How to Start a Consulting Business

If you have valuable insight and expertise you want to share, then starting a consulting business is a great way to monetize your strategic approach, skills and experience. Consultants come in many different types with specialists in hundreds of niches using thousands of varied skills and techniques.

Other businesses hire consulting experts because they want to “buy in” expert opinions, ideas and resources that don’t exist in their organization already. If you have a proven track record of transforming businesses for the better, you can turn that into paid insight, exchanging your time and skill set for well-paid consulting jobs. Consulting provides deep insight to an organization without them having to hire expert staff on a permanent or long-term basis.

Due to the expertise offered by consultants, the rates charged are normally high. So a consulting business is a great business to start if you want to make a great income and not work very many hours.

But where do you start? In this guide we’ll explore everything you need to do to set up your consulting business and maximize your chances for success. We’ll cover:

guide to set up the consulting business
  • Types of consulting business
  • Questions you should ask to see if you’re ready to start a consulting business
  • The best legal structure for your new organization
  • Some rules and regulations you will need to follow
  • Information on taxes and finances for your consulting business
  • Resources for your consulting business
  • And much more

Types of Consulting Business

Consulting is the practice of giving expert advice to others, normally in business, financial or technical areas. Clearly that’s a broad definition, so let’s narrow it down a little. Common types of consulting include:

Business process improvement

Examining how a business currently operates and making recommendations to improve efficiency and effectiveness

HR and culture

Working with HR and leadership to deliver changes in attitude, morale and culture throughout a business

Organization change

Examining the operational and staffing structure of a business and optimizing it for size and business functions

Leadership coaching

Working with C-suite and other senior managers to enhance leadership skills and approaches

Strategy planning

Helping to develop strategies for businesses to grow or react to changing environments, regulations and compliance

Technology, hardware and software

Providing insight into the technologies and approaches best suited to delivering business outcomes

Branding and public relations

Managing how a brand or individuals are perceived by customers and in the wider marketplace

Financial management

Helping a business optimize its cash flow, costs, profit margins and operations to maximize revenue and minimize expenses

Legal consulting

Giving insight into likely legal issues, challenges and strategy for new initiatives or business changes

There are many other types of consulting including social media, IT, investment, marketing and more, but this gives you an idea of the type of expertise businesses are willing to pay for.

Key Consulting Business Background Data and Statistics

This all points to the consulting industry being ripe with new opportunities for focused entrepreneurs, so now might be the perfect time to dive into starting your consulting business. Incfile is here to help you form your consulting business and understand the ins and outs of owning a consulting company.

The consulting space is dominated by several major businesses including PwC, Deloitte, Ernst and Young, Boston Consulting Group, McKinsey, Accenture, IBM and KPMG. But don't be deterred — there is still room for a small boutique consulting firm to do very well.


People are employed in the management and technical consulting services in the U.S.


The typical consulting fee an hour at entry-level and over 0300 an hour for experienced consultants.

key consulting business

The global business consulting market was worth $250 billion in 2016,
up from $205 billion in 2011. This overall total breaks down into the following industries:

  • $31 Billion Technology
  • $71 Billion Operations
  • $31 Billion HR
  • $70 Billion Financial
  • $48 Billion Technology

Questions to Ask Before You Start a Consulting Business

Is Consulting Entrepreneurship For You?

If you want to be a consultant, you need to demonstrate industry-leading expertise. You must bring unique insight, techniques, methods and experience to solving business issues in your niche.

As a consultant you will be expected to get a very quick understanding of an organization's problems, spend time analyzing those issues and come up with practical examples of how to make changes.

Being a consultant is all about “demonstrating your value.” Businesses will be expecting excellent results for the fees they are paying, so it’s all about delivering in accordance with those expectations.

What Are the Main Skills, Expertise and Experience to Be a Successful Consulting Entrepreneur?

The specific skills, expertise and experience for a consultant depend on the niche you decide to go into, but here are some general guidelines:


You must be good at dealing with others and building networks and connections between people.


Consulting starts with asking questions, and lots of them. You must be an expert at understanding exactly what an issue is, defining it and finding out the changes that need to be made.

Measurement and analysis

You will need to be able to measure and understand the current shape of an issue. Then you will have to carry out analysis to identify specifically where problems are so you can make recommendations for improvement.

Techniques and methods

You will need a large toolbox of techniques and methods for improvement. These could be proven tools, frameworks or approaches that have worked in the past. You will also need an up-to-date understanding of industry best practice and benchmarks.


You must have experience at working with project managers or other people making changes in an organization as you will need buy-in to turn your ideas into practical actions that deliver a result.

