Becoming a consultant can be a great way to take your expertise and turn it into a small business. There are over 2.4 million management consultants in the United States as of 2023, and the field is growing. On average, the number of management consultants increased by 6.5% between 2018 and 2023.
Working as a consultant can give you more work flexibility and freedom in your day-to-day life. With the drive to succeed, it could also become a lucrative career. Consultants make an average of $90,265 per year, though salary depends on the industry you work in and other factors.
What does a consultant do?
Consultants provide expert advice, opinions, recommendations, and analysis based on their own expertise. They help troubleshoot issues, prevent problems, and improve performance by providing an outside, objective viewpoint to their clients.
The information you provide to clients may vary depending on the industry you work within. You may work with individuals or entire organizations. Essentially, you are providing time and expertise that others do not have.
What do I need to start a consulting business?
Starting a consulting business generally requires that you to obtain certain licenses and file paperwork with your state and the federal government.
Licenses and certificates
Most state or local governments require consultants to have a business license to legally operate. Depending on the industry you are consulting in, you may need other licenses or certificates to legally do business and prove your expertise.
Why do consultants need licenses and certificates to work?
Licenses are an important part of doing business in many states and cities. They give you permission to operate your business (i.e., a business license) or conduct certain activities, like open a business bank account.
Certificates may also be required for consultants working in specific industries. They can act as endorsements of your skill and expertise, which is important for potential clients deciding whether to work with you.
For example, a financial consultant may need to complete certifications on investing or risk management before they can responsibly work with clients.
Financial information
Most businesses in the United States will need an Employer Identification Number (EIN) to open bank accounts, file a tax return, and apply for a business license. You can apply for an EIN online through the IRS website.
Business insurance
Protecting your consultancy is important to its success. Business insurance can help create a safety net for your finances and give you peace of mind as you work.
Professional Liability
A consultant’s entire job is to provide professional advice to others. The stakes can be high, as a small mistake or omission in your work could result in a financial loss for your client. Therefore, it may be wise to protect your business and reputation with Professional Liability insurance.
Professional Liability, otherwise known as E&O insurance, protects your business against claims of negligence, misrepresentation or mistake, as well as document or paperwork errors. It helps cover the legal costs of both legitimate and baseless claims, including settlements and judgements.
General Liability
This insurance protects consultants against the risk of customer injury and property damage. If you regularly meet with clients in person (i.e., in your office, their offices, a worksite, etc.), this type of insurance can help protect your business if they are injured on your property or you accidentally damage their property.
Workers’ Compensation
This insurance provides benefits to your employees when they make a claim against your workplace for injury or illness. If you employ a staff (even just one person), you may be required to have a policy by state law.
Protect your growing consultancy
It takes work to set up a consulting business—and even more to make it successful. As you grow your client list, consider Professional Liability and other types of business insurance to protect what you’re building.
BizInsure makes it easy for consultants to find, compare, and buy insurance to fit their business needs.
