Starting Your Own Consultancy Business

Starting Your Own Consultancy Business

Using Your Knowledge of Your Field to go it Alone

By Daniel Kidd

Starting a consulting business is just like starting any other business. As a consultant you can choose to be a sole-trader, a partnership or a limited company, and all the usual rules for registering your business and paying tax will apply.

As with other types of business, you’ll need to carry out market research to identify potential customers and establish the level of demand. You’ll also need to think about what funding you may need, and develop a robust business plan.

Most consultants have a head start because they’ve already worked in their chosen field. Consultancies also tend to have much lower start-up costs and therefore lower risks.

When you’re working towards starting a new business, in order to claim expenses on any research or other pre-trading costs these must have been incurred within seven years prior to you starting trading. For tax purposes, these costs will be treated as if they occurred on your first day of trading. This means that if your research is ultimately unsuccessful and you never start trading, you can’t claim your efforts as expenses against your tax bill.

Additionally, in order to be treated as tax-deductible, the law states that all expenses must be wholly and exclusively for the purposes of your trade or profession.