Over half a million babies are born in the UK each year. And though maternity leave is common, men can also benefit from leave when they welcome a new child. But, self-employed fathers-to-be may need to plan for paternity allowance themselves. A plan can help you maintain financial stability while welcoming and caring for a new family member.
This guide will discuss paternity allowance for self-employed workers, including:
- What is paternity allowance?
- Why is paternity allowance important?
- How can you plan for paternity allowance as a self-employed person?
What is paternity allowance?
Paternity allowance is when a new father gets time off work to help provide child care to a newborn or adopted family member. The UK government offers most employed persons one or two weeks of statutory paternity leave. Employed fathers may have paid or unpaid leave, but they maintain employment rights like earning raises, building up holidays, and being eligible to return to work.
With that said, self-employed people are not entitled to paternity allowance, which means they may want to plan for it themselves. Planning will help fathers care for new children without worrying about their job or income.
For self-employed persons, paternity allowance means you’ll need to save a percentage of your income over time to create a fund. By saving in advance, you can be ready when the time comes.
Why is paternity allowance important?
Parenting is a full-time job. So, when you introduce a child to your life, it’s helpful to take leave to adjust. Since there’s no equivalent to statutory paternity leave for self-employed persons, you’ll need a plan to give yourself time to care for your newborn.
Paternity allowance will allow you to set aside time to care for your new family member. You can also save up funds to give yourself paid leave. As a result, you’ll be able to help with and afford childcare, which can take significant stress off your shoulders during a busy time.
As a self-employed person, preparing for paternity allowance will allow you to maintain financial stability and client upkeep while focusing on your new family member. Instead of struggling to figure out what to do when the time comes, advanced planning shows you what to expect and how to support your business operations.
How can you plan for paternity allowance as a self-employed person?
It may be intimidating that self-employed persons aren’t entitled to paternity allowance. But if you plan for it, you won’t have to worry. We’ll explain how to get started.
Organise your finances
To financially prepare for paternity allowance, you’ll need well-organised finances. This way, you’ll be more aware of what you earn and spend for your business, and you can easily set money aside for your paternity leave.
Accounting software will help you organise your business finances for better accuracy and transparency. For example, Countingup’s two in one business account and accounting software gathers your financial data in one place and saves you time with financial management. As a result, you can better understand what you earn and where that money goes.
The app allows you to create and send invoices on the go, organise your expenses with automatic categorisation, and quickly store receipts with the receipt capture tool. Plus, the app generates year-round tax estimates and cash flow insights. This way, you can avoid surprises during tax season and plan business growth based on your cash availability.
These tools will not only make financial management more efficient, but they’ll help you plan for paternity allowance. Being aware of your money and average cash flow will show how leave may affect your earnings. This knowledge will make it easier to prepare for a few weeks away from work, so you can focus on caring for your new child.
Put money aside
Once you organise your finances, incorporate paternity allowance into your financial planning. Say you want to take two weeks off work when your child comes. To save up for leave, you could set aside about 5% of your weekly earnings over a year or longer. Then, pay yourself with these funds when the time comes.
When deciding what to put aside for paternity allowance, you could look at your income statement. This data can show your regular business expenses that will continue even while away from work. You can also factor in the lack of client work and save up to fill that gap. With good planning, you may even arrange for more paternity leave than most employed persons.
Build a plan
When you welcome a child, taking leave will likely impact your work and income as a self-employed person. But, if you put together a plan for this situation, it can help you maintain your customers and protect your business.
So, consider compiling a plan as part of your long-term business strategy for how you’ll manage and maintain your client base. Maybe you can complete projects in advance or offer clients a discount if they remain loyal. It may be as simple as sending out an email newsletter or announcement to inform people where you’ll be and when you will return.
Putting these plans together will help you focus on quality time with your new child instead of worrying about your business.
Prepare your paternity allowance finances with Countingup
Planning for paternity allowance requires organised financial records. Thousands of business owners use the Countingup app to make their financial management easier.
Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are.
You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward!
Find out more here.