How To Start Own Consulting Business – Starting a consulting business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below are the keys to starting a successful consulting business.
Importantly, a critical step in starting a consulting business is finalizing your business plan. To help you, you should download the Ultimate Consulting Business Plan Template
How To Start Own Consulting Business
This is a very important choice because your company name is your brand and will last throughout the life of your business.
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Ideally choose a name that is meaningful and memorable. Here are some tips for choosing a name for your consulting business:
One of the most important steps in starting a consulting business is developing your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also gives you a plan to follow and submit to funding sources if needed to raise capital for your business.
You must also choose a legal business structure for your consulting business and register it and your business name with the Secretary of State in each state where you operate your business. Below are five of the most common legal structures:
A sole proprietorship is a business entity in which the same legal entity owns the consulting activity and the business. The sole proprietor is responsible for all debts and obligations of the business. No formalities are required to set up a sole proprietorship and it is easy to set up and operate. The main advantage of self-employment is that its establishment is simple and cheap. The main disadvantage is that the owner is responsible for all debts and obligations of the business.
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A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a consulting business together. Partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to form and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly responsible for the debts of the business and disagreements between the partners can be difficult to resolve.
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that LLC owners are not personally liable for the debts and obligations of the business. Advantages of a consulting LLC include management flexibility, pay-as-you-go tax (prevents double taxation as explained below), and limited personal liability. Disadvantages of LLCs include lack of availability in some states and self-employment taxes.
A C Corporation is a business entity that is separate from its owners. It has its own tax identification number and can have shareholders. The main advantage of a C Corporation for consulting is that it offers its owners limited liability. This means that the owners are not personally liable for the debts and obligations of the business. The downside is that C Corporations are subject to double taxation. This means that the company pays taxes on its profits and the shareholders also pay taxes on their dividends.
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An S corporation is a type of corporation that provides limited liability protection to its owners and allows them to roll over their business income to their personal income tax returns, thereby avoiding double taxation. S Corporations have several limits, including the number of shareholders they can have, among other things.
After you have registered your consulting business, your state will send you your official “Articles of Incorporation.” You will need this documentation, among other things, when you open a bank account (see below). We recommend that you consult with an attorney when determining which legal structure is best for your company.
As you develop your consulting business plan, you may have discovered that you need to raise funds to start your business.
If so, the main sources of financing for a consulting firm to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to start-up businesses. Angel investors usually invest in a consulting business that they believe has high growth potential.
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Having the right space can be important for your consulting business, especially if you want to meet clients there and don’t plan to run a consulting business from home. To find the right office space, consider:
Next, you must register your business with the Internal Revenue Service (IRS), which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks require you to have an EIN to open an account. In addition, you will need an EIN to hire employees, as this is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor with no employees, you generally do not need to obtain an EIN. Rather, you would use your social security number (instead of your EIN) as your tax identification number.
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It is important to open a bank account in the name of your consulting firm. The process is quite simple and involves the following steps:
You should get a business credit card for your consulting business to help separate personal and business expenses.
You can apply for a business credit card either through your bank or through a credit card company.
When you apply for a business credit card, you’ll need to provide some information about your business. This includes your business name, your business address and the type of business you run. You will also need to provide some information about yourself, including your name, social security number and date of birth.
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Once you’re approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history, which can be very important when obtaining loans and getting lines of credit for your business in the future.
Depending on the type of consulting business you are starting, you will need to obtain the necessary state, county and/or city licenses.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
Most consulting companies don’t need a lot of equipment. A computer, phone and internet access are probably all you need to start a consulting business. If you plan a lot of virtual meetings with clients, don’t forget to invest in the right webcam. You may also need office furniture.
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Your pricing strategy will depend on a number of factors, including your level of experience and the services you offer. However, you can get an idea of what to charge by looking at the rates of other advisers in your area. You may also consider offering a free or discounted consultation to potential clients to gain their business.
There are several basic types of software that every consultant needs to run their business.
The first is accounting software like Quickbooks to manage your finances. You will also need word processing software and a spreadsheet. The most popular options are Microsoft Office and Google Workspace. It is also helpful to have a customer relationship management (CRM) system such as Salesforce to help manage customer relationships. Research the software that best suits your needs, buy it, and install it.
If you are just starting out, you can work independently or in a very small team. If you have the resources to hire additional staff, consider writing job descriptions and posting them online on sites like LinkedIn or in more local locations. You can also chat with your existing contacts to see if anyone is available or know someone who might be interested in joining your growing team. When interviewing candidates, make sure their skills are right for your needs and that they seem to fit the company culture you want to build.
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Now you are ready to open your consulting business. If you have followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that may help you further.
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There is no one-size-fits-all answer to this question, as the ease or difficulty of starting a consulting business varies depending on your skills, experience and resources.
However, if you follow the steps above, you should be able to start your consulting business without too much difficulty.
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The best way to get started in the consulting industry with no experience is to start small. You can offer your services to friends and family members or local businesses. Once you have a few customers, you can start promoting your business more aggressively.
The profitability of consulting varies depending on the specific industry and services offered.
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