When Should a Midwifery Team Be 1099 vs. W-2? Understanding the Key Differences and What’s Best for Your Practice
As a midwifery practice owner, managing your team’s payroll and classification can be a complex process, especially when it comes to deciding whether your team members should be classified as independent contractors (1099) or employees (W-2). This decision impacts how you handle taxes, benefits, worker rights, and the overall structure of your practice. Understanding the distinctions between 1099 and W-2 classifications is essential for ensuring compliance with tax laws and for creating a supportive, sustainable work environment for your midwifery team. In this blog post, we’ll dive into the key differences between 1099 and W-2, when each classification is appropriate for midwifery practices, and the pros and cons of each for both the midwifery team and the business owner. 1. Understanding the Basics: 1099 vs. W-2 Before diving into the specifics of when each classification applies, it’s important to understand the basic differences between 1099 (Independent Contractors) and W-2 (Employees). 1099 (Independent Contractors): Independent contractors are self-employed individuals who offer services to a business, but they are not considered employees of that business. Contractors are responsible for their own taxes, benefits, and insurance. They typically work on a contractual basis, which means their employment relationship is more flexible and short-term. W-2 (Employees): Employees, on the other hand, are considered part of the company. They receive regular wages or salary, and their employer withholds taxes, including Social Security, Medicare, and federal and state income taxes. Employers are also required to provide certain benefits, such as worker’s compensation insurance, unemployment insurance, and sometimes paid time off, depending on the state and the company’s policies. 2. When to Classify Midwifery Team Members as 1099 (Independent Contractors) In some cases, midwifery team members may be more appropriately classified as independent contractors. Here are some common scenarios when this may be the case: 1. Flexibility and Autonomy Independent contractors in midwifery practices often have a higher degree of autonomy and control over their work schedule. For instance, birth assistants, doulas, or even midwives who provide coverage on an as-needed basis might prefer to be contractors because they can choose which shifts to work, how many births to attend, and what additional services to offer. Example: A midwife who works in a private practice may choose to be an independent contractor if they want the flexibility to work with multiple midwifery teams, or take on a limited caseload without the responsibilities of being a full-time employee. 2. Short-Term or Project-Based Work If the role is short-term, project-based, or not integral to the long-term operations of your midwifery practice, it may be best to classify the worker as a 1099 contractor. Contractors typically work on a specific contract or project and are not expected to be long-term employees of the business. Example: A midwifery practice might hire an independent contractor for a special project, like conducting a specific number of prenatal visits, or providing services at a particular location, for a set period of time. 3. Contractors with Their Own Practice or Business If your team member has their own independent business or practice and is providing services to your practice on a contractual basis, they are likely best classified as a 1099 contractor. Independent contractors often run their own businesses and provide services to multiple clients, including midwifery practices. Example: A birth assistant who works for multiple midwifery practices and manages their own business may be an independent contractor, as they have the freedom to choose the work they take on and have control over how they perform their tasks. 4. Cost Considerations Independent contractors often cost a business less than employees because the business owner is not responsible for providing benefits (health insurance, paid leave, retirement contributions) or handling payroll taxes. If a midwifery practice is a small business or a solo practice with limited resources, classifying certain roles as independent contractors may be a more cost-effective option. Example: If a midwife hires additional support for backup coverage or to provide a specific service (such as lactation consulting) on a per-session basis, these workers can be 1099 contractors. 5. Freelance and Specialized Roles For specialized roles, such as lactation consultants, birth photographers, or doulas, contractors can offer their services on a freelance basis. This setup works well for midwifery practices that don’t need these services every day but require occasional expert assistance. Example: A lactation consultant who works with multiple practices and is only needed for certain clients would be an ideal 1099 contractor. 3. When to Classify Midwifery Team Members as W-2 (Employees) While independent contractors can be a good fit for certain roles, many midwifery team members should be classified as employees to ensure a legally compliant and well-supported team. Here are situations where a midwifery practice should classify its workers as W-2 employees: 1. Long-Term, Consistent Work If a team member works regularly, with a fixed schedule, and is expected to be part of your practice for the long-term, they should likely be classified as a W-2 employee. Employees are typically integrated into the business’s operations and their work is essential to the ongoing functioning of the practice. Example: A full-time midwife who works on-call or attends all the births at a particular practice should be classified as an employee since they have a consistent and long-term relationship with the practice. 2. Control Over Work Process One of the key differences between independent contractors and employees is the level of control the employer has over the work process. If you are directing how, when, and where the work is performed, then the person performing the work should likely be classified as a W-2 employee. Example: A midwife who is regularly on call for the practice, is expected to follow specific protocols and practices, and works according to the employer’s guidelines would be considered an employee, not a contractor. 3. Offering Benefits and Paid Time Off Employees are entitled to benefits such as paid time off, health insurance, and unemployment benefits in many cases. If you want to offer these benefits to
What Supplies are in Your Birth Bag?
