How to tell your boss you're leaving to start a business

When to hand in your notice

Don't resign until the numbers work. Work out your monthly costs and how long your savings will last with the quit your job calculator, and ideally have some paying customers before you go.

Then think about timing at work. Check when any bonus, pay rise or share scheme is due, because some only pay out if you're still employed, or haven't resigned, on a set date. Resigning halfway through a project you lead can also cost goodwill you'll want later.

Choose a day when your manager has time to talk properly. Early in the week is usually better than a Friday afternoon.

Check your notice period, holiday and contract first

By law you have to give at least one week's notice once you've worked somewhere for a month, but most contracts ask for more. Check yours and work out your exact last working day before you have the conversation.

Holiday matters too. When you leave, your employer has to pay you for any statutory holiday you've built up and not taken. You can ask to use some of it during your notice period, and your employer can also tell you to take holiday, as long as they give you notice at least twice as long as the leave itself.

Finally, look for restrictive covenants. These limit what you can do after you leave, such as competing with your employer, approaching their clients or hiring your colleagues. They matter most if your business is in the same field as your job, so read them before you plan who your first customers will be.

How to tell your manager

Tell your manager first, in person or on a video call, then follow up in writing the same day. Hearing it from a colleague before you've told them is the quickest way to sour things.

• Start with the news: you've decided to leave to start your own business.
• Give your last working day, based on your notice period.
• Thank them for something specific.
• Offer a proper handover and ask how they'd like to tell the team.
• Keep the business plans brief. You don't have to justify your decision.

Handling questions and counter-offers

Your manager might ask what the business is, whether you're sure, or whether anything would make you stay. Some will offer more money, a promotion or more flexible hours. Decide beforehand what, if anything, would change your mind, so you're not making that call on the spot.

If you'd like to say it out loud before the real thing, Exitnine's pitch practice lets you role play the conversation and try different answers to the awkward questions.

How to write a resignation letter (with a sample)

You don't legally have to resign in writing, but you should. A letter or email records the date you gave notice, which settles any disagreement about your last day. Send it to your manager or HR and ask them to confirm they've received it.

Keep it short. It isn't the place for reasons or complaints. Here's a sample you can adapt.

• Dear [manager's name],
• Please accept this letter as formal notice of my resignation from my role as [job title]. My notice period is [length], so my last working day will be [date].
• I'm leaving to start my own business. I've valued my time here, particularly [something specific], and I'm grateful for the support I've had.
• I'll do all I can to make the handover smooth over the coming weeks. Please let me know how you'd like to arrange it.
• Kind regards, [your name]

Garden leave, leaving early and restrictive covenants

Your employer might put you on garden leave. That means you don't work some or all of your notice, but you're still employed and still paid as normal, including contractual benefits. Your contract still applies, and garden leave clauses usually stop you working for anyone else, yourself included, until your end date. Check before you plan a launch day.

If you want to leave sooner, you can ask. Your employer might let you go early without pay for the rest of your notice, or pay you in lieu of notice. They don't have to agree, and walking out before your notice ends without agreement is likely to be a breach of contract.

Restrictive covenants can apply for months after your last day. They're only enforceable if they protect a genuine business interest and go no further than needed, and Citizens Advice says they typically last 3 to 6 months. The government has consulted on limiting non-compete clauses, but at the time of writing the existing rules still apply. If a clause would stop your business working, raise it before you leave. Employers will sometimes agree in writing to narrow or waive it. This is general information, so speak to Acas or an employment solicitor if you're unsure. There's more on this in can you start a business while employed.

Stay on good terms: your employer could become a client

Your old employer knows your work better than anyone. If your business uses the same skills, they may be glad to hire you on a freelance basis when a gap appears, either straight away or a few months later.

It's also worth asking about a halfway step. Going down to three or four days a week for a few months, or doing contract work for them after you leave, can soften the drop in income while your business grows. Employees can ask for flexible working from their first day, though your employer can refuse for a business reason. Check that any arrangement fits with your restrictive covenants.

Whatever happens, do a thorough handover, write clear notes and don't criticise anyone on the way out. People change jobs, and the manager you leave behind could be a client or a referrer somewhere else in a year's time.

What to sort out before your last day

A few things are much easier to deal with while you're still on the payroll.

• Final pay. Check your last payslip includes any notice pay and untaken holiday.
• P45. Your employer should give you one when you leave. Keep it safe, as it shows your pay and tax for the tax year so far.
• Payslips and P60s. Download copies before you lose access to the payroll system.
• Mortgage. If you're planning to move or remortgage soon, talk to a broker before you leave. Many lenders want a track record of self-employed income, often a year or two of accounts or tax returns, before they'll count it.
• Pension. Your workplace pension stays yours and stays invested. Note the provider and plan details, and decide whether to leave it, transfer it or start a personal pension.
• Health and other benefits. Private medical cover, life cover and income protection through work usually end when you leave. Ask the provider whether you can carry on with a personal policy.
• Contacts. Swap personal contact details with colleagues you want to stay in touch with, but don't take client lists or company files.
• Tax. Read how to register as self-employed so you know what to do and by when.