that time period.


On that note, if you’re planning to hire a temporary replacement during your leave, make sure you take a reduced income into account when you consider if you can afford it.


If you’re feeling unsure of what your income will look like during your leave, it’s a good idea to meet with a financial advisor or accountant to go over your business numbers when planning for maternity leave.


Income won’t magically start pouring in the door the minute you come back from leave.

Although I took 8 weeks of leave with our fourth baby, I prepared for 12-16 weeks of reduced income. I recommend budgeting for decreased revenue for a few weeks longer than you’re actually planning for maternity leave and have a plan in place for what you’re tackling first (i.e. those money-making activities) during your initial period back in the office.


Those activities might be things like sending an email out to clients or messaging referral partners. Depending on how long you’ve been in business, you might even be able to create a waitlist for an offer, coaching or consulting to resume upon your return!


I think so many women believe once they come back to work, they’ll just pick up where they left off, but that’s not the case. You need plenty of lead time to get back into the swing of things with your clients.


Have personal and/or business savings to fall back on.

Generally speaking, it is recommended that small businesses have 6 - 9 months worth of expenses saved at any given time. When you’re planning to be out on maternity leave, however, I would recommend 12 - 15 months of expenses saved prior to starting your leave.


In my opinion, it’s better to be conservative and air on the side of caution by having more than you need. The money will still be there if you don’t need it (and you can put it towards something else), but you won’t be stressing yourself out in those first postpartum months when everything else is already stressful.


How much savings you need will - both personally and professionally - depend on your specific situation. Be sure to consult with your accountant when planning for maternity leave.


Have more recurring (or truly passive) income to fall back on.

See if you can figure out ways to create more recurring (or truly passive) income. This was the biggest difference financially for us between baby #2 and baby #4: We had more recurring income coming in for our fourth child, so even though I earned less during tax season, income kept coming in continually throughout the year.


Some recurring income ideas could include:

  • Rentals

  • Affiliate marketing

  • Investments

  • Selling digital products or online courses

  • Subscriptions


Any of these business models would certainly take time and planning to set up. You could even set them up before you are pregnant if you really want to plan ahead. Whether you’re on maternity leave or not, recurring income is a great cushion to have in your business!


Final Thoughts on Planning for Maternity Leave

There are other logistics to consider: you’ll want to update your contact information with your customers, vendors, and team; review your insurance policies; and check to see if any benefits will cover your time away from work. But keep in mind that while you can plan for months in advance, babies truly come when they want to come (this enneagram 3 learned this with her first 😉) – so be flexible with your leave and return date if your baby comes early, or if it turns out you need more leave time to rest and recover.


Remember, the most important thing you should be doing at this time is taking care of yourself – that means getting your rest, drinking lots of water, eating well and spending time with other family members.


If you’re just starting to plan for your maternity leave, there’s still plenty of time to meet with a financial advisor and tax strategist to ensure everything is in order before you officially start your leave. They can help ensure that you are financially prepared for this milestone event.

Interested in seeing how our firm can help? Download our services guide here.





*Disclaimer: This article is not meant to be tax advice. This is not an all-inclusive list of business deductions. Different rules may apply to each individual taxpayer’s specific situation. Please consult with your accountant.


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