Supplies in Birth Bag Putting together your first birth Bag is a BIG DEAL! You want to make sure you have everything you need to do multiple births in a row safely and not kill your back long-term. There are many opinions about what supplies should be taken to a home birth. It will vary based on your skill set, educational background, and volume of practice. Here is my recommended list of supplies to have in your birth bags. I carried around 2-3 bags at all times depending on how many ladies were due that month (prenatal & birth bags). Prenatal Bag: 1. Stethoscope (high quality) 2. Blood Pressure Cuff (sm, reg, & lg) 3. Doppler (gel, measuring tape, spare batteries, and good case to hold it) 4. Lubricant (individual packs) 5. Gloves (sterile and non-sterile) 6. Urinalysis strips (including collection cups) 7. Patient Charts (due in the next month) 8. Extra Paperwork (labor, prenatal visits, progress notes, educational handouts, & consents) 9. Pens, Business Cards (appt reminder cards), & Hand Sanitizer Birth Bag: 1. Resuscitation Supplies (newborn ambubags, laryngoscope, delee suction, intubation supplies, oxygen tank, oxygen tubing, bulb syringe, & adult mask) 2. IV Start Supplies (IV Start needles – 18g and 20g, iv start kits, tape, IV tubing, & LR bags) 3. Medications (cytotec, pitocin, lidocaine, erythromycin eye ointment, vitamin K injections, Benadryl, Tylenol, Motrin, and Tums) 4. Instruments (suture set, delivery set, episiotomy scissors, ring forceps, blunt tips scissors, gauze, & allis clamps) 5. Misc Supplies (underpads, needles, syringes, reflex hammer, alcohol swabs, cleaning wipes, hand sanitizer, & gloves – regular and sterile) 6. Newborn Assessment Supplies (baby sling, baby hanging scale, eye light, measuring tape)
What is Your Inner Midwifery Superpower?
Midwifery Superpower I believe we all have an inner superpower. Something we naturally excel at. This isn’t something simple or pragmatic, like being able to pick the perfect-sized Tupperware for leftovers (although that is a major asset several of my friends possess). Your inner superpower is something you have had since childhood. It’s a strength that came to you without working for it. It’s probably something people have commented on for years and years. You Stay Really Calm In The Face Of Conflict And Stress. You Can Deeply Connect And Relate To Other People, Particularly People In Distress You Can See Beauty, Even When The World Or The Moment Appears Ugly To Others. If you have ever watched a Marvel movie, you will also know that superpowers come with strings attached. Many superpowers can be harnessed for good, but exist on the brink of evil. They can serve the superheroes in incredible ways, but they can also be their downfall. Your midwifery superpower is like that too. It is one of your biggest gifts but also a huge weakness if treated with respect and care. My Superpower is to Pull the Best out of Midwives to Make a Stronger and More Accessible Midwifery World! HOW DO YOU KNOW WHAT YOUR INNER SUPERPOWER IS? People have probably referred to your superpower since childhood. Even strangers have probably commented on it. People may even have been a little worried about it. As a young child, I have always been a big dreamer! I would always ask lots of questions and wonder about possibilities. I would sit and daydream for hours about what my future will look like. Today, I use that visionary/futuristic strength to harness inspiration in millions of women worldwide! We can do anything if we learn our inner power and utilize it to our ultimate potential! What strengths do people notice in you? Remember that you may not be harnessing your superpower most effectively, so it might not be something that seems obvious. IS YOUR SUPERPOWER HINDERING YOUR WORK-LIFE BALANCE OR YOUR HAPPINESS? Once you know your inner superpower, you might realize it’s not something you have always seen as a strength. In fact, it might even be something you or other people have seen as a weakness. I know someone who stays unbelievably calm amidst chaos, but people often describe her as emotionally detached. Her superpower does not always serve her. People see it as a weakness. It’s a way in which she is very different than most people. When she uses this superpower in the right way, it is an incredible tool, but it can also leave her vulnerable. All superpowers are like this. You might even feel like your superpower is more of a problem than a strength. Sometimes that’s true. HOW MY FUTURISTIC FOCUS GETS IN THE WAY OF GRATITUDE, HAPPINESS, AND WORK-LIFE BALANCE My superpower helps me work with an intense determination to change the future, but makes it so staying in the present with clients, family, and