Do You Need a Certificate or License to Start a Consulting Business?

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Do You Need a Certificate or License to Start a Consulting Business?

Jun 23, 2021 · 5 minutes to read

Becoming a consultant can be a great way to take your expertise and turn it into a small business. It 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.

A business consultant with 2 clients discussing

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.

Business license

You will likely need to apply for a business license and file Doing Business As (DBA) paperwork to start a consultancy. The exact requirements for doing so can be found through your state government’s website, as they may vary depending on where you live. You will likely need to pay a fee to file this paperwork.

Specialty certificates & licenses

Depending on the industry you are consulting in, you may need other certificates or licenses to legally do business and prove your expertise. Examples of industries that may require special certification or licensing include, construction and trades, engineering, education, law, health and medical, and accounting. Your state government or professional association’s website will have more information about what you need to consult within your industry.

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 function 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. This may be the most important coverage for consultants to consider due to the nature of their job. It helps cover the legal costs of both legitimate and baseless claims, including settlements and judgements, so you do not have to shoulder these expenses on your own.

Other types of insurance
Beyond Professional Liability, your consultancy might need other forms of coverage depending on how you work.

General Liability insurance protects businesses against the risk of customer injury and property damage. If clients regularly visit you in your work premises, this type of insurance can help protect your business if they are injured on your property. Additionally, if you regularly visit them at their office, worksite, or home, a policy also helps protect you if you damage their property.

Workers’ Compensation insurance provides benefits to your employees when they make a claim against your workplace for injury or illness. If you employ a staff (even if it’s just one person), you may be required to have a policy. Check your state or local workers’ comp laws to ensure you are meeting the requirements in your area.

Other considerations to make when starting a consulting business

Beyond what is legally required, you may want to consider how you’ll spread the word about your consultancy once it’s up and running.

Website

A website is an essential part of starting a business, as most clients will expect you to have an online presence. It also creates a space for you to showcase your business and work on your own terms. There are many online tools available that make building a website simple and easy. However, you can also hire a professional to build and manage your site.

Social media

Clients may also expect to find you and your business on social media. For consultants, LinkedIn is the most obvious platform to promote your expertise and find new clients. Depending on your industry, it may also make sense to be on other sites too. For example, if you provide consulting services in the interior design space, Pinterest may be a good match for your consultancy.

Advertising

Social media platforms offer an affordable way to market to a targeted audience. However, you may need or want to advertise on other channels depending on your industry. It may make sense to take out print ads in industry publications or set up a booth at an industry event.

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.

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