Six Ways On How To Quit Your Job And Start Working On Your Passion
There are people who find 9–5 jobs boring. When you hear them describe their job, it sounds like a prison sentence with roadside manual labor and the ol’ shackle and chains. Their job makes them a prisoner and they hate it. Others love their 9–5 job. They go to work and enjoy that they have zero ownership in the company and can walk away at any time without any liability.
Falling into the trap of a 9–5 job you hate is easy. Getting out is the challenging part. But if you have made up your mind that you never want to work for a boss again, then you can choose to transition out. Here’s how to really quit your 9–5 job if that is your goal.
Work on your taxes
“Taxes are an integral part of financial planning,” Jonathan Medows, expert CPA contributor at the Freelancers Union, shares. “A major percentage of your profit will go to taxes, and you should plan accordingly.” Hook up with an accountant who can walk you through it all and one who can help you navigate the dreaded quarterly tax process.
Gather an emergency fund
“While working full time as a W-2 employee, your income is very steady. As a freelancer, your income may get more volatile,” Nick Holeman, CFP and Head of Financial Planning at Betterment, says. “Consider increasing the size of your emergency fund. Think of this as giving yourself more runway to allow your business to get off the ground and succeed.”
Enlist your loved ones
“If you’re in a relationship, you need buy-in and support from your partner. Start the conversation early,” Ramit Sethi, personal finance expert and founder of I Will Teach You to Be Rich, says. He suggests the following script: “I’m thinking of going full time with this business. I know it might be risky, but I’m working on a plan so we’ll be comfortable. I want to know what you think — would you be OK with this? Let’s talk about this together.”
Treat yourself like the business you are
“Open a business checking account and funnel all business income and expenses through that account, not your personal one,” Kelsey Sheehy, small business specialist at NerdWallet, says. She also notes the need for a separate tax account. “You’re taxed as a business owner, which means roughly 30% of any income earned, after expenses, belongs to the IRS. You have to estimate what you owe and pay taxes quarterly to avoid interest and penalties.”
Still plan to retire one day
“If your employer matches your 401(k) contributions, you should plan on this expense coming out of your pocket when you move to freelance work,” Matt Frankel, CFP and contributing analyst for The Ascent, says. “Plus, you’ll need to open your own retirement account, something that an employer generally handles on your behalf.”
Know your potential to scale
Once you know how much you’ll need to quit your day job, it’s time to tally that amount against what you’re currently bringing in from your side hustle and what you can expect to bring in once you’re doing it full-time. You may decide to wait until you’re bringing in exactly what you’ll need, or you may decide to leap with the faith that having more time to devote to your business will enable you to quickly scale to reach that amount.