friends is very challenging for me. I am not fully listening or appreciating the moments in front of me as much as I should. But my superpower is also very present at my weakest moments. My people are talking, it can be hard to not be in my visionary world and tasks I need to get done later today for that to happen. My meditation and life coach support has really helped with honing in on those mental distractions I create from having such a strong future thought process. HOW IS YOUR SUPERPOWER HINDERING YOUR HAPPINESS? If you haven’t yet figured out your superpower, looking at your weaknesses might shed some light. If you haven’t been harnessing your superpower and treating it with care, it’s probably seen as more of a weakness than a strength. Once you know your superpower, you can really reflect on how your superpower doesn’t serve you. In what ways does it make you less happy? How does it make you feel weak, stupid, powerless? Think of times in your life you have been unhappy, stressed, and struggling. How did this superpower play a role? WHAT IS YOUR SUPERPOWER AND HOW CAN YOU HARNESS IT TO CREATE A HAPPIER, MORE BALANCED LIFE? You can ask yourself these key questions to unleash the potential of your superpower. What Is Your Superpower? What Makes Your Superpower Unique And Incredible? What Can You Do To Better Use Your Superpower? What Limitations And Challenges Does Your Superpower Bring With It? What Are Things You Can Do To Overcome Those Limitations? Figuring out your superpower can be challenging. Help other women out by adding a comment about your superpower in the comments so they can see lots of examples of incredible, unique superpowers! Reference: https://behaviorelevationacademy.com/blog2/harnessing-your-female-powers
What is the Average Midwife Salary?
There are Many Different Types of Midwives (we will discuss the two main types present in the US today) and pay potential for each type of midwife. It makes a difference if you are a Certified Professional Midwife (CPM) or a Certified Nurse Midwife (CNM). It makes a difference what you make as a midwife whether you are employed or run your own midwifery practice. I know midwives that can qualify for Medicaid while running their own practices for the first couple years of getting going. I know midwives that are millionaires from creating a multiple birth center franchise model within their community. There isn’t any data out there with hard credibility for midwife salary except for Certified Nurse Midwives. From my consulting experience and being in this industry for the last 20yrs, the average midwife salary for a Certified Professional Midwife is $60-80,000 while working for someone else and then $80-120,000 when working for themselves by being a business owner. Per Bureau of Labor Statistics (BLS), Certified Nurse Midwife salaries continue to increase over the years. Data published by the BLS shows that the average annual wage for nurse midwives was $114,210 as of May 2021. That’s up from $106,910 three years earlier Based on my consulting experience and research analysis of current job postings for midwives across the US, a Certified Nurse Midwife working for a birth center or home birth practice gets offers around $80-100,000 a year. Certified Nurse Midwives can make more with working at the hospital for around $100-130,000 a year with benefits. Once midwives start getting into administration roles with additional responsibilities like Midwife Director, average salary is closer to $140-170,000 a year. When a midwife chooses to start her own business, the salary earned from the midwifery practice can be barely anything to highly lucrative income stream from their practice. You can choose many different midwife service lines to offer and each have more profits than others. Mental health and maternity support tend to be lower revenue streams, but having the right negotiating tools for getting great insurance contracts can change that right around. Women health clinics with more medical and procedural visit focus tend to make more money per visit than midwives focusing on prenatal, birth, and postpartum services. Based on my extensive midwifery experience, the average midwife salary with being a business owner is $120-180,000 a year. Midwives that get employed have a max salary cap around $140,000 if keeping to traditional midwifery skill sets when searching current job postings. There is a wide range of potential salary that a midwife can make based on educational background, where living, trainings, practice setting, and being an employee versus a business owner. Midwives can truly make as little or as much money as they want based on their negotiating and business skills!
