Question 1

What is a Quit Number?

Accepted Answer

Your Quit Number is the monthly net business income you need to safely replace your W-2 job. It accounts for your salary, lost employer benefits (health insurance, 401k match), and the extra self-employment tax you will owe. It is always higher than your take-home pay because of these added costs.

Question 2

How is the Quit Number different from my salary?

Accepted Answer

Your salary does not include the benefits your employer pays on your behalf. Health insurance alone can add $500-$1,500 per month. Your employer also pays half of your Social Security and Medicare taxes. When you go self-employed, you pay the full 15.3% yourself. These costs mean your Quit Number is typically 25-40% higher than your monthly salary.

Question 3

How many months above my Quit Number should I be before quitting?

Accepted Answer

Most financial advisors recommend at least 3 consecutive months of business income above your Quit Number before making the transition. One strong month can be a fluke. Three months shows a pattern. Combine that with a fully funded emergency reserve and you have a solid foundation.

Question 4

What is a good emergency fund before going full-time?

Accepted Answer

Six months of personal expenses (including the cost of health insurance and any benefits you need to replace) is the standard recommendation. Some business owners target 9-12 months for extra security, especially if their revenue is seasonal or project-based.

Question 5

Does the calculator account for income taxes beyond self-employment tax?

Accepted Answer

The calculator focuses on self-employment tax (Social Security + Medicare) because that is the new cost you did not pay as a W-2 employee. Federal and state income taxes apply whether you are employed or self-employed, so they do not change your Quit Number. However, you will need to make quarterly estimated payments once you leave your job.

What's Your Quit Number? for HVAC

What's Your Quit Number?

Ready to use your real numbers?

More Calculators for HVAC Businesses

What's Your Quit Number? for Other Industries

Related Articles