W-2 vs Self Employed: What are the Pros and Cons?

As a midwife, we can choose to work for a doctor, hospital, government program, or another midwife. Many midwives that aren’t CNMs, they have to be self employed to practice midwifery. Most home birth practices are created by CPMs, Direct Entry Midwives, and Lay Midwives. CNMs typically deliver in the hospital and work for someone else.

If you knew the true risks and benefits of working on your own, would business running be more tempting venture? Starting your own practice isn’t for everyone. Some people need the paycheck security blanket in life. Some people are the opposite, some people need to be their own bosses and do things “their way.”

My goal with this article is to help determine if business ownership and starting your own midwifery empire is the right fit. Business ownership is hard. I think working for someone else is harder. In the beginning, many business owners put in LONG hours to see their baby succeed and prosper. With the proper prep and education about business plans and finances, they don’t have to start out that way. Create a business structure that has a strong administration team from beginning to do the work. Find investors to partner or loan money for your dream midwifery clinic. Don’t be the expert and staff member doing everything the first year. Hire the resources and expertise to build your dream practice.

Cons are not having a consistent paycheck to rely on. Business owners need to have an emergency account for the ebs and flow of business ownership. Sometimes funds are delayed or unexpected costs arise. With working for a hospital, whether the women pays for her services, your pay check is direct deposited into your checking account.

There is no one telling you to get for work in morning. You need to be self motivated. There are no yearly evaluations, tardy sleeps, satisfactory reports to meet. If customers aren’t happy with your services or business, you won’t get paid. If you decide to take a week off and not work on your business, your finances will see a direct impact from that decision.

Midwives are very good at caring for women and their families. We are weak at money, business ownership, and accounting. There are no classes required for midwifery school about these topics. We want to serve everyone and will short ourselves financially to make this women’s birth happen with our team.

When I hear midwives talk about job security with working for someone else like a hospital, I always laugh in my head. Working for a system is the least secure way to make money. Budgets and administration goals for organization can change quickly and I have seen midwives many times be the first ones to be “let go.” When you run your own business, you are accountable for you. I will always invest and secure my own financial freedom. My security is in me and no one else.

Job security, save for retirement, and hope the system will support me is a middle class myth of financial freedom. I made a decision to think like the rich when my world was turned upside down financially. I taught myself about business, finances, wealth, and financial freedom. I created many different passive income streams so I could choose to be at home or run a midwifery practice. I want to be a midwife, because it makes me happy (not because I have bills to pay). Anyone can do it, it takes training just like becoming a midwife.

Personal freedom of choice. You can decide when to work, what patients to see, what your practice will look like, what policies are outdated and can be changed instantly versus years of hospital board meetings to see change happen. I really cherish knowing I can pick who I see, what days I will leave office early to pick up my kids from school, or how much time I spend with a patient. There isn’t a Office Manager breathing down my neck saying I am not meeting my “quota” for the day.

Tax savings are huge for business owners. There are few tax deductions for W-2 employees. There are hundreds of things you can write off with your business tax free that you are currently paying for with your paycheck money. Home office space, cell phone, computer, driving in car, food, or so much more. The overall wealthiest people in the United States have two key concepts in common: business ownership and real estate investing.

Accountability can be positive or negative depending on how you look at it. When a person works for a big health system, complaints are filtered through a department and rarely is one person the challenge. If you are a business owner, responsible for care and services being rendered ultimately lands on your shoulders. Even if you hire staff, their actions reflect on you. If a customer is unhappy, business owner is responsible vs employee keeps seeing the next patient while administration handles the unsatisfied patients.

I love watching “Island Hunters.” When the island investors talk about their professional backgrounds, pretty much all of them are real estate investors or business owner. You don’t see people that work for someone else buying these islands.

Midwives can have an infinite wealth creation with business ownership. If you choose to work for someone else, you are trading your time for money. There are only so many hours in the day to work, so your income potential plateaus. Owning a midwife business allows you to create a potential limitless income stream passively or from your own invested time.