What is a Midwife Salary?
Midwifery is an amazing profession. It doesn’t always mean that as a midwife your only job is to catch babies, but to empower women, families and other midwives is power that midwifery continually offer. According to wilsoncenter.org, midwives can provide 87 percent of sexual, reproductive, and maternal health services. They provide nearly constant care for their patients and can often experience “compassion fatigue,” particularly when faced with mistreatment and disrespect, in addition to long work hours. Because midwifery is commonly seen as “women’s work,” it is often devalued. Midwives around the world have reported going several months without a paycheck. In some instances, they are not paid at all. Midwives also report that some obstetricians and systems they work in disrespect them. However, in many low-resource settings, many obstetricians are actually trained by midwives. While midwifery offers great amount of pride and honor, your financial aspects as midwives speaks value as well. It is essential to gain knowledge with how much money you will earn pursuing your midwifery degree and if the value spoken is sufficient enough for you to live while living your dreams and passion. There are many types of midwives and pay ranges based on location (high or low cost of living), educational backdrop (CNM/CM or CPM/LM), certifications, care setting (home, birth center, & hospital), employment status (employee hospital, employee private practice, or business owner). There is lots of data available about Certified Nurse Midwives, but very little data about other midwifery professional backgrounds. To provide references for many midwifery pay standards, I will start with my many years of experience being a midwife and working in multiple settings for myself, locum assignments, hospital, and physicians in many different states and consulting hundreds of midwives across the country with their businesses and job searching needs. Most out of hospital midwives that own their own businesses are Certified Professional Midwives, Licensed Midwives, and Direct Midwives. Their pay really depends on their service model, business structure, location, and fee schedules. I have seen midwives that barely can pay their bills and dependent on their partners income to support the family’s needs (some decided by choice while others wish their businesses supported them). I have seen midwives literally make hundreds of thousands of dollars running a successful midwifery practice. Birth center midwives tend to have higher income levels to themselves as owners. The more services and larger the operation are, the income streams increase exponentially. Midwives that choose to work for someone else are limited in pay based on the salary range and bonuses being offered. Private practices tend to offer less salary ranges than larger institutions can due to financial constraints. Across the US, I see many job posting for CPM/LM positions around $60-90,000 for home and birth center services. For CNM/CM positions around $90-140,000 for hospital-based positions (private practices tend to offer less than large healthcare systems can). I also stress that getting more money in a salary tends to mean that the midwife needs to work harder to make that pay. Business owners expect to make more money off a hired staff than what is being paid to them. The more you make, the more work you have to do for the practice (increased patient volume, less time in office visits, more births/procedures a month, etc). Here are some national data references we gathered to expand your knowledge about midwives’ salaries (mostly Certified Nurse Midwives in the hospital employment setting). Nurse Midwives earned an average salary of $111,130 in 2020. Entry-level positions start at $78,450 per year while most experienced workers make up to $123,934 per year. The best-paid 25 percent made $136,960 that year, while the lowest-paid 25 percent made $91,590. Nurse Midwives earned an average salary of $115,540 in 2020. To summarize everything, a midwife can literally make whatever they want. The biggest factor in getting a higher income is based on increased experience and certifications, working for larger healthcare organizations, starting a business, and transitioning from being self-employed to a business owner mindset. We help midwives all over the country with getting the highest paid job they are searching that fits their passion and location needs. We help start and improve private practices to have more strong foundations and income streams that allow the midwives to really make whatever level of funds from their ventures! Latest Blog: https://midwiferybusinessconsultation.com/writing-and-reading-midwifery-employment-contracts/ References Home. Job Search. (n.d.). Retrieved May 20, 2022, from https://www.indeed.com/career/midwife/salaries The importance of midwives in achieving Universal Health Coverage. Wilson Center. (n.d.). Retrieved May 20, 2022, from https://www.wilsoncenter.org/event/importance-midwives-achieving-universal-health-coverage
What is a Midwife Business Consultant?
