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How to Start a Consulting Business in 8 Steps

8 Steps for Starting a Consulting LLC: Build a Strong Foundation

Deborah Sweeney, CEO of MyCorporation


Starting a Consulting Business

Anyone thinking about starting a consulting LLC knows that proven expertise is everything. You are knowledgeable in your field with a proven track record of success, and a natural ability to network and make new professional connections.

As a consultant, it is important that you not only convey professionalism to your potential clients, but that also that you properly structure your business for success. No matter what kind of consulting company you are looking to start, our step by step guide has you covered from start to finish.

Starting A Consulting Business In California

Starting a consulting business can be broken down into 8 steps.

Bookmark this page and follow along while you learn how to form a consulting company. From setting up a basic structure for your business, to creating your website this guide contains everything you need to get your consulting company up in running quickly.

Step 1. Weigh the pros and cons of starting a consulting business

Becoming an independent consultant gives professionals the opportunity to leverage their industry experience and know how to provide valuable services to their clients that no one else can provide. No matter what kind of consulting company your planning on starting, it's important to identify the unique value you bring to the to help you stand out from the crowd.

Where do you excel and what are your specialties? Answering this question means understanding the type of consultancy you'd like to start and why a client would hire you for your services.

What is a consulting Firm?

A consulting or consultancy firm is a business of one or more experts in their field who provide guidance to other businesses for a fee.

Here are a few popular industries where consultants may enter the market:

  • Accounting
  • Advertising
  • Business
  • Career Counseling
  • Communications
  • Human Resources
  • Public Relations
  • Writing

Step 2. Draft a business plan on how to set up a consulting business.

When you start a consulting business, nothing is more important than creating a solid business plan from the outset. Not only does this step help you better understand your long-term goals, but it also serves as a proof of concept for the future success of your business. Many people aspiring to start a new business skip this critical step, because they may not understand what kind of details a business plan should entail.

How to Write a Consulting Business Plan

In short, a business plan is your way of "defining a roadmap" to profitability, and in some cases, can help you uncover any gaps or blind spots in your plans.

Traditional business plans detail the following areas.

  • Executive Summary
  • Business Description, Concept, and Strategy
  • Industry Analysis
  • Market Analysis
  • Organization and Management
  • Financial Projections
  • Financing Request
  • Appendix

However, for many starting a small consultancy business, you can greatly simplify your business plan into 4 key parts:

  1. What service does your consulting company offer?
  2. How much will it cost to get your business up and running, and where will that funding come from (self or investment)
  3. Who is your target audience?
  4. Who are your competitors?

If you already understand these 4 components, feel free to skip this next section.

What service will your consulting business offer?

Consultants are generally experts in their field who advise their clients to make informed decisions that will ultimately lead to positive results.

Chances are, you already know exactly what kind of consultation you wish to provide. If not, a few of the most in demand skills you could build a consulting service around are:

  • Computers/IT
  • Business Description, Concept, and Strategy
  • Accounting and Finance
  • Online Marketing (SEO, Paid Advertisement)
  • Business Management
  • Communications (Social Media, PR)

While it may seem like an easy way to generate income, the reputation of your business will rest on the quality of your service and the results you can demonstrate. Make sure you are qualified to provide the service you offer, otherwise you may not be able to maintain a long-term business.

How much does it cost to start your own consulting business?

One of the best parts of starting a new consulting business is the low cost to entry. Many consultants start out in a home office, leveraging consumer grade technology to get the job done. A reliable computer, printer, cell phone and quiet work area may be all you need to successfully run your consulting company, depending on your industry.

There are also some reoccurring costs involved with operating any business. If you do decide to rent an office for example, you will want to consider those costs monthly, and apply that to your budget. You may even need to budget in utilities like internet, phone service, video conferencing, and any additional services you need to run your business efficiently.

Who is your target audience?

Identifying your customers may seem like a no brainer, but it is a step that is often overlooked by first time entrepreneurs.

It is important to consider early on what the demand is for the service you offer, as well as the areas you want to serve. Combining these two metrics can help you make an educated estimate of the potential volume of customers looking to hire a consultant.

This will help you make smart choices when it comes to investing money back into your consulting business, and give you a general idea about the amount of money you could earn.

Who are your competitors?

Now that you have identified your target audience, its wise to look at who you will be competing with for their business. Researching your direct competitors can help drive early business decisions by arming you with the knowledge of what seems to be working for customers, and what does not.

It can also help you determine your value proposition ( the value a company promises to deliver to customers should they choose to buy their product or service). Lean into what makes your consulting business a cut above the rest and use that to drive your success.

Your business plan is not limited to these 4 items, but in general, these are all required for due diligence.

Step 3. Choose a name for your consulting company

Choosing the name for your business is critically important when starting a consulting company. Potential clients should be able to see the name and identify it to your specific brand.

Some consultants that have been recognized in their industry as leading experts may wish to operate under their own name. Others may take a more traditional approach to naming their consultancy with a business name. Pick a professional name that properly represents the services your consultancy provides its market.

