When you decide to become a consultant, you’re also deciding to start a small business. As an employee, you can generally just turn up and do your job because someone else is taking care of all the back-room functions that keep everything ticking over. Now you’re a consultant you need to take care of these things yourself – compliance, accounting, marketing, systems, administration, IT. And that’s before you even start doing work you’ll be paid for.
When you’re starting out as a consultant, it’s important that some key elements of running your business aren’t overlooked. To help you on your way, here’s a checklist I wish I’d had when I started out.
Initial set up tasks
Register the business. Decide your business name and register it in your jurisdiction. It’s pretty straightforward and can be done online.
Get a business number (ABN/BN). You’ll need a business number to operate legally. Also easy to do online.
Sign up for GST/VAT. Depending on which country you’re in, you’ll need to register your business for goods and services tax if you’re gross earnings are going to be over the relevant threshold. For example, in Australia, that’s $75,000.
Arrange taxation. Speak to your accountant to make sure you set up everything you need to pay taxes regularly.
Open bank accounts. Set up separate bank accounts for your business to ensure transparency.
Prepare an invoice template. Check out compliance issues in your jurisdiction to see what needs to be included on your invoice. For example in Australia, it must state “tax invoice” and have an invoice number.
Organise insurance. As a consultant, you’ll need public liability and professional indemnity insurance.
Set your fees. New consultants often agonise about this, but you need to bite the bullet and decide on your daily rate quickly. Without it, you won’t be ready to bid for consultancy projects.
Managing your business on an ongoing basis
Payment of your salary. Even if you operate as a sole trader [not a company], you should pay yourself a regular salary, leaving funds available to cover the other costs of running your business.
Financial record keeping. You need to keep sound financial records now that you’re running a small business. My best advice is to get yourself a book keeper.
Regular reporting of financial information. Be aware of the financial reporting requirements in your jurisdiction – and comply with them. For example, in Australia if you’re registered for GST you need to report quarterly to the Australian Taxation Department.
Taxation payments. You need to take care of both personal and business taxation payments. Sign up for pay as you go [PAYG] options to avoid a hefty end of year tax bill.
Efficient filing systems. You’re undertaking consulting projects and running a small business. Make sure you’re organized.
Effective IT systems. There’s no IT help desk anymore, but things can still go wrong. Make sure you back up and put appropriate security measures in place.
Now that you’re a consultant, it’s a big mistake to forget that you’re also running a small business. To make a success of it you’ll need to develop your business acumen and have good systems in place.
Jacq Hackett, Founder, www.soloconsultantmasterclass.com