Midwife Business Consultant A midwife business consultant is a person who specializes in improving practice revenue, efficiency, and utilization of resources. The topics that can be discussed are billing and coding, start up budgets, accounting, taxes, liability risks, business plan, policies, supplies, training staff, resources, and so much more! A midwife business consultant helps you in whatever capacity your needs are. It is taking your needs and helping you develop or take your midwife business to the next level. At an initial visit, we would analyze what you want to do, what are your challenges, and what are your goals for our services at Midwifery Business Consultation. A team plan would be made to get your goals accomplished. Everyone’s budget and needs are different. Some people have a low funding for start up and are looking at money options to get their business going. We can talk about ways to create a powerful business plan to present to a bank for a Small Business Loan or a financial backing business partner to get your dream midwife birth center going. Consultation Recommendations We could make a one time call to get simple questions answered or make a timeline over next 3, 6, or 12 months of where you want to be and goals to help make that happen. Our expert knowledge and experience will be available to brainstorm and create an individualized plan to make your midwifery business successful and exactly what you had envisioned it would be. Everyone is in a different place with their practice. Some people have been established for a long time, but getting burnt out from less and less income while time at office is increasing. Professional burnout is a huge challenge and I want midwives to be passionate about midwifery everyday without dread of business pressure dragging down their birth vibes. I went through a year of professional burnout and don’t want any midwife to go down that dark path. More Knowledge More Financial Gains When looking at the costs of any supply or service in business and life, consider the return on investment rule. Whatever time or money you are putting into something should be at least that amount but goal is so much more. Knowledge is truly power. Money can come and go, but knowledge stays with you forever. Even if the financial kickback isn’t tomorrow, look at the long term financial gain of learning from other midwife’s mistakes and business hiccups that costs clients to care for and thousands of dollars in revenue. Think of all your valuable time being focused on the patient versus learning every business aspect of midwifery clinic side. Our expert knowledge can help accelerate your profits and success. We would love to help you at any level you are at. I have worked in a large hospital with high risk women, small community based hospital with limited resources, private home birth practice, private birth center, private women’s health clinic, and done extensive administration midwifery roles. With our combined minds, we will create and grow your midwifery business to a level you didn’t even think was possible! Checkout our amazing teachable courses here at www.midwiferybusinessconsultation.teachable.com
WHAT INSPIRES YOUR MIDWIFERY DREAMS?
Have you ever heard about the famous phrase of Brian Tracy “There are no limits of what you can accomplish, except the limits you place on your own thinking?” People as we are, we are limitless, we know how to thrive for more, we are eager for success, but sometimes, we just stop working on what we love and what we want. Why? Because we are uninspired and unmotivated, we can’t find any reason to push through anymore and to finish what we have started. This is why we need to find an inspiration and motivation. It’s important to understand the significance of inspiration within yourself because this is your indispensable factor or influence that gives you strength and vitality. Psychologists Todd M. Thrash and Andrew J. Elliot has noted these core aspects of inspiration: evocation, transcendence, and approach motivation. First, inspiration is evoked spontaneously without intention. Inspiration is also transcendent of our more animalistic and self-serving concerns and limitations. Such transcendence often involves a moment of clarity and awareness of new possibilities. As Thrash and Elliot note, “The heights of human motivation spring from the beauty and goodness that precede us and awaken us to better possibilities.” This moment of clarity is often vivid, and can take the form of a grand vision, or a “seeing” of something one has not seen before (but that was probably always there). Finally, inspiration involves approach motivation, in which the individual strives to transmit, express, or actualize a new idea or vision. According to Thrash and Elliot, inspiration involves both being inspired by something and acting on that inspiration. We all love to be inspired by people we admire — our boss, our spouse, someone who has accomplished great things. It makes us feel good, and it motivates us to do great things ourselves at work, home, or in our communities. We can learn powerful lessons from those who inspire us that we can use to inspire the people in our lives. Ines Temple, president