How to Start a Consulting Business

I wanted to write this article because I recently found myself as a consultant to numerous industry and DoD organizations. Being excited, I jumped right on it. But then quickly realized that I don’t know how to start a consulting business. Though I’ve owned a company I’ve never been a consultant and definitely didn’t understand how it worked. I learned a few things in the last few weeks that I thought I’d share with everyone just in case you are in the same boat. Though I’ve run a few businesses I’ve never run a consulting company. Therefore, I was somewhat lost on how it all worked and how I would go about a few minor things.

Start an LLC, Duh!

So, obviously, the first thing you should do is start a business or an LLC. You can do this as a 1099 but it’s kind of beneficial to do all your consulting through your own entity and not personal. If you are interested in learning more about why check out my article on that, here. But starting your LLC can be as easy as going on LegalZoom and getting it. All you have to do is pick a name and you’ll be good to go! Once you get your LLC you should look into getting your EIN number for your business. This is a pretty easy task, and all you need to do is go here and follow the instructions!

Once you have created your LLC and applied and received your EIN, it’s time to open up that bank account. Most bank accounts require a minimum balance. But if you are on a budget there are other options. For more information on that take a look at my article on the 5 banks with a $0 minimum balance. Creating your first LLC can be quite nerve-wracking but getting this is the first step. Getting the first step out of the way can be a confidence builder. Having confidence is the key to success. Once you’ve set up your LLC, retrieved your EIN number, and opened your bank account you are ready for the next step!

Setting up to get paid in Billable Hours

Once the LLC, EIN, and bank account have been retrieved this part is easy. All you would need to do depending on how much money you bring is work on making automatic payments to the IRS. Which you can do through the IRS website! It’s that easy! All you need to do from there is work on keeping track of your expenses and income. One thing to keep in mind if you are getting into the consulting game is the taxes. As an independent consultant, you will have to pay both corporate and employee taxes (for both state and federal taxes). Which is a doozy if you aren’t getting consistent work and aren’t making a ton of money.

Networking

Networking is a good way to get more consulting gigs. When done right you can build yourself as a subject matter expert (SME)

Takeaways

As you can see, when you start any new business it can be confusing. Though I’ve started a few companies before, starting my first consulting business was still frightening. Hopefully, this article provided with you the basics to getting your consulting gig started. Informing you on how to start a consulting business is important because most people are not sure where to start. I will agree that it can be quite abstract. But understand you have to know where to be and not be afraid to ask for money. There is nothing wrong with that. So, keep that in mind and get out there and make some money!