Anyone going into consulting knows that proven expertise is everything. You need to be an expert in your field (preferably in an industry like tech, marketing, or accounting) with a proven track record of success and a natural at networking. As a consultant, you will also face the issue of the way you want to go into business. Some consultants want to be self-employed while others want to branch out with a firm where they can hire employees. Once you've decided on the employment style that best fits you, then you can pick a legal structure to incorporate your business.
What's the Best Entity to Form?
If you plan on going it alone... Form a sole proprietorship. This entity may seem perfect for a consultant since the industry isn't exactly dangerous and you're not as likely to run into situations where personal liability is involved. However, keep in mind that a sole proprietorship means that the owner is the business. You're liable for everything that happens there, whether that means losing valuable information, someone being injured in your workspace, or being served with a lawsuit.
If you're planning to open a consulting firm... Form an LLC. A Limited Liability Company will ensure that your professional and personal assets are separated and protected with liability protection. Forming an LLC also allows you to choose which tax entity you would like to have, either as an S-Corporation or a C-Corporation. If you qualify as an S-Corporation, you can use careful planning to avoid paying significant employment taxes.
Why Your Consulting Company Needs This Legal Structure
What do McKinsey & Company, The Boston Consulting Group, Inc., and Bain & Company all have in common? They're the leading consulting firms in the United States, ranked by prestige. As a consultant, your experience and expertise will receive serious recognition over time, allowing you to move up in the ranks. But if you don't have a legal structure for your business, you'll find that establishing credibility with potential clients will be much harder. Make sure you're reputable from the start! Form an LLC with the help of our experts who make it easy to file your documents so you can return to perfecting your recipes to share with the world.