How do I know if the business name I want is available?

Searching the web for similarly named businesses is a quick way to find out if they are already taken, although it is not very reliable. You can also conduct a domain name search to see if your business name's URL is already taken. Again, while this method is prudent, its not foolproof.

Get a Domain Name

Register a domain name and create your online identity.

The only reliable way to find out if your business name is available is to conduct a business name search. Not only will we search for any potential name conflicts, we can also ensure that your intended name adheres to any business name rules your state may have.

It's best to jot down one or two alternatives, in case the name you choose is not available when to attempt to register it.

Step 4. Choose a business entity (form your business)

Now that you have a solid plan of how your business will operate, it's time to choose and form a legal entity for your business.

What is the best legal structure for starting a consulting LLC or corporation?

Some consulting companies are just a single, self-employed individual looking to pursue their passion (sole proprietors), while others may be structured as a firm with multiple employees. The needs of your business will be undoubtedly unique, as no two businesses are the same.

Forming a legal entity has many important advantages for any consulting company and should be one of the first steps you take on your business journey.

Forming a corporation or LLC establishes your business as a separate legal entity. That means you will not be personally liable if, for example, your business is sued or accrues a debt.

When you skip the step of business formation, you inadvertently open your personal property as collateral to pay your business's debts. That means that your home, your car, R.V., or any other high value assets in your possession could be identified as assets that could be used to pay business debts. That is why business formation is such a critically important step.

Another important side effect of forming an LLC or corporation for your consulting business is that it contributes to the professionalism of your business. Your business is legitimate, credible, and more permanent when you have taken the extra step of forming a legal entity, compared to operating as a sole proprietorship.

It's fairly easy to pick the entity that best suits your consulting business. Identify the entity that is right for the business by comparing the specific benefits of each entity type. Below are a few entity formations that are popular with consultancies and the differences between the structures for basic guidance.

Entity Type
Limited Liability Company Combines limited liability protection with a pass-through tax structure. IRS rules allow LLCs to choose between being taxed as partnership or corporation. The easiest entity to maintain with the least amount of formal annual requirements.
Corporation Owners / shareholders have limited personal liability for business related debts. Separate taxable entity, corporate profits among owners and corporation. Meetings are required to maintain corporate status. Stock may be sold to raise capital.
Non-Profit Corporation A corporation formed for a charitable, educational, religious, literary, or scientific purpose. Contributions to charitable corporation are tax deductible. Can get tax exempt status with the IRS. Annual reports, minutes, meetings are required to maintain nonprofit / tax exempt status.
S Corporation An S Corporation is a tax status, so any existing liability protections from your base entity carry over. More expensive to create than partnership or sole proprietorship, but offers potential tax savings. More formality requirements than for a limited liability company which offers similar advantages.

Step 5. Open a business bank account

Don't accept your first payment from a client before you open a business bank account! Here's why having a separate bank account for your consulting business is of critical importance.

  1. Accept payment under the name of the business. It could be a bit jarring for a client using your company's services to make a payment to an individual/personal account as opposed to a business account.

    Setting up a bank account for your business allows you to accept checks and payment under the business name. This conveys a high level of professionalism and credibility. It also helps separate your finances, making it easier to assess profits and losses.

  2. Protect your personal assets.When you combine your personal and business assets, you blur the line of separation between you and your business. This lack of a defined separation puts your home, car, or other valuables at risk in the event of a lawsuit involving your business.

    This is known as piercing the corporate veil. Keeping your finances separate also reduces your chance of audit and makes filing your taxes easier.

  3. Establish credit. Build a credit history for your business which can be useful when seeking outside investment or need to demonstrate buying power for your business.

    Most financial institutions will require you to obtain an employer identification number (EIN) for your business before you can create a business account. An EIN, also referred to as a tax ID, is a nine-digit number that is issued by the IRS. It is used to uniquely identify your business for tax purposes. Think of an EIN as a social security number (SSN) for your business only slightly less sensitive.

    As the owner of your own consulting business, you may also find an EIN useful when you need to accept payments from many clients. For tax purposes you may be required to file a 1099. Sharing your EIN is a great alternative to providing every one of your clients with your Social Security Number.

    An EIN is also required by the IRS if you plan on hiring employees. If you plan on expanding your consulting business in the future, an EIN is a must have and is relatively easy to acquire.

    MyCorporation can help you complete the necessary paperwork to file for an EIN for your consulting business. The process is simple and only takes only a few minutes to complete.

Step 6. Obtain required business licenses or permits

Most consulting businesses will be required to obtain some form of licenses or permits to operate. Those requirements vary depending on the business activity and its industry as well as the city and state. Research the requirements with your local Secretary of State to determine the licensing you will need for your consultancy.

Failing to obtain the required business licenses can lead to severe consequences such as fees or fines, and even involuntary dissolution of your business.

You may purchase MyCorporation's business license compliance package. This helps simplify the process of meeting your business license requirements while eliminating the chance of missing a requirement. We conduct all research on your behalf, taking into account your business type and location, and provide you with the necessary paperwork to get the required licenses.

