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.

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