How to become an IT consultant and start a business

There are over 33 million small businesses in the United States as of 2023¹. With the vast majority relying on computers and the internet to run their businesses, opportunities for IT professionals are growing.

If you’re looking for a way to launch your information technology career, becoming a consultant might be the way to go. Many small businesses cannot afford a full-time IT team, making independent IT consultants essential. Even larger businesses often turn to freelance IT security consultants to help them complete projects.

Here’s an overview of how to start your information technology consultant business:

What does an IT consultant do?

An IT consultant helps businesses repair, manage, maintain, and protect their computer systems. Business owners rely on computer consultants to provide answers and solutions, repair hardware and software issues, and secure their systems against cyberattacks.

Many IT consultants specialize in one of the above areas, though others provide more general services.

What are the benefits of being an IT consultant?

Consultants enjoy great work and career freedom. You are your own boss and can select the clients you want to work with. You also set your own hours, allowing you to create a work-life balance that suits your lifestyle.

IT consultants also earn high salaries in much of the United States. Glassdoor reports an annual salary range of $79,000 to $130,000 as of December 2023. However, the amount you earn will depend on your knowledge, experience, speciality, and the types of clients you work with.

What education and skills does an IT consultant need?

IT consultants typically have a degree in computer science, information technology, or a related field. However, you can also start an information technology career by completing a certification or specialist training program.

There are several skills that successful IT consultants often have, including:

• Computer programming, database and network fundamentals
• Communication and interpersonal skills
• Problem-solving and logic
• Confident decision making
• Planning and time management
• Teamwork
• Customer service

Getting IT experience

With the necessary skills and education, it’s time to gain experience in the field. Working as an IT technician, IT trainer, or computer support specialist can provide you with valuable hands-on experience. An IT consultant with no experience may not be viewed as an expert, regardless of their knowledge.

Experience also provides you with industry contacts that can help you build a consulting business. Former bosses, colleagues and others in your network can provide referrals and advice to help you establish and grow your business.

Starting an IT consulting business

There are many steps to establish a business in the United States. The exact requirements you must meet may vary from state to state, but generally you will need to:

• Write a business plan – A document that helps you plan your operations, set goals, and guide your decision making.
• Choose a business structure – Many independent consultants choose sole proprietor, but other structures may better suit your business.
• Get a business license and permits – You may need a general business license to work in your state. Other state or local permits may also be required.
• Establish business finances – You may need separate bank accounts for your business and an Employer Identification Number from the IRS. Outside funding, such as a small business loan or investment, may also be part of your financial plan.
• Market your business – Advertising your business and creating a steady stream of clients can help you maintain a steady cash flow and grow your IT consultancy.

Striking out as an independent consultant means taking on many new responsibilities. Small business owners must tackle many tasks that they may not be experts in, from accounting and filing business taxes to marketing and customer service. You might consider hiring other independent contractors to help you manage areas of your business that you do not have the skills or time to handle yourself.

Protecting your business

IT consultants face many challenges in the day-to-day operation of their businesses. That’s why many consider different types of IT consultant insurance to help protect their finances against unexpected events.

As an IT security consultant, you might consider coverage such as:

Professional Liability – Also known as Errors and Omissions (E&O) insurance, this type of policy protects your business against claims of negligence, misrepresentations, or mistakes. Professional Liability claims are typically made by clients who allege some form of financial damage as a result of your services, products or employees.
Businesses rely on you for IT advice based on your expertise. If a client feels that your recommendations cost them money, they could file a lawsuit against you. Professional Liability can help you cover your legal costs, whether you are at fault or not.

General Liability – Also referred to as Commercial General Liability (CGL) or “slip and fall coverage”, this insurance can protect your business against bodily injury or property damage lawsuits from outside parties.
IT consultants often work onsite, visiting clients in their place of business to deliver their services. This creates opportunities for accidents to happen. General Liability can help you if your business activities cause an injury or damage to a client’s property.

Business Owner’s Policy – A Business Owner’s Policy (BOP) is a combination of policies, combining covers such as General Liability insurance and business personal property coverage, to help protect small businesses from costly interruptions to service.
A BOP can be a convenient and affordable way to protect several parts of your consultancy business with a single policy.

Starting an IT consulting business checklist

• Complete the required education to work in the industry and certifications for specialty areas.
• Work for another company to gain valuable real-world experience and industry connections.
• Write a business plan and establish your business structure.
• Apply for any required licenses and permits to run your business.
• Set up your business finances and secure funding, if needed.
• Create a marketing strategy to advertise your consultancy and find potential clients.
• Consider IT consultant insurance to protect your growing business.

Building and protecting your IT consultancy

Starting an IT consulting business could be a great way to take control of your information technology career. As you put in the work to build a successful business, you might want to protect it with IT consultant insurance.

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