Step 7. Develop and define your brand

Creating a strong brand helps distinguish your consulting business from your competitors. It's also a representation of what your company stands for, values, and goals for client and business success. Depending on the kind of consultancy you plan on opening, developing, and defining your brand will involve a few steps.

  1. Create Your Logo. Your logo is not only an important part of your company's advertising and marketing efforts, but also often your first impression to potential customers, so make it count! Your logo design should clearly represent your company and who you are as a business.

    Conduct some basic research and find out what resonates in your industry for ideas. Most importantly, you know best what vision you have for your business, so trust your instincts.

    One option is to use one of the many available free online logo maker tools, which can help you design your own logo online with no software or previous design experience required. This is a great option for your business when you want complete control of your logo at a substantially reduced cost.

    You can also choose to hire a professional logo design team with a large portfolio of successful designs. This is a great option if you have a bit of budget to spare and really want a unique, professional design that grabs attention.

  2. Promote and Market Your Brand. Now that you have created your brand, its time to promote it! Stay ahead of your competition by helping people remember your business while also demonstrating professionalism.

    Promotional/informational products can be great way to drum up interest in your business and get your name out there. Printing high quality brochures and fliers outlining your services and distributing them to local businesses is a solid method for building local brand awareness.

    Professional business cards are a tried and true way of creating brand awareness and are an absolute must for any serious business owner. Business cards are easy to carry everywhere you go, you never know when a marketing opportunity may arise. A savvy business owner is always on the lookout for a new source of potential clients.

    Email Marketing is a simple but effective way to provide a huge return on a small budget. Email marketing is a great way to put your business in front of thousands of new potential customers all at once or promote a new service or offer.

    Networking is critical for growing your client base and getting referrals. Joining in-person networking events and online participation in Twitter chats allows you to establish word of mouth about your business. You may connect with and pitch potential new clients during networking nights and using professional connection platforms like LinkedIn. Attending industry events is also key to getting your name out there, establishing yourself as a thought leader, and staying in touch with influential experts in the space.

Step 8. Establish your web presence

A professional website is an incredibly valuable asset for any consulting business. It is a valuable method for collecting contact information from potential clients, sharing more information about your offerings, and more.

For many new consulting business owners, the prospect of building a website can seem overwhelming and expensive. This couldn't be further from the truth. In fact, there are lots of easy and affordable ways to get a custom website for your business without hiring an expensive web design firm or freelance web developers.

You can use one of many website builder tools that provide you everything you need to build a website out of the box, with no coding skills necessary. This can be a great starting point from which you can build a full site.

If your business relies on your website to sell your service, we recommended that you work with a team of web design experts. In many cases, a professional can help you create a more functional website.


From discovering your niche to incorporating your company, your consulting business now has everything it needs to ensure the business succeeds and thrives with its audience. Keep that momentum going!

As you continue to build your client base, focus on additional services you can offer. Look into classes you can take that allow you to continue solving problems for clients. Invest in networking and practicing your talking points for your pitch. Over time, you may even make revisions to your business plan once you've hit certain goals and milestones in your market as a consultant.

Frequently Asked Questions

What are the benefits of setting up an LLC for consulting?

There are plenty of benefits to setting up an LLC for consulting. Whether you are looking for personal liability protection or tax flexibility, you won't miss out on the opportunity to take advantage of the benefits you can have when you setting up an LLC for consulting.

An LLC is an entirely separate entity that helps protect your personal assets from business liabilities, for example. You can also decide whether you want to be taxed as a sole proprietorship or corporation. Depending on how you are taxed, the benefits for you will differ.

What legal and financial aspects to consider in starting a consulting business?

Consider the legal and financial aspects that accompany you when you set up your consulting business. For example, the first thing you want to do is set up your business structure. You might want to be set up as a corporation or a proprietorship, but whatever the case, you need to decide which benefits you most.

Additionally, you must register your business with your state to attain the right licenses and permits. Finally, you will need liability insurance and a detailed business plan. Proper bookkeeping and startup funds will also help you start your business successfully.

What certifications can help succeed as a consultant?

There are plenty of options for certificates that can set the foundation for a successful start as a consultant. You can start with a Certified Management Consultant certification to demonstrate your experience and commitment to meeting the professional standards as a consultant.

Once you are confident in your skills, you can find certificates in your area of expertise to help confidently portray your knowledge and experience to your customers. You have plenty of options but focus on finding certifications that set you apart from your competitors and increase customer credibility.

Which strategies do I need to follow for scaling your consulting business?

Following specific strategies allows you to scale your consulting business and reach the success that you aspire for. One of the things you can do is to identify your area of experience and focus on that. Rather than trying to specialize in different areas, choose one to which you can commit your entire time and provide high-quality services.

This will help you develop a reputable reputation and build a strong relationship with customers who trust your work. Additionally, create and implement a marketing plan that will help increase your visibility and attract new clients.

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