of LHH-DBM Peru and LHH Chile — and author of the best-selling book Usted S.A. Empleabilidad y Marketing Personal — believes that understanding what inspires us is the key to learning how to inspire others. Here, according to Ines, are 11 ways she is inspired by others. Consider how you can inspire the people in your own work and life in the same powerful ways. 1. I am inspired by people who feel enthusiastic about their job, their life, or their family, and who convey their enthusiasm and good energy to me. Being with people who are passionate about what they do makes me feel good, and they are an example to me. They inject their enthusiasm and prompt me to make my best efforts too. 2. I am inspired by someone who is capable of pointing out possibilities that I had not considered, that I thought were unattainable, or that I never dared to dream of or expect. This inspiration is powerful and works as a major driving force of my development and growth. 3. I am inspired by people who believe in me and make me feel worthy, accepted, and approved. People who, if I make a mistake or if things don’t go well the first time, can point this out with a sense of “it didn’t go well this time” or “you will do better next time.” I am most inspired when people trust my ability to learn, change, and improve! 4. I am very much inspired by someone who conveys an optimistic vision of the future that makes sense to me, especially if that vision focuses on the opportunities or possibilities that I will have, and on what these opportunities will mean to me. I make that vision my own very fast and fully, and I strive for it. 5. I am much inspired by people who try to see the best in me and focus on it when dealing with me. If they see me with flying colors from day one, assuming that I always give the best of me, that drives me to live up to the good image that they already have of me and my reputation. 6. I am inspired when any problems that may arise are set forth transparently before me, with emphasis on the possible solutions and, especially, on what is expected of me. This makes me feel worthy and respected, that the person takes me into account, and this helps me feel capable of coping with any problems and doing what has to be done to solve them! 7. I am inspired by serious people, by people with values who don’t lie to me or use me for their own purposes or to cover up their misdoing. I am inspired by those who place the common interest above their ego, as hard as it may be. 8. I am inspired by those who can resist the temptation to be negative and don’t pay heed to those who gossip to hide their own frustrations — those who see only bad in others inspire no one, they achieve nothing, they are worth nothing. I am inspired by those who celebrate happily the success of others because this is how they show their own strength and greatness. I enjoy their company and they give me energy. 9. I am inspired when someone who is generating changes explains to me, step by step, patiently and well ahead of such changes, how these will affect me (hopefully, not for long), or, even better, how they will benefit me. I am most inspired by being told they need me to implement these changes! 10. I am inspired by the boss or leader who is capable of showing his or her vulnerability. I can relate to that person immediately. When I can relate their weaknesses to mine, I cease to be afraid of them, and this new confidence brings out the best in me. 11. I am inspired by people who know
What does Covid 19 Mean for Midwifery?
Covid 19 for Midwifery Midwifery is in Higher Demand than Ever Before! Covid 19 has made families realize that hospital means “sick house” and not the best place to be delivering normal, healthy babies. We have been given an immense opportunity to fill a need with the pandemic and need to take advantage of the midwifery momentum at play. Speak and email with your local government representatives. This crisis is a time for barriers to practice and birth center regulations to be relaxed so that midwifery can care for families to their full scope safely. Having a need for physician collaboration to practice and write prescriptions only makes midwifery harder for families to find, not improve outcomes. Midwifery has a due obligation to advocate for our families within community and on a state level. Creating a Sound Running Midwifery Business is More Needed than Ever! We need to have extra financial reserves to write these waves on insurance reimbursement delays, increase costs for personal protection for staff, and high prices of routine supplies due to break downs in shipping and business functions from Covid-19. Midwifery businesses need to be thriving during this pandemic, not struggling to stay afloat. Having a student with you to grow our midwifery community during these busy times is even more needed than ever. It is our duty to pass on our knowledge to the next generation of midwives and have more midwifery practices in the future. More and More Midwives are Retiring and Getting Burnt Out We need to work together and strengthen our midwifery businesses, not compete with each other. Provide back up coverage for each other. Help prevent professional burnout