Niche and industry expertise

Perhaps most important of all, you must have established insight, experience and authority in your chosen area. You need to demonstrate thoughtful, innovative approaches that will deliver practical, sustainable transformation for your client.

What Are the Main Challenges for a Consultant?

Consultants come across many challenges. These start with finding clients — consultant services can be expensive, so building up a network of good leads and opportunities is vital. You will want to build up a robust pipeline of work to ensure your business is profitable.

Next, you will need to establish strong methods for working with people. Key skills include gathering information, carrying out analysis and making recommendations.

As business needs change, you must be flexible and adaptable. You will have to use your experience to understand what is going on below the surface of an issue and then use tools and techniques to resolve the underlying problems.

Finally, you need to deliver sustainable results. This means getting involved with project managers, business analysts and operations experts to check that your recommendations are being implemented in the best possible way.

Choose the Right Business Structure and Register Your Consulting Business

Now that you have all the background information for your consulting business, it’s time to make it into a reality. That starts by choosing the right structure or “legal entity” for your business. In the U.S., there are four main business structures. They are:

Choose the Right Business Structure and Register Your Amazon Business

Sole Proprietorship

This is the "default" business
structure and is what your
business will be if you decide
not to create a more formal
structure. We don't
recommend this type of
business as it doesn't give
you the legal protections you need.

Limited Liability

Limited Liability
Company or LLC

The most common type of business entity. An LLC is fast, simple and inexpensive to setup and maintain. It protects your personal finances and assets and is a great way to start your real estate

Series LLC

Series LLC

This is a special type of LLC entity that's only available in certain states. It allows you to create "mini" LLCs, each with their own limited liability and separate assets, under the umbrella of a master LLC.

S Corporation

S Corporation

This is a more complex type of
business and isn't generally
recommended for smaller

C Corporation

C Corporation

These are the largest and most
complex types of businesses
and are far more than the
average entrepreneur or
business owner will need.

For most smaller consultant businesses, an LLC is the ideal business setup. It provides you with liability protection, is simple to administer and has some tax advantages over other business types. Additionally, if another consulting firm ever subcontracts to you (which does happen), they will definitely expect you to have a formal legal structure in place.

For more information on the advantages and disadvantages of different types of businesses, please see our in-depth guide. If you’ve still got questions, we’ve answered them to help you choose the right business structure.

We’ve got a complete guide to everything you need to do to set up an LLC, and we can start one for your consulting business today. LLC formation does vary from state to state, but we’ve got you covered, wherever you are.

Set up & Maintain Your Consulting Business

Once you've legally created your consulting business you’ll need to get some other things in place.

business location
Business location

Where are you going to run your business from? Will you work from home, get an office, use a shared working space or something else? Most consultants will likely start by working from home. As you get more recognized, you may want to use external offices for client meetups.

Permits and licenses

Running a consulting business comes with certain rules, regulations and legalities you need to be aware of. Incfile can conduct a Business License Research package for you, or you can take the time to do the research yourself.

permit and license
finances & taxes
Finances and taxes

What kind of bank account will you get? Will you need a business credit card? And how will you pay your business taxes? These are all important things to consider so your consulting business stays in the green. Here at Incfile we can even help you file your taxes.


What equipment do you need to manage your consulting business? Will you need a laptop, computer, smartphone or tablet? What about transportation or specialized equipment? Make sure you understand exactly what you need to spend so you can write it off against business expenses. Most consultants will likely just require a computer, smartphone and transportation to their client’s business to begin with.


Do you need to build a website? Should you have a logo designed professionally? Will you need business cards? Consultants rely on projecting an extremely professional persona. It is definitely worth getting high-class personal branding together with a website, logo and business cards.


What business processes are you going to use to run your business efficiently and effectively? Since you will likely be advising on processes in other businesses, getting your own processes and methods setup as well as possible will definitely make things easier. In particular, you should focus on your research, note-taking, measurement and analysis capabilities.


Do you need to hire employees to help you out? Initially you will likely be a “one-man band,” but later on you may want to hire other consultants or administrators who can help free up your time for billable work.

Business maintenance

Most states require businesses to file an Annual Report report once a year. You will also be expected to pay estimated taxes on what you plan to earn in the current business year. And, your federal, state, regional and city business licenses and permits may need to be renewed on a regular basis, typically once a year.

business maintenance
Our Start a Business Checklist will also help you get your consulting business going in the strongest possible way.


If you have experience and insight into a particular industry, sector or niche, then consulting could be a viable business option for you. Combine your experience with an innovative approach, strong skills, and proven results, and you will be off to a great start in your new career as a consultant.