What Self-Employment Taught Me About My Family's Financial Legacy: Part I

image: Martha Aguilar x DALL-E

After taking the plunge from employed to self-employed, I've noticed a few similarities between being employed and family dynamics.

Becoming self-employed can be quite the culture shock. Wave goodbye to the cushy world of direct deposits, paid time-off, and company-sponsored 401(k)s, and say “Hello” to the unpredictable currents of being your own boss and figuring out how to keep the lights on. 

For a stability-seeking Capricorn like myself, that’s pretty terrifying. But after decades in toxic work environments and the frustrations of the 2020 pandemic; I made the choice to go from a W-2 employee to a self-employed therapist in private practice. Though I always knew I wanted to work for myself, the transition was quite the wake-up call complete with stressful days and long hours of frustration. It’s also been an experience packed with important lessons and some interesting revelations.

In this two-part blog series, we’ll explore the wild world of self-employment, its daunting responsibilities; and how the experiences of being employed often mirror our family dynamics.

Team of One: Mastering a Multitude of Hats

Making the leap from having a boss to being the boss is not just swapping titles. It's being thrust into a high-wire circus act—no safety net—while dodging knife-throwers and juggling flaming torches. 

In opening a private practice, there were many late-night Google binges about procedures and regulations; asking new questions like "Are pro bono services a tax write-off?", and learning new terms like “clawbacks” and “single case agreement.” This crash course in entrepreneurship was a whirlwind of business admin nightmares, spiced with a generous dash of existential dread. 

Sounds fun right? While asking yourself to approve your time off definitely has its benefits, opening a private practice has its own special flavor of chaos. Ready to dive in? 

In starting a private practice, you’re not just the therapist. Oh no, you’re also:

• CEO, CFO, COO of All the Things: You’re running the show from top to bottom.

• Marketing Guru: You’re the mastermind behind social media posts, newsletters, and networking events.   

• IT Specialist: You’re the go-to for HIPAA-compliant cybersecurity, fixing software glitches, and smoothing out network issues.

• Insurance Biller: You're the wizard billing insurance companies on different platforms, navigating credentialing, tracking billed sessions, using the right codes to avoid clawbacks, fixing inevitable claim errors, and chasing down payments when insurers decide you really don’t need 53 minutes of psychotherapy.

• Accountant: You're tracking co-pays, session fees, insurance payments, and business expenses like malpractice insurance. Plus, you’re on the hook for quarterly taxes—get them right or face the wrath of the IRS.

• Administrator: You’re keeping all professional, city, and state licenses up to date, handling rent and utilities, tracking your CEU hours, scheduling intakes, cancellations, and reschedules. Oh, and don’t forget setting up your business entity—Sole Prop, LLC, S-Corp?. Pick your poison.

• Legal Department: You’re staying ahead of changing licensing and practice requirements, ensuring HIPAA compliance is in place, and maintaining airtight client confidentiality policies.

• HR: You’re juggling health insurance and setting up retirement plans.

• Janitor: Because someone’s gotta do it.

So there you go. Welcome to the world of private practice—where you’re wearing all the hats, often at the same time, and somehow, you’re still making it work.

The Never-Ending To-Do List with a Side of Imposter Syndrome

Just when you think you've got a handle on your multiple roles, a fresh batch of chaos swoops in. The insurance company wants to audit claims from two years ago, the state licensing board decides to rewrite the rules on a whim, and your website crashes because... well…computers. It’s like playing whack-a-mole; every time you smack one problem down, two more pop up. Then imposter syndrome waltzes in, whispering, “Who are you kidding? You can't handle this!”

Show Me the Money (or Not)

Now, I've had my share of years in survival mode, struggling to keep my head above water. When your paycheck isn't enough to cover basics, you count every cent. When I eventually gained financial stability, those steady paychecks became a life raft and I could finally stop treading water. Naturally, I was content to let the raft keep me afloat by showing up and getting paid.

But in self-employment, money is no longer a paycheck that holds you above water. Every dollar your business makes is dependent on you hard work and creativity. You’re now hyper-aware of the longevity of every cent because it’s the lifeblood of your practice and livelihood. This heightened financial mindfulness can be both exhilarating and terrifying.

So, where does that dollar go? Let's break it down:

The Non-Negotiables:

• Taxes: Estimated Quarterly Taxes (Federal and State).

• Licensing Fees: City business licenses and professional licenses

• License Maintenance: Required trainings for continuing education units (CEUs)

The Usual Suspects:

• Office Rent: If you have a physical office space.

• Virtual Mail/Office or Registered Agent: If you work from home.

• Malpractice Insurance: Varies by state and situation, but seriously, don’t skip this.

• Health Insurance: To keep you healthy because you need to be functional to run your business.

• Retirement Plans: Funding your future because, if you can work forever, you likely don't want to.

• EMR Hosting Costs: For storing your electronic medical records in compliance with HIPAA.

• Video Conference Hosting: if you provide telehealth services.

• Credit Card Processing Fees: If you accept plastic.

The Optionals (But Are They Really?):

• Association Memberships: Useful for networking, keeping up on current trends in health, financial opportunties, and training resources.

• Website Cost: If you want a landing space for others to know more about you and your work.

• Directory Fees: If you want to increase the possibility of people fining you.

Every entity takes their cut to keep you compliant and operational. So, while you’re counting those dollars, you have to remember they’re doing a lot of legwork behind the scenes.

Cue the Self-Employment Learning Curve: It's a Steep One

The learning curve keeps you constantly scrambling to keep up, juggling more unpaid hours than when you were employed, and wondering if you've made the right choice to go solo.

Starting anything, can be a tough grind in the first few years. They don’t have to be, but let’s be real—they probably will be. Politics, the economy, technological progress—any of these can make your job obsolete in a heartbeat. Just look at how many businesses folded because of the pandemic.

Your livelihood depends on landing work and learning and doing everything to make that work happen. You don’t just show up and get paid; you’ve got to hustle to make the money flow.

So What About the Family Part?

Going through this process has shown me how much family dynamics and being employed can mirror each other. In work and family, we often stay in toxic situations for the illusion of safety, forgetting that comfort can disappear overnight. We might stick around longer than we want, causing anxiety, guilt, and self-doubt. Sometimes we think we can't leave, have faith that things will change, or feel obligated to stay. Next thing you know, years go by and the stress and frustration take their toll, leading to burnout and a depletion of your mental and emotional well-being.

But what really stood out ot me was how receiving that paycheck and benefits has the same impact as coming from a family where financial bail out is just a phone call away. If you don't wipe the sleep from your eyes, both work and family can make you finically ignorant, irresponsible, and lazy.

But more on that in Part II.

Transitioning from employee to self-employed is a rollercoaster ride with exhilarating highs and gut-wrenching lows. But it's also a journey of self-discovery, revealing unexpected connections between our professional lives and family experiences. In part two, we'll dive deeper into these parallels and share the lessons learned along the way. So buckle up—this ride is just getting started!

#selfemployed #therapistlife #privatepractice #entrepreneurship #familydynamics #mentalhealth

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Disclaimer: This blog post is crafted with the assistance of Google Gemini and Chat GPT-4 for research and editing purposes. No advertisements or paid affiliations are associated with its content.