to our birth colleagues. Get creative with local zoning about turning a hotel or bed and breakfast home into a birth center for midwifery community to pull their home birth clients together and deliver at the same location. Buy supplies in bulk with other midwifery practices. AABC has great blogs of midwifery practices already doing this! We have many options to improve our practices while still giving great care. There are so many women actively looking for out of hospital births and midwives needs to find creative ways to handle the pandemic to serve them all. COVID has transformed nearly every aspect of healthcare, pregnancy included. Pregnant clients face an increased risk with the infection, making it vital for midwives to know what to do in the face of this illness. This course has been created to provide crucial knowledge whether you’ve been practicing since before the pandemic or are just starting out in this career. When you purchase this class, Covid care tips for midwives you’ll have access to over five hours of the latest content regarding the COVID pandemic. You’ll learn everything from the breakdown of this illness to how to treat parents and newborns who have been infected. Check out our Amazing courses here at https://midwiferybusinessconsultation.teachable.com
What Are The First Steps In Creating A Midwifery Practice
Creating a midwifery practice I get asked this question often so I thought it would be great to spread this advice to the masses. So many midwives have an amazing dream practice. I get the privilege of hearing so many amazing dreams and goals to change the face of midwifery as we know it. The biggest challenge isn’t the dreaming part, it is the application part. How do you start a practice when you have never run a business before? What are the first steps in making this a reality? Many people can visualize the final product very well, few can visualize the strategic planning needs that are required to make that midwife practice actually open. Becoming an entrepreneur I don’t feel our society does a great job of training anyone to be a successful business owner. We are taught from a very young age to work for someone else as employees and get paychecks. It is a totally different mindset and planning process to become an entrepreneur. When I meet with clients for the first time, we talk a lot about their passions, goals, backdrop stories to midwifery, hobbies, life drivers, and pain points they want to overcome. Anytime you are in the early planning stages of your business, it is great to make a business plan and Small Business Administration (SBA – Write your business plan (sba.gov)) has a lot of resources to help get that part started. Many people don’t realize that you need to be planning early on how I am going to get my mindset shifted towards business owner and investor versus employee and self-employment. There are two complete mindsets and lifetime financial pathways you can choose from. When I ask midwives questions like, “Do you want to stay small and simple home birth practice or expand into a team with multiple birth centers?” Most will want to be business owners and we spend much of our time getting them to think like a business owner versus self-employed while doing the business planning process. The biggest shift is to stop thinking about exchanging your own time for money . Stop thinking about what I can directly do to make money and serve families. The shift becomes real when clients start making strategic plans that are along the lines of, “What systems can I put into place with my midwife practice to serve more families? Who are the experts in my community I can get to join my dream practice? As soon as your mind starts working like a business owner, planning and running the day-to-day operations of any business gets a THOUSAND TIMES EASIER! The best advice I can give in practice early planning stages is to continually do professional development with your own leadership and business skills at the same time you are planning all the things to make your midwife practice run well. I always stress that I can help you write the best business plan to get funding, but only you can apply this business plan and actually make sure the systems are running as recommended in the business plan. There is a reason that 90% of small businesses fail in the first 5 years. It usually has nothing to do with this business venture itself, it has to do with the person managing the business. Take some time to think about simple, little changes in your life you can be doing now to help improve your knowledge and skills around business (stop listening to the radio to home visits and start listening to audiobooks and podcasts, find a business mentor in your community, or just start critically thinking about how you are processing decisions in your life – are you still think how can I exchange my precious time for money or how can I create amazing service teams that serve the families I love?) Great books to read: Think and Grow Rich, Cash Flow Quadrants, & Compounding Effect Tips for Writing a Midwifery Business Plan is a course we created using our own experience in the industry.
What are the Different Types of Business Entities?
Upon starting your Midwifery Business, it is important to know and choose what type of business entities you will undertake. Choosing the right type of business is an essential step, but it requires knowledge regarding the different types as well as an estimate of the size and structure of your business. Regardless of the business domain that your organization operates in, the business type has a direct impact on its long-term success. Below are the types of Business Entities that you can review when you start your own Midwifery Practice. 1. Sole Proprietorship This is a business run by one individual for his or her own benefit. It is the simplest form of business organization. Proprietorships have no existence apart from the owners. The liabilities associated with the business are the personal liabilities of the owner, and the business terminates upon the proprietor’s death. The proprietor undertakes the risks of the business to the extent of his/her assets, whether used in the business or personally owned. Single proprietors include professional people, service providers, and retailers who are “in business for themselves.” Although a sole proprietorship is not a separate legal entity from its owner, it is a separate entity for accounting purposes. Financial activities of the business (e.g., receipt of fees) are maintained separately from the person’s personal financial activities (e.g., house payment). 2. Partnerships-General and Limited A general partnership is an agreement, expressed or implied, between two or more persons who join together to carry on a business venture for profit. Each partner contributes money, property, labor, or skill; each shares in the profits and losses of the business; and each has unlimited personal liability for the debts of the business. Limited partnerships limit the personal liability of individual partners for the debts of the business according to the amount they have invested. Partners must file a certificate of limited partnership with state authorities. Limited Liability Company (LLC) An LLC is a hybrid between a partnership and a corporation. Members of an LLC have operational flexibility and income benefits similar to a partnership but also have limited liability exposure. While this seems very similar to a limited partnership, there are significant legal and statutory differences. Consultation with an attorney to determine the best entity is recommended. 3. Corporation A corporation is a legal entity, operating under state law, whose scope of activity and name are restricted by its charter. Articles of incorporation must be filed with the state to establish a corporation. Stockholders’ are protected from liability and those stockholders who are also employees may be able to take advantage of some tax-free benefits, such as health insurance. There is double taxation with a C corporation, first through taxes on profits and second on taxes on stockholder dividends (as capital gains). 4. Small Business Corporation (S-Corporation) Subchapter S-corporations are special closed corporations (limits exist on the number of members) created to provide small corporations with a tax advantage, if IRS Code requirements are met. Corporate taxes are waived and reported by the owners on their individual federal income tax returns, avoiding the “double taxation” of regular corporations. Advantages/Disadvantages Sole Proprietorship Simplicity of organization-this is the most common form of business organization in the United States because it is the easiest and least expensive to establish. Minimum legal restriction-fewer reports have to be filed with government agencies. There are no charter restrictions on operations. Ease of discontinuance-the business can be terminated at the will of the owner. The owner is truly the boss, making all decisions, keeping all profits, and assuming responsibility for all losses and debts. Difficulty in raising capital-this can be a problem since an individual’s resources are typically less than the pooled resources of partners. Limited life of the business-untimely, unanticipated, or unplanned removal of the proprietor from the operation of the business may have ramifications for creditors. Unlimited liability-this is by far the greatest disadvantage to the proprietorship. Even though proprietors may invest only part of their capital in the business, they remain personally liable to the full extent of their assets for the liabilities of the business. Partnership Greater possible capital availability Greater resources for decision making, support, creative activity Unlimited liability in general partnerships Divided authority-having to divide the authority for making decisions among the partners can delay the decision-making process and occasionally lead to disagreement. Limited Liability Company Allow greatest flexibility for customizing the structure of the business Limits member liability In many states, an LLC may have only one member (have the benefits of a sole proprietorship but limits liability). Requires comprehensive operating agreement because of the high degree of variability/flexibility Corporation/S-Corporation Limited liability to stockholders-liability is limited up to the amount invested personally in the business. In addition, personal assets may not be seized by creditors to satisfy debts (although now creditors often request personal guarantees on business loans). Perpetual life-the business continues as a legal entity. Shares in the corporation can be passed on to heirs. Ease of transferring ownership-stockholders can sell their shares when they desire, if there is a market. Ease of expansion of the company-greater capacity to raise capital by legal sale of stock. Government regulation-a corporate charter must be obtained from the state, and the corporation is subject to all state and record keeping regulations that pertain to corporations. Costs to organize a corporation are higher. Unless permission is obtained from other states, the corporate charter restricts operation to the state where it was issued. Double taxation feature unless S-Corporation election is made. It is crucial and important to choose the right type of legal structure for your launched midwifery practice that will operate under. Being introduced to what your options are when it comes to business type and structure is vital for the success of your practice in the future. No business structure is fundamentally superior to another, with each one being appropriate in different situations for particular business objectives. Know your capacity, can you do it on your own? Do you need a partner? Or do